NCLT prevents DoT from cancelling Aircel's telecom licence, spectrum

"Cancellation of licence shall adversely affect the business," said a tribunal bench of MK Shrawat and Chandra Bhan Singh.

The National Company Law Tribunal on Thursday directed the department of telecommunications (DoT) not to cancel the telecom licence and spectrum issued to Aircel which had shut operations many years now.

The Mumbai NCLT bench said, "the relief sought by Aircel is that due to issuance of the demand notice by DoT, an apprehension has been created that that the same may be suspended. We hereby direct that the clauses of "moratorium" are squarely applicable on this bankruptcy process, hence need not be interrupted or hampered by any authority." The apprehension is that the DoT demand notice seeking Rs 55.70 crore issued on April 13, 2018 may lead to cancellation of the licence of the company.

"Cancellation of licence shall adversely affect the business. Only on the basis of licence the company is running its business. Therefore, licence is an essential requirement for running the business," said a tribunal bench of MK Shrawat and Chandra Bhan Singh.

It also noted since spectrum and operating licence are the most crucial components of Aircel's core business, its cancellation/taking back will lead to the stalling of the resolution process as "without such an asset, no party shall take interest in acquiring the company.

The tribunal bases its decision to the objectives cited in the 'preamble' of the IBC which states the resolution process should aim at maximizing the value of the assets under resolution and thus help revival of the company.

Therefore, NCLT instructed "DoT not to make any attempt to cancel the licence issued to Aircel," as the usage of licence/spectrum is akin to "essential goods or services" because without these the company cannot run its business." However, it said since "licence/spectrum is an asset of the state over which Aircel has no ownership rights and therefore DoT can approach Trai or TDSAT for remedy.