Supreme Court raps bankrupt telecom operators for filing insolvency
The Supreme Court on Monday asked telecom operators Reliance Communications (R-Com) and Aircel and others why they went in for insolvency proceedings when they had more than Rs 40,000-crore dues in adjusted gross revenues hanging over them.
The court asked the department of telecommunications (DoT) why it did not move the apex court against the insolvency cases at the National Company Law Tribunal where national resources such as spectrum were listed as assets, meaning they could be sold to pay off dues.
Solicitor-General Tushar Mehta, appearing for the DoT, told the bench of Justices Arun Mishra, Abdul Nazeer and M.R. Shah: “We have told the NCLT that spectrum can’t be owned by anyone… We have raised the point that a company which is to go into insolvency cannot show the spectrum as one of the assets. Spectrum cannot be owned by anyone like this. Government is the trustee. Spectrum is a national asset.”
The bench, which is hearing the case relating to the payment of Rs 1.47 lakh crore dues in adjusted gross revenue (AGR) from the private operators to the exchequer, adjourned the matter till Friday, by which time the operators and the DoT will have to come up with their position on the insolvency claims.
The solicitor-general told the court that Aircel had shown spectrum as its assets in the insolvency proceedings before the National Company Law Tribunal(NCLT).
“What’s the material placed on record for the insolvency? What were the reasons to initiate insolvency,” Justice Mishra asked.
The solicitor-general said it was for the respective companies to address the court on the issue. “We have told the NCLT that spectrum cannot be an asset of a company. Cannot be sold.”
He said the objections raised by the Centre against the sale of R-Com’s spectrum were also under the consideration of the tribunal.
“We want to know the cause of initiation of insolvency for telecom companies under IBC. We want to know if there is any urgency,” the bench asked.
The court asked the solicitor general why the DoT did not bother to file an appeal before it against the NCLT proceedings that spectrum cannot be part of bankruptcy assets. “What if spectrum is sold in the meanwhile?” Justice M.R. Shah asked.
Senior advocate Shyam Divan appearing for RCom said the insolvency proceedings had to be undergone by the company as the “monetisation outside the IBC failed due to lack of consensus among lenders”.
The court wondered how come the NCLAT revived insolvency proceedings despite RCom’s payment to Ericsson. The court then asked the resolution professional in the RCom-IBC matter to file his stance on the issue.
“If your main asset is spectrum, then you don’t want to pay anything,” the court observed to the RCom’s
resolution professional while seeking the DoT’s response also on the issue.
According to RCom, the resolution plan is presently pending NCLT approval after being cleared by the committee of creditors (CoC).
On July 2 the apex court had agreed to consider a staggered payment of over Rs 1.47 lakh crore AGR dues, but sought details on the bona fide of the insolvency claims made by R-Com, Aircel, Videocon and Sistema Shyam Teleservices.