In February, the Supreme Court had given a ruling in a longstanding IBC case that telecom service providers (TSPs) do not own spectrum, a public resource, and so cannot include it among their pool of ‘assets’ for insolvency or liquidation.
Anish Niranjan Nanavaty, Resolution Professional of Reliance Communications, in the 182-page plea argued that the exclusion of spectrum from the insolvency framework would deem the Code unworkable for the telecom sector and all other enterprises dependent upon government-granted rights to use sovereign resources, including mining, hydropower and infrastructure sectors. This, in turn, will discourage banks from providing financial assistance to any commercial project involving government-allocated natural resources.
Right as asset
In February, the Supreme Court had given a ruling in a longstanding IBC case that telecom service providers (TSPs) do not own spectrum, a public resource, and so cannot include it among their pool of ‘assets’ for insolvency or liquidation. It ruled that the Code excludes any assets over which a corporate debtor has no ownership rights.
In response, the plea argued the company never claimed ownership of spectrum as a natural resource and said, “The asset under consideration is not the spectrum itself but the legally enforceable right to use spectrum, which vests in the licensee for the duration of the licence and is capable of commercial exploitation. Telecom companies consistently recognise such rights in their financial statements as intangible assets forming the backbone of their enterprise value.”
It also pointed out how the Department of Telecommunications (DoT) recognises this right of telcos to use spectrum as an asset under the Tripartite Agreement. Telecom companies depend on continued spectrum for its network infrastructure, subscriber services, enterprise connectivity solutions and revenue streams. The exclusion of spectrum from the insolvency process would then render the CIRP framework unworkable for such sectors. Considering this, DoT cannot simultaneously contend that the asset generating its dues lies outside the insolvency framework, said the company.
Liquidation concerns
Nanavaty argued that if such a core operational asset of the company is excluded from the insolvency estate, the company would have to go for liquidation, defeating the primary objective of the Code to provide resolution to stressed companies.
“This shall have profound negative impact on overall credit expansion in the economy with domino effect on capital investment climate and infrastructure development,” said the plea.
Earlier, businessline had reported on Reliance Communication’s Committee of Creditors (CoC) carrying out a detailed analysis on the judgement and talks of the DoT possibly filing a review petition on the company’s outstanding AGR dues.
Internal inconsistencies
The plea also claims internal inconsistencies in the judgement regarding spectrum responsibilties. If spectrum is a sovereign resource, the liabilities arising from its grant must also travel with the resource. Instead, the judgment allows DoT to reclaim spectrum as a sovereign resource as well as enforce the entire spectrum-related debt against the Corporate Debtor within CIRP, said the plea.
“This structural asymmetry grants de facto super-priority to DoT, contrary to the statutory waterfall mechanism and the principle of equitable treatment of creditors embedded in the Code,” said the plea.
The plea stressed this point considering the court judgement had failed to determine DoT’s status under the Code by allowing the government’s appeal “in part”. It thus argues that the court disrupts the unified structure of the Code and renders the insolvency framework ineffective for telecom and similarly situated enterprises.
Published on March 15, 2026