Supreme Court Shields Spectrum from Insolvency Proceedings

The Supreme Court has ruled that spectrum allocated to telecom service providers cannot be treated as an asset in insolvency proceedings under the Insolvency and Bankruptcy Code. This ruling, affecting companies like the Aircel Group, emphasizes that spectrum is under the jurisdiction of telecommunications laws.

In a groundbreaking ruling, the Supreme Court has determined that spectrum allocated to telecom companies cannot be categorized as an asset for insolvency proceedings within the Insolvency and Bankruptcy Code (IBC). This decision directly impacts companies such as Aircel, which had used the IBC to navigate financial restructuring.

The court emphasized that the Union government retains ownership of the spectrum while the Telecom Regulatory Authority of India (TRAI) regulates the sector. As such, spectrum's classification as an intangible asset does not grant it eligibility for proceedings under the IBC's framework.

This landmark decision comes in response to telecom firms utilizing financial records to label spectrum as an asset in insolvency cases. The ruling reinforces the exclusivity of existing telecommunications laws in governing spectrum-related contracts and agreements.

(With inputs from agencies.)