The case of bankrupt telecom operators in the adjusted gross revenue (AGR) case took a new turn on Monday when the government told the Supreme Court that the spectrum held by such firms cannot be sold as part of their resolution plans. This raises uncertainty about the resolution plans of Reliance Communications and Aircel, where the respective plans are at different stages.
The issue at stake is that if spectrum belongs to government and is given to the telecom operators on lease can it be put up for monetisation as part of the resolution plan. In such a process the government becomes an operational creditor and the payment of its dues comes after the dues of the financial creditors, like banks, are paid off and therefore the chances of the government recovering its AGR dues through the insolvency process is near negligible.
A Bench led by Justice Arun Mishra told Solicitor General Tushar Mehta that he should come “prepared on Friday with a plan for recovery of dues from the companies under insolvency. And whether spectrum can be sold by these telecom companies? What is the government’s stance? What is the government’s plan to recover dues from RCom? It seems the government will get nothing from the IBC process.” “The government will get zero,” said Justice MR Shah, part of the three-judge Bench, adding under IBC, if the preference is given to financial creditors then the government will not get anything.
The court will next hear the matter on August 14.
The Bench asked the SG, “If you don’t appeal quickly, how will you prevent spectrum from being sold off”? The question sprang up because the National Company Law Tribunal and the National Company Law Appellate Tribunal have allowed the respective companies to put up spectrum as part of their resolution plan and though the government disagrees with it, it has delayed in filing an appeal against such orders in the Supreme Court.
On July 20 during the course of hearing in the AGR matter, the SC had sought all records of RCom, Aircel, and Videocon Telecommunications to ensure that these companies did not misuse IBC to escape their AGR dues. —FE
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