The Supreme Court on Thursday dismissed Reliance Communications Limited's petition challenging the invocation of ₹802 crore in bank guarantees by the Department of Telecommunications over the company's unpaid spectrum instalments. A Bench of Justices PS Narasimha and Alok Aradhe ruled without entertaining the petition, marking the end of RCom's legal challenge to the guarantee invocation. The Court's decision comes in response to the DoT's action over RCom's unpaid spectrum dues and could have significant implications for the company's financial obligations and future operations in the telecommunications sector.
The guarantees were invoked on August 15 by the DoT, with specific amounts including ₹281.45 crore issued by Yes Bank, ₹249.29 crore by State Bank of India, ₹114.09 crore by Punjab National Bank, and ₹157.08 crore by Canara Bank. The guarantees relate to spectrum purchased by RCom in auctions conducted between 2013 and 2016. The batch also included petitions filed by Yes Bank, State Bank of India and Punjab National Bank, which had issued guarantees on RCom's behalf to secure its deferred spectrum-payment obligations. RCom was represented by Senior Advocates Abhishek Manu Singhvi, Gopal Jain and Niranjan Reddy.
RCom contended that the DoT had allowed the guarantees to remain untouched for nearly eight years, from 2018 until 2026, and had invoked them only after the Supreme Court's February ruling in the insolvency case. The company argued that the amount recovered through the guarantees would otherwise remain part of the insolvency estate and be distributed among creditors under the IBC's statutory priority framework. RCom maintained that its review petition against the February judgment was pending, and encashing the guarantees before the review was decided could effectively defeat the challenge. The invocation would instead give the Department priority over the amount, while the ₹801 crore forming part of the insolvency estate would otherwise be distributed among the company's creditors in accordance with the priority mechanism under the IBC.
The Court clarified that it had not examined the merits of RCom's challenge. The Bench observed that the earlier judgment had not directed the DoT to invoke the guarantees, and questioned the practice of invoking its jurisdiction under Article 32 of the Constitution and subsequently seeking interim protection when directed to approach the High Court. The resolution professional also submitted that RCom was being operated as a going concern and that any action affecting its spectrum could seriously impair its ability to continue operations. After the Court indicated that RCom should approach the High Court, the company sought status quo for a week. The Bench refused and questioned the practice of parties directly filing petitions under Article 32 of the Constitution and later seeking interim protection to approach a High Court, stating "Advising them (client) to come under Article 32 and then asking for an interim order when we relegate you. It is happening quite too often."
