Apex Court upholds TDSAT order on RCom

In a ruling that provides a relief to Reliance Communications (RCom), the Supreme Court on Tuesday stated that the buyer of its spectrum will not be liable for its earlier dues.

This also comes as a solace to the telecom industry, which has been fighting spectrum and licence issues of more than ₹1-lakh crore over the last decade.

DoT’s plea

The apex court, which heard a plea by the Department of Telecommunications (DoT), said the buyer — Reliance Jio Infocomm (RJio) — will be liable to pay Spectrum Usage Charges (SUC) only after it buys the radio waves.

The verdict came after DoT challenged a similar order by the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) order on past dues related to RCom’s SUC.

The apex court also dismissed DoT’s plea that challenged the TDSAT ruling.

TDSAT order

TDSAT in February had held that RJio cannot be held liable until the spectrum trade in 800 MHz takes place.

DoT, on its part, wanted RJio to give an undertaking that it would be responsible for RCom’s past spectrum liabilities before approving the deal with RCom.

RJio refused to provide the undertaking, leading to the collapse of the deal.

In October last year, TDSAT permitted debt-laden RCom to go ahead with its proposed spectrum sale to RJio, a wholly-owned subsidiary of Reliance Industries Ltd (RIL). The move, according to RCom, would have helped the Anil Ambani group company emerge debt-free.

In its interim order last year, the Tribunal had permitted RCom to sell spectrum and use the proceeds of about ₹975 crore to pare debt.

However, the DoT raised a number of issues, including securitisation of ₹2,900 crore for SUC from RCom, which the company had termed as “unjust”.

In December 2017, RJio had emerged as the successful bidder to acquire beleaguered telecom operator RCom’s assets.

Under the deal RJio was to acquire more than 43,000 towers, 1.78-lakh route km of optical fibre cable network, 122.4 MHz of spectrum in the 800, 900, 1800 and 2100 MHz bands and 248 Media Convergence Nodes.

In March this year, RCom and RJio decided to mutually terminate the asset-sale agreement.

The transactions were called off due to non-receipt of consent and no-objection certificates from RCom’s foreign and Indian lenders, numbering over 40. This was despite over 45 meetings and the passage of over 15 months, RCom had said in a regulatory filing.

Further, non-receipt of requisite permissions and approvals from DoT, and a decision by RCom board at its meeting on February 1 to seek fast-track resolution of its overall debt through the National Company Law Tribunal (NCLT), were among the other reasons.

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