Info-tech

AGR: SC asks govt to explain if spectrum of telcos under IBC can be sold

Our Bureau New Delhi | Updated on August 10, 2020 Published on August 10, 2020

Keeps next hearing on August 14

The Supreme Court on Monday asked the Centre to explain if spectrum can be sold/auctioned in the insolvency proceedings of telecom companies under the Insolvency and Bankruptcy Code, while observing that recovery of government dues may not be possible from telcos undergoing insolvency.

The apex court observed that the government must prepare a plan for recovery of the Adjusted Gross Revenue-related dues from bankruptcy facing telcos, including Reliance Communications, Aircel and Videocon Communications.

Next hearing on Aug 14

The court posed the query on spectrum while examining the bona fides of bankruptcy claims of RCom, Aircel and Videocon. It has set the next hearing for August 14 (Friday).

The court said it wants to go into the cause of initiation of insolvency for telcos under the IBC, understand their outstanding liabilities as also their urgency in pushing for insolvency.

“If RCom had settled the payment dispute with Ericsson why was the corporate insolvency resolution process (CIRP) allowed to proceed,” the Bench of Justices Arun Mishra, Abdul Nazeer and M R Shah asked.

The Supreme Court orders are binding on all courts, how can IBC proceedings be revived by the National Company Law Appellate Tribunal despite the payment by RCom to Ericsson, they asked. “How can it be decided for the resolution plan proceeds to be paid only to banks and nothing to the Department of Telecommunications for AGR,” the Bench observed.

“What is the government’s stance? It seems the government will get nothing from the IBC process. What is the plan to recover ₹31,000 crore from RCom,” Justice Shah asked Solicitor-General Tushar Mehta, representing the DoT. Therefore, the government must come prepared with a plan for recovery of dues from telcos under insolvency, the Bench said.

Senior Advocate Shyam Divan, RCom’s resolution professional, said that “Ericsson’s claim was ₹1,677 crore. Have submitted details as sought by the SC. Insolvency began on account of claims made by operational creditor Ericsson and China Development Bank.”

“After banks failed to sell assets of RCom, the telco and lenders agreed for the CIRP process. Resolution plan pending before National Company Law Tribunal, the Committee of Creditors has given 100 per cent approval. RCom owes ₹49,054 crore to banks. RCom’s primary asset is spectrum, it can be sold or monetised under IBC to realise value for banks,” he added.

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Published on August 10, 2020
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