State Bank of India (SBI), on behalf of lenders to the bankrupt Aircel group, has approached the Supreme Court of India seeking a review of its February 13 judgment that barred telecom spectrum from being treated as an asset under insolvency proceedings, warning of far-reaching implications for the banking system and infrastructure financing.
In a review petition filed on March 30, SBI argued that the ruling contains “errors apparent on the face of the record” and fails to address key legal questions framed earlier by the court. It said the judgment overlooked issues central to lenders, including the treatment of spectrum usage rights and classification of government dues under the Insolvency and Bankruptcy Code (IBC).
“The Impugned Judgment suffers from patent errors on the face of the record which go to the root of the issue,” the petition said.
The February ruling had upheld the government’s position that spectrum, as a sovereign asset, cannot be treated as a tradable or transferable asset during insolvency resolution.
SBI, however, contended that the court’s narrow focus on whether telecom companies invoked insolvency to avoid licence dues resulted in incomplete adjudication. It argued that the judgment failed to rule on whether lenders hold a valid security interest over spectrum usage rights and whether such rights can be monetised in insolvency proceedings.
“The impugned judgment has not rendered findings on several material questions, which have a direct bearing on the status of lenders and treatment of government dues,” the petition said.
The dispute traces back to the insolvency of Aircel and its group entities in 2018 after defaults on loans of over Rs 13,000 crore to a consortium led by SBI. During the resolution process, lenders sought to treat spectrum usage rights as assets, while the Department of Telecommunications (DoT) maintained that dues must be cleared before any transfer.
Earlier, the apex court had ruled that spectrum, being a public resource, cannot be used to restructure debt under the IBC.
Lenders have maintained that the ruling could weaken recovery prospects not just in telecom but also in other regulated sectors such as mining, power and infrastructure, where business models rely on state-granted rights.
“The Impugned Judgment is likely to compel banks and financial institutions to undertake a fundamental overhaul of their credit appraisal and risk evaluation frameworks. Banks and financial institutions may grow increasingly reluctant to finance such commercial ventures,” SBI said in the petition.
SBI said the ruling, if left unreviewed, could have “cascading repercussions” on insolvency cases and the investment climate, urging the court to revisit its findings.
In a review petition filed on March 30, SBI argued that the ruling contains “errors apparent on the face of the record” and fails to address key legal questions framed earlier by the court. It said the judgment overlooked issues central to lenders, including the treatment of spectrum usage rights and classification of government dues under the Insolvency and Bankruptcy Code (IBC).
“The Impugned Judgment suffers from patent errors on the face of the record which go to the root of the issue,” the petition said.
The February ruling had upheld the government’s position that spectrum, as a sovereign asset, cannot be treated as a tradable or transferable asset during insolvency resolution.
SBI, however, contended that the court’s narrow focus on whether telecom companies invoked insolvency to avoid licence dues resulted in incomplete adjudication. It argued that the judgment failed to rule on whether lenders hold a valid security interest over spectrum usage rights and whether such rights can be monetised in insolvency proceedings.
“The impugned judgment has not rendered findings on several material questions, which have a direct bearing on the status of lenders and treatment of government dues,” the petition said.
The dispute traces back to the insolvency of Aircel and its group entities in 2018 after defaults on loans of over Rs 13,000 crore to a consortium led by SBI. During the resolution process, lenders sought to treat spectrum usage rights as assets, while the Department of Telecommunications (DoT) maintained that dues must be cleared before any transfer.
Earlier, the apex court had ruled that spectrum, being a public resource, cannot be used to restructure debt under the IBC.
Lenders have maintained that the ruling could weaken recovery prospects not just in telecom but also in other regulated sectors such as mining, power and infrastructure, where business models rely on state-granted rights.
“The Impugned Judgment is likely to compel banks and financial institutions to undertake a fundamental overhaul of their credit appraisal and risk evaluation frameworks. Banks and financial institutions may grow increasingly reluctant to finance such commercial ventures,” SBI said in the petition.
SBI said the ruling, if left unreviewed, could have “cascading repercussions” on insolvency cases and the investment climate, urging the court to revisit its findings.