Reliance Communications’ curative petition against the Supreme Court’s February ruling on spectrum has reopened a question that sits at the intersection of telecom infrastructure, insolvency law and public finance: when a private company becomes insolvent, can a regulated public resource still be treated as an asset available for resolution and recovery by lenders?
The petition, filed by resolution professional Anish Nanvaty, seeks recall of the Supreme Court verdict that excluded spectrum allocated to telecom companies from proceedings under the Insolvency and Bankruptcy Code. Business Standard reported that the petition argues the judgment is causing “irreversible harm” to lenders and has removed the asset against which banks extended thousands of crores in credit.
The immediate dispute concerns Reliance Communications and its subsidiary Reliance Telecom Limited. According to the report, the Department of Telecommunications invoked bank guarantees belonging to the erstwhile service provider in August and terminated spectrum allocated to the two companies earlier this month. The resolution professional has argued that these actions leave lenders without access to a major asset that had supported the company’s borrowing.
The issue is not simply whether spectrum has a monetary value. Telecom spectrum is allocated by the state and remains subject to regulatory conditions, government dues and operational requirements. The legal question is whether those regulatory characteristics prevent spectrum from being dealt with under the IBC, even when it appears as an asset on a company’s books and is central to the value of a failed telecom business.
The Supreme Court ruling arose from insolvency proceedings involving Aircel and RCom. Lenders had sought to monetise spectrum to recover their dues. The petitions before the court challenged a 2021 order of the National Company Law Appellate Tribunal, which had held that spectrum could be transferred or sold under a resolution plan only after outstanding government dues were cleared.
The Supreme Court subsequently held that spectrum allocated to telecom firms and shown as an asset in their books could not be subjected to IBC proceedings in the insolvency cases of Aircel and RCom. The ruling therefore placed a boundary around what resolution professionals and lenders could treat as recoverable value in a regulated infrastructure business.
That boundary is at the centre of the curative petition. Nanvaty has argued that excluding spectrum creates a sectoral exception without a basis in the IBC. The petition reportedly warns that the reasoning could extend beyond telecom to other rights and concessions, including mining leases, oil and gas licences, infrastructure concessions and hydropower rights.
This argument matters because modern infrastructure companies often operate through rights granted by the state rather than through ownership of conventional physical assets. A telecom operator may own towers, equipment and offices, but its ability to provide service depends on access to spectrum. Similarly, the commercial value of a mining, energy or transport company may depend heavily on a licence, lease or concession whose continuation is controlled by a public authority.
In an insolvency process, that distinction can determine whether a company has a viable resolution value. If a regulated right cannot be transferred, sold or continued through a resolution plan, potential buyers may value the business mainly for its physical assets and customer base, if those can be separated from the licence or concession. The RCom petition argues that this could reduce recoveries for financial institutions and weaken the purpose of the insolvency framework.
The petition has also relied on the explanation to Section 14(1) of the IBC. According to the report, Nanvaty argued that licences could not be terminated during the insolvency moratorium if current dues were paid, and that RCom’s current dues had been paid. The argument places the telecom dispute within a broader conflict between the IBC’s objective of preserving a going concern and sector regulators’ authority to enforce licence conditions and recover public dues.
That conflict is visible in the treatment of the Department of Telecommunications’ claim. The report states that DoT filed its claim as an operational creditor and that admitted claims of Rs 31,276 crore gave the department what the petition described as “de facto super-priority”. Nanvaty’s position is that this was contrary to the Supreme Court’s 2019 Swiss Ribbons ruling, which had upheld the constitutional validity of the IBC.
The competing priorities are clear. The government has an interest in ensuring that spectrum dues are paid and that a scarce public resource is not transferred without regulatory compliance. Banks, meanwhile, want the insolvency process to preserve and monetise the value that supported lending. A resolution professional’s task is to maintain the company and maximise recoveries within the legal framework. The dispute arises when those objectives depend on different interpretations of the same asset.
The financial scale of the telecom insolvencies explains why the legal issue has attracted attention from lenders. Aircel had bank dues of more than Rs 13,500 crore, while RCom had dues of over Rs 50,000 crore, according to the report. If spectrum cannot be used in a resolution process, the recovery pool for these cases is narrower. Business Standard also reported that experts had warned the Supreme Court ruling could deter recovery of bank dues in corporate insolvency cases, including those involving RCom and Aircel.
The case also shows how insolvency outcomes in infrastructure sectors depend on administrative actions taken outside the insolvency tribunal. The Department of Telecommunications’ invocation of bank guarantees and termination of spectrum, as reported in the petition, directly affects the value available to creditors. This means that the resolution of a telecom company cannot be understood only through the IBC; it also depends on the terms of spectrum allocation, payment compliance and the regulator’s powers.
For urban and economic infrastructure, the consequence is broader than the fate of one failed operator. Telecom networks are essential to cities, businesses and public services, but their operation rests on a limited and regulated resource. When an operator fails, the legal system must determine whether the priority is to preserve continuity of service, protect government revenue, recover bank loans or maintain regulatory control over spectrum. The RCom proceedings bring those priorities into direct conflict.
RCom had already filed a review petition against the Supreme Court’s ruling, but that petition was rejected, according to the report. The curative petition is therefore a further attempt to reopen the matter before the apex court. Its central claim is that the earlier judgment did not adequately account for the IBC’s moratorium provisions, the treatment of current dues and the consequences for lenders.
The supplied report contains two references to the timing of the earlier judgment, describing it as a February 13 judgment and later referring to a February 15 ruling. The central development remains clear: RCom’s resolution professional has filed a curative petition challenging the exclusion of spectrum from IBC proceedings. The Supreme Court’s response will determine whether that challenge proceeds and whether the legal treatment of regulated infrastructure rights is reconsidered.
