The Aircel creditors' committee and the successful bidder, UV Asset Reconstruction Company (UVARCL), have filed a Supreme Court petition challenging the order of the National Company Appellate Tribunal (NCLAT) pronounced on April 13, which ruled that spectrum can be transferred as part of an insolvency resolution plan but only after all government dues are cleared. According to the CoC's petition, the appeal tribunal neglected to consider that the rules of the Insolvency and Bankruptcy Code (IBC) supersede the terms of the universal access service licence, the tripartite agreement, and the spectrum trading guidelines. The NCLAT order maintained that the department of telecommunications in the Aircel bankruptcy case is an operational creditor, but the clauses relating to spectrum trading guidelines and licence agreement stipulate that government dues must be cleared in full before spectrum can be transferred and used. State Bank of India, on behalf of the CoC of Aircel entities, has challenged the order, claiming that NCLAT's direction to settle DoT's dues first would amount to preferential treatment to the government department, which happens to be an operational creditor, and thus "amounts to discrimination against other operational and financial creditors of the Aircel entities." It has stated that the NCLAT decision is “inherently contradictory” in the sense that, on the one hand, it holds that the right to use spectrum is an intangible asset of the corporate debtor, that the right to use spectrum can be subject to insolvency proceedings, and that DoT is an operational creditor. On the other hand, it decided that the natural resource would not be accessible for use until the necessary dues were paid, which could not be erased by initiating the corporate bankruptcy resolution procedure under the Insolvency and Bankruptcy Code. The CoC has stated that because DoT is an operational creditor in this matter, it cannot be paid ahead of other financial and operational debtors.
UAVRCL further claimed that NCLAT's result was demonstrably wrong, contradicting the basic structure of IBC and intrinsically incompatible with the other conclusions. On the two appeals, a Supreme Court bench led by Justice S Abdul Nazeer sought responses from the Centre, insolvency professionals, and others. Tushar Mehta, Solicitor General, also informed the bench that the Centre has filed an appeal against the NCLAT decision. The April 13 NCLAT ruling was in the case of Aircel, where the Mumbai bench of the National Company Law Tribunal had accepted a Rs 6,630-crore resolution plan of UAVRCL in June 2020. The DoT had challenged this at NCLAT last September on the grounds that spectrum does not belong to telecom operators but is leased to them and that if payment is not made, it has the right to use the spectrum. Despite the fact that the NCLAT ruling relates to Aircel's insolvency, it might have ramifications for similar procedures involving another business, Reliance Communications. UVARCL's resolution plan was also accepted by the creditors' committee.
Both Aircel and RCom owe the DoT adjusted gross revenue. Aircel's debts are Rs 12,389 crore, whereas RCom's are Rs 25,199.27 crore.
Comments