NCLAT order on Spectrum

The National Company Law Appellate Tribunal (NCLAT) on April 13, 2021 ruled that though the spectrum held by telecom companies can be a part of insolvency process, it can only be sold or transferred from one telco to another only if the government’s dues with respect to the said asset are clear.

  • The NCLAT said that spectrum was an intangible asset of the telecom company and could be subjected to insolvency or even liquidation proceedings.
  • However, telcos cannot use or transfer the spectrum under the Insolvency and Bankruptcy Code (IBC) without settling government dues. all the dues of the Department of Telecommunications.
  • The NCLAT’s judgement came after the Supreme Court order of 1 September 2020, where the apex court directed the National Company Law Tribunal (NCLT) to consider all issues related to the sale of spectrum usage rights and adjusted gross revenue (AGR) dues of bankrupt telcos—RCom, Aircel and Videocon.
  • The NCLAT has also held that the telecommunication companies only have the right to use the spectrum and that they do not own.

About NCLAT

  • National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June, 2016.
  • NCLAT is also the Appellate Tribunal for hearing appeals against the orders passed by NCLT(s) under Section 61 of the Insolvency and Bankruptcy Code, 2016 (IBC), with effect from 1st December, 2016.
  • NCLAT is also the Appellate Tribunal for hearing appeals against the orders passed by Insolvency and Bankruptcy Board of India under Section 202 and Section 211 of IBC.
  • NCLAT is also the Appellate Tribunal to hear and dispose of appeals against any direction issued or decision made or order passed by the Competition Commission of India (CCI) – as per the amendment brought to Section 410 of the Companies Act, 2013 by Section 172 of the Finance Act, 2017, with effect from 26th May, 2017.

(Source: Indian Express and NCLAT)

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