Aircel Resolution: Banks in SC, say IBC overrides telecom licence conditions

The CoC has mentioned that DoT being an operational creditor on this case can’t be paid in precedence over different monetary and operational collectors.

The committee of collectors of Aircel and the profitable bidder, UV Asset Reconstruction Firm (UAVRCL), have challenged within the Supreme Courtroom the order of the Nationwide Firm Appellate Tribunal (NCLAT) pronounced on April 13, which dominated that spectrum will be transferred as a part of insolvency decision plan however solely after clearing all authorities dues. The CoC’s petition has mentioned that the appellate tribunal failed to think about that the provisions of Insolvency and Chapter Code (IBC) overrides the common entry service licence situations, tripartite settlement and the spectrum buying and selling pointers.

The NCLAT order had maintained that the division of telecommunications within the Aircel chapter case is an operational creditor, however nonetheless the clauses regarding spectrum buying and selling pointers and licence settlement stipulate that authorities dues have to be cleared in full earlier than spectrum is transferred and will be additional used.

Difficult the order, State Bank of India on behalf of CoC of Aircel entities has mentioned in its petition that NCLAT’s path to settle DoT’s dues first would quantity to preferential therapy to the federal government division, which occurs to be an operational creditor, and due to this fact, “quantities to discrimination towards different operational and monetary collectors of the Aircel entities”.

It has mentioned that the NCLAT judgment is “inherently contradictory” in as a lot as that on the one hand it holds that the suitable to make use of spectrum is an intangible asset of the company debtor, the suitable to make use of the spectrum will be subjected to insolvency proceedings and DoT is an operational creditor, then again it dominated that the pure useful resource shall not be obtainable to be used with out cost of requisite dues, which can’t be wiped off by triggering the company insolvency decision course of underneath the Insolvency and Chapter Code.

The CoC has mentioned that DoT being an operational creditor on this case can’t be paid in precedence over different monetary and operational collectors.

UAVRCL additionally contended that NCLAT’s conclusion was manifestly incorrect, opposite to the underlying scheme of IBC as additionally inherently incompatible with the opposite findings.

A SC bench led by justice S Abdul Nazeer sought response from the Centre, insolvency decision skilled and others on the 2 appeals. Solicitor Basic Tushar Mehta additionally knowledgeable the bench that the Centre can be submitting the attraction towards the NCLAT judgment.

The NCLAT order, which was pronounced on April 13, was within the matter of Aircel, the place the Mumbai bench of the Nationwide Firm Regulation Tribunal had in June 2020 authorised a Rs 6,630-crore decision plan of UAVRCL. The DoT had challenged this in NCLAT final yr in September on the bottom that spectrum doesn’t belong to telecom operators however is given to them on lease and upon non-payment it has the suitable to grab it again.

Although the NCLAT order pertains to Aircel’s insolvency, it could have implications on related proceedings of one other firm, Reliance Communications. There additionally the committee of collectors have authorised UVARCL’s decision plan.

Each Aircel and RCom owe adjusted gross income dues to the DoT. Whereas the dues of Aircel stand at Rs 12,389 crore, RCom’s is at Rs 25,199.27 crore.