SBIN

Challenges Government Over Telecom Spectrum in Insolvency Battle

India’s largest lender, State Bank of India (

), is locked in a legal standoff with the Union government over whether telecom spectrum can be treated as an asset under the Insolvency and Bankruptcy Code (IBC). The Supreme Court is hearing arguments in the Aircel case, which could set a precedent for future telecom insolvencies. - SBI’s Position: - SBI argues that spectrum, though intangible, is a monetizable asset and should be part of insolvency proceedings. - It cites tripartite agreements between lenders, telecom operators, and the government, where spectrum serves as security for loans. - SBI contends that without treating spectrum as recoverable collateral, financing telecom projects becomes unviable. - Government’s Stand: - The Centre maintains that spectrum is a public resource held in trust and cannot be liquidated under IBC. - Attorney General R. Venkataramani cited Sections 18 and 36 of the IBC, which exclude third-party assets held under trust or bailment from insolvency proceedings. - The government insists that operators only have a licence to use spectrum—not ownership. - Legal Background: - The dispute stems from a 2021 NCLAT ruling that spectrum can only be transferred under insolvency if all government dues are cleared. - Appeals were filed in the Supreme Court in June 2021, but progress was delayed until arguments resumed in September 2025. - Core Legal Questions: - Does spectrum belong to the government or the operator? - Can the right to use spectrum under a licence be treated as an asset for creditor recovery? - Implications: - The outcome could reshape how telecom insolvencies are handled and clarify the treatment of spectrum under IBC. - It may also influence future lending practices and government policy on spectrum allocation and recovery.