Reliance Communications (RCom) has filed a curative petition in the Supreme Court challenging the apex court’s February 13 judgment that excluded spectrum as an asset under the Insolvency and Bankruptcy Code (IBC).
According to two people aware of the development, the petition filed by resolution professional (RP) Anish Nanvaty on Friday has sought that the Supreme Court recall its earlier verdict as the ruling was causing ‘irreversible harm’. The petition explained that the Department of Telecommunications (DoT) invoked bank guarantees of the erstwhile service provider in August and terminated spectrum allocated to RCom and its subsidiary Reliance Telecom Limited earlier this month.
The RP has argued in the petition that by excluding spectrum, banks had been stripped of the asset against which they had lent, leaving them having advanced thousands of crores without recourse. Importantly, the petition flagged that the ruling created a sectoral exception that had no basis in the IBC, cautioning that it could be extended to other instances such as mining leases, oil and gas licences, infrastructure concessions and hydropower rights.
The RP is also learnt to have argued that the judgment did not consider the explanation to Section 14(1) of the IBC, which stated that licences cannot be terminated during the moratorium if current dues were paid. It added that RCom’s current dues were paid. It further added that the DoT had filed its claim as an operational creditor and the admission of claims of Rs 31,276 crore had given it a “de facto super-priority”, which was contrary to the Swiss Ribbons ruling of 2019 that had upheld the constitutional validity of the IBC.
On February 15, Justices P S Narasimha and A S Chandurkar ruled that spectrum allocated to telecom firms and shown as an “asset” in their books cannot be subjected to proceedings under the IBC in the insolvency proceedings of Aircel and RCom, where lenders had sought to monetise spectrum to recover their dues. The verdict was delivered on a batch of petitions filed by the State Bank of India and the two insolvent telecom operators, challenging a 2021 order of the National Company Law Appellate Tribunal (NCLAT), which had held that spectrum could be transferred or sold under a resolution plan only after clearing all outstanding government dues.
Experts had noted that the SC ruling would deter recovery of bank dues from corporate insolvency cases, including RCom and Aircel. Aircel had bank dues worth over Rs 13,500 crore, while Reliance Communications had over Rs 50,000 crore. RCom had subsequently filed a review petition, which was rejected.