Telecom dept sets up insolvency panel to tackle issues faced by telcos

The Department of Telecommunications (DoT) has set up a committee that will look into contentious issues arising out of telecom companies that are going through the insolvency process.

The six-member committee under the chairmanship of member (technical) in the Telecom Commission will look into three key issues. 

One, the position of DoT in terms of notice inviting application and licence condition cases where the telecom companies file for insolvency. Two, the legal position vis-a-vis the licensed resources (spectrum) and as a creditor in terms of recovery of dues. And third, the precautions and actions available for DoT to safeguard the value of public resources such as spectrum from getting locked in unproductively or being disposed at sub optimal price consequent to the resolution process.

The move comes close on the heels of various cases, which include that of Aircel, which is now in the NCLT. The firm is holding on to valuable spectrum despite it stopping telecom services. 

The resolution professional (RP) is also looking at finding buyers for the spectrum. Even Reliance Communications (RCom) has gone to the NCLT. The company’s spectrum is being used by Reliance Jio (with which it had a spectrum sharing agreement) even though RCom has stopped services.

In the Aircel case, DoT had made a claim of ~6,666 crore against the company for non payment of spectrum dues, but the resolution professional pointed out that the department was covered under regulation 7 of the CIRP Regulations 2016 with the definition of operational creditors.  And the RP prayed to the NCLT that it should refrain DoT from terminating the licence and invoke the spectrum of the Aircel group. 

The ministry of corporate affairs, to which DoT referred the matter, also felt that in terms of recovery of dues, the position of DoT was of an operational creditor under the IBC rules. 

However, DoT has a different legal position. It has argued that based on the Supreme Court judgment of 2011, the court has said that common law recognises states as having authority to protect natural resources (spectrum is a natural resource) as the resources are within the interests of the general public. 

In such cases, the state is deemed to have propreitory interest in natural resources and must act as guardian and trustee. DoT feels that spectrum lying idle is a waste of the country’s natural resources. DoT has also pointed out that it has the power to terminate a licence or spectrum issued to a telco if it defaults on payment of instalments and in that case the spectrum will revert to DoT and bank guarantees encashed.

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