A Bench comprising Justices P.S. Narasimha and Alok Aradhe observed that telecom spectrum is a “material resource of the community” and is vested in the Union government under the Telegraph Act and Article 297 of the Constitution. The Court held that ownership, control and economic benefits arising from spectrum are matters of public trust and cannot be governed solely by corporate insolvency principles.

The ruling was delivered in a batch of appeals arising from the insolvency proceedings of Aircel and Reliance Communications, where lenders had sought to include the “right to use” spectrum as part of the insolvency estate.

While speaking to the TBB team, Anoop Rawat, National Practice Head, Restructuring & Insolvency, Shardul Amarchand Mangaldas & Co. said that

“The full intent and import of judgment will be known once the judgment is uploaded and that the publicly available observation appears to prevent a free transfer of ownership and control under IBC. It is yet to be seen whether the principles of IBC on restructuring and resolving the debt (including DoT debt) have been upheld or rejected.”

A detailed judgment is awaited.