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The dedicated bankruptcy court has reserved the order over the spectrum dues between the Reliance Communication and the Department of Telecommunications on Wednesday.
The counsel appearing for Reliance Communications said that the spectrum is a tangible asset and without it repaying the lenders would become difficult for the company. However, the Telecom Department said that though spectrum is tangible asset, it belongs to the government. It was further stipulated that any company going into liquidation under the Insolvency and Bankruptcy Code, 2016 cannot make or use spectrum as a part of it.
The company said that it is still undergoing the corporate insolvency process and has not entered the liquidation stage. This issue was raised when the telecommunications company owned by Anil Ambani entered into the last stage of the sale of its assets and spectrum formed the most important part of the resolution process of the company.
The Department of Telecommunications said that spectrum is a national resource that should be returned back to the government. The telecom department also said that for the non-payment of its dues, the licenses of the company should be cancelled.
The issue between Reliance Communications and the Telecom Department over the spectrum dues have been going on for a while now and the matter got even more heated when the telecom department sent a show cause notice to the company demanding reasons as to why the licenses should not be cancelled when the company defaulted in paying the dues.
The company in the reply cited an order by the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) in which the operator was allowed to use the spectrum till the completion of the insolvency process.
It shall be noted that Reliance holds 850 MHz 4G spectrum which will finish in July 2021. The company still has claims to address worth Rs. 90,000 crore. Any order rendered in favour of the Department of Telecom would affect the asset-sale process of the company.
Deloitte is the resolution professional for both Reliance Communications and Aircel which is also under going corporate insolvency process. The contention made by Deloitte is the same in the case of Aircel that if the license is taken away the repayment process would become even more difficult for the companies.
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