The Japan Times - RCom professional asks Supreme Court to revisit spectrum insolvency ruling

Reliance Communications’ resolution professional filed a curative petition asking the Supreme Court to reconsider its ruling that spectrum cannot form part of an insolvency resolution plan.

Reliance Communications’ (RCom) Resolution Professional has asked the Supreme Court to recall its earlier judgement excluding spectrum from the insolvency code in its curative plea filed on Friday.

The petition seeks to challenge a February 13 ruling by a bench comprising Justices P.S. Narasimha and Atul S. Chandurkar, which held that spectrum allocated to telecom operators, even if shown as an “asset” in their books, cannot be subjected to IBC proceedings.

Following this ruling, the company received communications from the Department of Telecommunications (DoT) on October 5 regarding the termination of the spectrum assigned to RCom and Reliance Telecom Limited (RTL), a wholly owned subsidiary of RCom. The spectrum assignments were withdrawn and reverted to the Central Government, and the company lost its right to use the spectrum, based on the government’s letter.

“After the ruling, the Department of Telecommunications (DoT) invoked bank guarantees linked to RCom (August 14) and terminated RCom’s spectrum (October 5). The petition argues that these actions demonstrate that the judgment is causing irreversible harm,” stated Anish Nanavaty, Resolution Professional for RCom.

Specifically, the plea focuses on how banks lose their security if spectrum is excluded from the insolvency framework. It argues that the decision strips lenders of the very asset against which they extended credit, leaving banks without recourse and potentially leading to tighter lending to the telecom sector.

Further, it states that the IBC is sector-neutral and that carving out spectrum in the telecom sector in this manner could have a similar impact on mining leases, oil and gas licences, infrastructure concessions, and hydropower water rights.

“The judgment allegedly did not consider the Explanation to Section 14(1) of the IBC, which provides that licences cannot be terminated during the moratorium period if current dues are paid, or the new Section 31(5), inserted by the IBC (Amendment) Act, 2026, and stated to apply retrospectively. RCom says that current dues were paid,” the company note stated.

As for DoT’s status as a creditor, the company stated that the government’s claim as an operational creditor and the admission of claims worth approximately ₹31,276 crore grant it a “de facto super-priority”, contrary to the Supreme Court’s ruling in Swiss Ribbons.

M.Sugiyama--JT