Insolvent Telecom Operators: Row over AGR dues back in Supreme Court

NCLAT ruled last week that spectrum can be transferred as part of insolvency resolution plan but only after all the government dues are cleared.

The order was pronounced in the matter of Aircel, where the Mumbai bench of the National Company Law Tribunal had in June, 2020 approved a Rs 6,630 crore resolution plan of UV Asset Reconstruction Company (UVARCL). The DoT had challenged this in NCLAT last year in September on the ground that spectrum does not belong to telecom operators but is given to them on lease and upon non-payment it has the right to seize it back.

Though the order relates to Aircel’s insolvency, it would have implications on similar proceedings relating to Reliance Communications where also the committee of creditors have approved UVARCL’s resolution plan. The NCLAT order is sure to be challenged in the SC by the lenders of Aircel.

Though a part of spectrum of Aircel was acquired by Bharti Airtel through trading and that of Rcom by Reliance Jio, they cannot be made to pay for the AGR dues as the SC had ruled that buyers can only be asked to pay the arrears if they acquire the entire spectrum, not some portion of the whole. Though Bharti had acquired the entire spectrum of Videocon Telecommunications, it has argued that any dues which comes to light after the spectrum trading has been done needs to be paid by the seller, Videocon in this case, and not the buyer, Bharti.

However, during the course of the hearing it had observed that government dues need to be cleared and responsibility, as to who pays them, needs to be fixed.