Spectrum is a finite natural resource owned by the Union of India; telecom service providers hold limited, conditional licenses that cannot be restructured or transferred through insolvency proceedings.
In a landmark judgment dated February 13, 2026, the Supreme Court of India delivered a comprehensive ruling in the consolidated appeals involving the State Bank of India, the Union of India, and various telecom service providers (TSPs) including the Aircel Group entities. The Court addressed the critical legal question whether spectrum usage rights, allocated to TSPs under government licenses and recognized as intangible assets in their accounts, can be treated as assets subject to restructuring under the Insolvency and Bankruptcy Code, 2016 (IBC).
The Court unanimously held that spectrum is a scarce and finite natural resource vested in the Union of India, held in public trust for the benefit of the nation and its citizens. Telecom licenses confer only a limited, conditional, and revocable privilege to use the spectrum; they do not confer ownership or proprietary rights to the licensees. Consequently, spectrum usage rights cannot form part of the insolvency estate of a corporate debtor under the IBC.
The judgment elucidates that the relationship between the Union and TSPs is governed by the Indian Telegraph Act, 1885, the Telecom Regulatory Authority of India Act, 1997, and the Spectrum Trading Guidelines, 2015. These statutes vest exclusive privilege and control over spectrum with the Central Government, which retains the power to suspend, revoke, or terminate licenses for non-compliance or non-payment of dues. The Government’s rights as licensor supersede insolvency proceedings.
The Court examined accounting standards and acknowledged that while TSPs may recognize spectrum usage rights as intangible assets in their balance sheets—based on control over economic benefits—such recognition does not amount to ownership. The Insolvency and Bankruptcy Code excludes from the insolvency estate any assets not owned by the corporate debtor, including those held under license or trust arrangements.
Further, the Court clarified that the Spectrum Trading Guidelines require prior governmental approval and clearance of all outstanding dues before any spectrum trading or transfer. This regulatory framework cannot be overridden by insolvency proceedings or the moratorium imposed under the IBC. Attempts by TSPs to use insolvency processes to wipe off significant dues payable to the Government or to restructure ownership or control of spectrum were held impermissible.
The Supreme Court dismissed appeals filed by financial creditors and resolution professionals challenging these principles. However, it partly allowed the appeal filed by the Union of India through the Department of Telecommunications, upholding the Government’s sovereign rights over spectrum.
This judgment reinforces the constitutional and statutory framework recognizing spectrum as a national asset managed by the State for the common good, ensuring that insolvency laws do not dilute the Government’s control over this vital natural resource.
Bottom Line:
Spectrum allocated to Telecom Service Providers (TSPs) is a finite natural resource owned by the Union of India in public trust and does not confer ownership rights to TSPs, but only a limited, conditional, and revocable privilege to use spectrum under licence.
Statutory provision(s): Indian Telegraph Act, 1885; Telecom Regulatory Authority of India Act, 1997; Insolvency and Bankruptcy Code, 2016; Spectrum Trading Guidelines, 2015; Companies Act, 2013.
This report summarizes the Supreme Court’s detailed reasoning, which harmonizes the Insolvency and Bankruptcy Code with telecommunication laws, emphasizing that spectrum, as a natural resource, is not an asset subject to insolvency resolution but remains under the exclusive control of the State. The Court emphasized that insolvency tribunals cannot override sovereign powers vested in the Government regarding spectrum licensing, dues, and transfer conditions.
State Bank of India v. Union of India, (SC) : Law Finder Doc id # 2852965
