SBI-led lenders want RCom spectrum sale proceeds

Lenders to Reliance Communications Ltd, led by State Bank of India, told the Supreme Court that spectrum should be considered assets of a company under insolvency proceeding, adding that this was the intent when the government framed the Insolvency and Bankruptcy Code in 2016.

Appearing for the lenders, senior lawyer Harish Salve said the 1999National Telecom Policy was framed as a tripartite arrangement between the Department of Telecommunications, mobile service providers, and banks.

Salve added that it was envisioned that banks would be able to use a company's spectrum as security.

A Supreme Court bench headed by Justice Arun Mishra is currently examining the insolvency cases of Reliance Communications and Aircel Ltd as part of the companies' adjusted gross revenue case.

The two companies owe 250 bln rupees and 120 bln rupees, respectively, to Department of Telecommunications in the form of unpaid spectrum usage charges and licence fees.

In a previous hearing, the apex court had said that it would look into why Reliance Jio Infocomm should not be liable to pay adjusted gross revenue dues if it was using spectrum belonging to the Anil Dhirubhai Ambani Group company.

In their reply to the court, the banks said the Reliance Industries Ltd arm was using a part of Reliance Communications’ spectrum under the Spectrum Sharing Guidelines framed by Department of Telecommunications.

Salve said none of Reliance Communications' adjusted gross revenue-related claims have been raised on Reliance Jio Infocomm.

However, the company had paid adjusted gross revenue-related licence fee and spectrum usage charge claims of 1.95 bln rupees that arose from using Reliance Communications' spectrum.

The banks also said the Insolvency and Bankruptcy Code accorded greater priority to their dues over those of the government when it comes to recovery percentage as the government is categorised as an operational creditor.

The Parliament had actively intervened and passed an amendment when the National Company Law Appellate Tribunal had tried to strike a parity between the two sets of creditors, the banks said.

If the insolvency cases continue, bulk of the recoveries from selling the two companies would go to the banks.

The banks also requested the top court not to view the insolvency process as a ruse to evade paying dues to the Department of Telecommunications.