Supreme Court adjourns hearing in Aircel spectrum ownership case

New Delhi: The Supreme Court on Thursday adjourned the hearing on a batch of petitions filed by lenders of bankrupt telecom operator Aircel Ltd, challenging the National Company Law Appellate Tribunal’s order, which had held that spectrum can be transferred under an insolvency resolution plan only after all government dues are cleared.

The case is now expected to be listed next week, though a specific date for the next hearing has not been notified by the court yet.

The petition filed by the State Bank of India (SBI)-led committee of creditors (CoC) was listed for hearing by a bench of justices P.R. Narasimha and Atul S. Chandurkar, but could not be taken up due to paucity of time.

At the core of the dispute lie two crucial questions: whether telecom spectrum belongs to the government or the operator, and whether the company’s right to use it under a government licence can be treated as an asset that may be monetized during insolvency.

After the NCLAT order in April 2021, appeals were filed in the Supreme Court the following month. The apex court issued a notice in June 2021, but the case saw limited progress in the last four years, with repeated adjournments, according to court orders reviewed by Mint. The arguments began only in September this year, with the matter last listed for hearing on 8 October.

Monetizing spectrum

The lenders of Aircel, led by SBI, have argued that the right to use spectrum is a transferable commercial right forming part of the company’s insolvency estate.

They contend that monetizing spectrum is critical to maximize recovery and complete the resolution process. Without it, they warn, Aircel would face liquidation, leading to substantial losses for banks, employees, and other creditors.

The department of telecommunications (DoT), however, has maintained that spectrum is a national resource owned by the Union government and merely licensed to operators for limited use.

It argued that if a telecom company defaults on statutory dues such as licence fees, spectrum usage charges, or adjusted gross revenue (AGR) dues, the spectrum must revert to the government and cannot be sold or transferred under insolvency proceedings. In Aircel’s case, these dues stand at around ₹12,389 crore.

Founded in 1999 by entrepreneur C. Sivasankaran and later sold to Malaysia’s Maxis Communications in 2005 for about $1 billion, Aircel once served over 90 million subscribers. The company thrived for nearly a decade before being hit by the intense price war following Reliance Jio’s entry in 2016, which forced several smaller players to exit the market.

In February 2018, Aircel and its subsidiaries, Aircel Cellular and Dishnet Wireless, filed for bankruptcy before the National Company Law Tribunal (NCLT), Mumbai, citing unsustainable debt of ₹58,670 crore.

In June 2020, the NCLT approved a ₹6,630 crore resolution plan submitted by UV Asset Reconstruction Company Ltd (UVARCL), which proposed taking over Aircel’s assets, including spectrum, with lenders accepting an 89% haircut. UVARCL planned to raise between ₹800 crore and ₹1,300 crore through the sale of spectrum in the 1800 MHz and 2100 MHz bands.

The DoT opposed the plan, insisting that spectrum cannot be sold before clearing all government dues, leading to a protracted legal battle.

NCLAT order

In April 2021, the NCLAT sided with the government, ruling that telecom spectrum cannot be transferred or sold under insolvency proceedings unless statutory dues are fully paid.

UVARCL and the lenders then approached the Supreme Court, seeking permission to sell Aircel’s spectrum and deposit the proceeds in an escrow account until the court delivers its final verdict.

The case is now being closely watched as its outcome will determine how spectrum, a critical but government-controlled asset, is treated in future telecom insolvencies. It may also have a bearing on the resolution process of Reliance Communications, since the legal issues involved are similar.