STATE BANK OF INDIA Vs. UNION OF INDIA

JUDGEMENT

(1.) The question for our consideration is whether telecom service providers (TSPs), called upon to pay the license dues by the Department of Telecommunication (DoT) can invoke moratorium on the basis of voluntary corporate insolvency resolution process under Insolvency and Bankruptcy Code, 2016 (IBC) for restructuring of their assets. The asset in question is the Spectrum allocated to the TSPs through auction. The endeavour to treat spectrum as an asset in the hands of TSPs gives rise to a fundamental question as to its ownership, possession, use, transfer, or assignment. Its definition and legal province are the subject matter of our inquiry.

(2.) The Aircel Group entities - Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited (hereinafter collectively referred to as "the corporate debtors") - were granted telecom licences by the DoT under Unified Access Service Licences (UASL) pursuant to Licence Agreements dtd. 5/12/2006, each valid for a term of twenty years. Domestic lenders, including the State Bank of India, extended rupee term loan facilities aggregating to Rs.13,729.00 crores under a Rupee Loan Facility Agreement dtd. 29/3/2014, followed by execution of Indentures of Mortgage dtd. 2/5/2014 in favour of the lenders. In spectrum auctions conducted by DoT during the years 2010, 2014, 2015 and 2016, the corporate debtor acquired rights to use spectrum in the 900 MHz, 1800 MHz and 2100 MHz bands upon payment of 6,249.27 crores.

(3.) Corporate debtors failed to pay licence fee. When DoT attempted to recover these amounts, they invoked IBC by filing an application under Sec. 10 for voluntary corporate insolvency resolution process. The application was admitted by the National Company Law Tribunal, Mumbai Bench, vide order dtd. 12/3/2018 in respect of Aircel Limited, appointing Vijaykumar V. Iyer as the Interim Resolution Professional. By a subsequent order dtd. 19/3/2018, Aircel Cellular Limited and Dishnet Wireless Limited were also admitted into CIRP.