Supreme Court of India in New Delhi. File
| Photo Credit: The Hindu
The Supreme Court on Friday (February 13, 2026) laid down that telecom service providers (TSPs) do not own spectrum, a precious and finite public resource meant to be used for the common good of all, and cannot include it among their pool of “assets” for insolvency or liquidation.
A Bench of Justices P.S. Narasimha and Atul Chandurkar held that Insolvency and Bankruptcy Code (IBC) excludes any assets over which a corporate debtor has no ownership rights.
“Mere recognition of spectrum licensing rights as an intangible asset by TSPs in the financial statements is not conclusive of their ownership, as it only represents control over future economic benefits,” Justice Narasimha clarified the law.
The court said spectrum was a scarce natural resource owned by the people of India, with legal title vesting exclusively in the Union of India, which holds it in trust for the public.
“Licensees acquire no proprietary interest in spectrum,” Justice Narasimha, who authored the judgment, underscored.
‘Limited privilege’
The mere grant of spectrum under a licence does not mean a complete transfer of a finite natural resource from the Union government to a TSP. “It confers only a limited, conditional and revocable privilege to use spectrum, subject to statutory requirements, licence conditions and overriding public interest,” Justice Narasimha clarified.
The court observed that the Union as the owner and trustee of spectrum on the one hand and the Telecom Regulatory Authority of India (TRAI) as the regulator on the other, occupy the entire province of telecommunications.
“The statutory regime under IBC cannot be permitted to make inroads into the telecom sector and rewrite and restructure the rights and liabilities arising out of administration, usage, and transfers of spectrum which operate under exclusive legal regime concerning telecommunications. The disharmony caused by applying IBC to the telecom sector which operates under a different legal regime was never intended by the Parliament,” the court noted.
The verdict is the culmination of a train of events dating back to the grant of telecom licences to corporate debtors — Aircel Limited, Aircel Cellular Limited and Dishnet Wireless Limited — by the Department of Telecommunications under Unified Access Service Licences (UASL). Domestic lenders, including the State Bank of India (SBI), had extended loan facilities to the corporate debtors for acquisition of rights to use spectrum. Eventually, the corporate debtors failed to pay the licence fee. When DoT attempted to recover these amounts, the debtors invoked IBC for a voluntary corporate insolvency resolution process.
The Supreme Court judgment was based on a series of separate appeals filed by SBI and others against a 2021 National Company Law Appellate Tribunal (NCLAT) judgment requiring TSPs undergoing insolvency to clear statutory dues to DoT before transferring or selling spectrum under the IBC.
Friday’s (February 13, 2026) judgment made it clear that the spectrum cannot be brought under the IBC framework. The TSPs did not own spectrum in the first place to sell it.
Besides, the top court made it clear that DoT dues owed by TSPs were not “operational debts” under the IBC.
“Licence fees and spectrum usage charges arise from the grant of a sovereign privilege and represent regulatory consideration, not payment for goods or services. The relationship between the Union and the licensee is that of sovereign licensor and licensee, not a commercial creditor-debtor relationship. Treating such dues as operational debt would permit insolvency proceedings to undermine statutory and regulatory control over natural resources,” the Supreme Court held.
Published – February 13, 2026 09:45 pm IST
