Bankruptcy court to decide whether Reliance Communications can keep its spectrum license

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Bankruptcy court to rule on Rs 10,000 crore issue in Reliance Communications Ltd. case The decision will affect the most important asset of the telecommunications service provider: its telecommunications license.

RCom is the subject of insolvency proceedings in the Mumbai court of the National Company Law Tribunal and has been under moratorium since May 15, 2018. The company has spent over Rs 10,000 crore to acquire spectrum, Senior lawyer Ravi Kadam told the court.

The NCLT must decide whether the spectrum fees payable by RCom to the Department of Telecommunications are considered operational or current fees.

For now, the court has granted interim relief allowing RCom to continue providing telecommunications services until August 12.

Controversy

In 2016, the licensing regime for telecommunications companies changed from a Unified Access Service license to a new Unified License regime. Regardless of any spectrum in any part of the country, only one license was now required.

Following this, in October 2020, RCom requested the migration of telecoms licenses on its behalf to the UL regime.

But on June 15 of this year, the telecommunications department denied the license migration citing unpaid amounts, including spectrum auction slices due between 2013 and 2016.

In its order, the ministry also stated that these unpaid contributions fell within the definition of the term “current contributions” in the explanation of Article 14 (1) of the IBC. This section prevents the cancellation of regulatory licenses due to insolvency as long as all “current dues” have been paid.

Since RCom was already in default, her license migration request cannot be viewed favorably until she has paid all of her current dues, the telecommunications department said.

The overlap of the NCLT and the Delhi High Court

This prompted RCom to move the NCLT and seek certain exemptions to maintain its licenses, especially those that would expire on July 19.

On July 15, NCLT adjourned the case without giving the company a break, saying remedies RCom sought in the form of a license extension were outside the court’s powers.

Drawing on the NCLT’s submissions, the company filed a lawsuit with the Delhi High Court on June 19.

The High Court, however, viewed the litigation differently. He said the issue between the parties essentially involved the interpretation of the term “current dues” under the IBC, which fell within the purview of NCLT.

As an interim measure until July 30, the High Court ordered the telecommunications department not to take any coercive action against RComm. It also allowed the company to continue providing telecommunications services.

The telecommunications department has already filed its claims as operational dues, according to RCom

Before the NCLT today, counsel for RCom argued that these payments cannot be categorized as “current dues”. This is because the amounts became due before the start of the moratorium and had already been claimed separately by the telecommunications department before the resolution professional as operational dues.

These dues are past due dues, and not “outstanding dues” in any way, as explained in Article 14 (1) of the IBC, Kadam said.

The telecommunications department’s guidelines on the unified license, Kadam said, do not contemplate the payment of deferred spectrum royalties or any other fees by a licensee, as a prerequisite for migrating existing licenses to the new regime. .

The company has already approached the telecommunications dispute resolution and appeals tribunal on the matter, Kadam told the NCLT.

The NCLT will then hear the case on August 12.


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