Supreme Court reserves verdict on whether insolvent telcos RCom, Aircel can sell spectrum to repay lenders

The Supreme Court on Thursday reserved its verdict on how spectrum held by Aircel and Reliance Communications (RCom) will be treated under their insolvency proceedings. It concluded its hearing after listening to arguments by advocates representing Aircel, the resolution professional (RP) of Reliance Telecom Limited, a subsidiary of RCom, the lender State Bank of India (SBI), and the government.

The court was hearing a batch of petitions filed by SBI and the two insolvent telcos that challenged the National Company Law Appellate Tribunal’s (NCLAT’s) 2021 order which held that spectrum could be transferred or sold under an insolvency resolution plan only after all government dues were cleared.

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

“Under the scheme of the IBC (Insolvency and Bankruptcy Code), the central government is squarely within its four corners,” Gopal Jain, senior advocate appearing for Reliance Telecom’s resolution professional, told the Supreme Court.

Jain argued that the telecom department has accepted the “rigors of the IBC” and cannot deny its role because it willingly joined the insolvency process. The evidence for this conduct was the filing of a Form B (proof of claim by the operational creditor) under Regulation 7 of the Insolvency and Bankruptcy Board of India (IBBI) regulations, he said.

“…if you take away the license and the spectrum, it’s a husk. No resolution will take place,” Jain said, adding that withdrawing the spectrum and licence would have far-reaching consequences and defeat the IBC’s goal of enabling successful resolution.

Whose spectrum is it anyway?

The court’s decision will be significant as it will provide clarity on whether telecom spectrum—which is a natural resource and thus Constitutionally recognised as belonging to citizens of India, with the government acting as a trustee—could be liquidated under the IBC for lenders to recover dues.

On Wednesday, SBI told the Supreme Court that telecom spectrum should be treated as part of the insolvency process and sold to recover dues, setting up a direct clash with the government. SBI argued that spectrum was an intangible asset that could be monetised for recovery of dues, while the government maintained it belonged to the state, which held it in trust for the public, and wasn’t subject to the IBC. It said the licence granted to operators only gave them permission to use spectrum. “The interim resolution professional (IRP) in the course of any proceedings in IBC, cannot reach out to this asset (spectrum),” R. Venkataramani, the attorney general of India, told the Supreme Court on Wednesday.

After the NCLAT issued its order in April 2021, appeals were filed in the Supreme court the following month. The court issued a notice in June 2021, but the case has since seen little progress, with repeated adjournments, according to court orders Mint reviewed. The arguments began only in September 2025.

Lenders to the bankrupt operators contended that monetising spectrum was crucial to maximising recovery and completing the resolution process. Without it, they warned, Aircel and RCom would face liquidation, leading to substantial losses for banks, their employees, and other creditors. However, the telecom department has maintained that if a telecom company defaults on statutory dues such as licence fees, spectrum usage charges, or adjusted gross revenue dues, the spectrum must revert to the government and cannot be sold or transferred under insolvency proceedings.