Telecom Department Moves NCLAT Challenging UV ARC’s Resolution Plan For Aircel

The department challenged UV ARC’s resolution plan for Aircel as it doesn’t provide for dues against licence and spectrum rights.

A banner for Aircel Ltd. is displayed outside a mobile phone store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
A banner for Aircel Ltd. is displayed outside a mobile phone store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

The Department of Telecommunications has moved the National Company Law Appellate Tribunal challenging UV Asset Reconstruction Co.’s Rs 6,630 crore resolution plan for the bankrupt cellular operator Aircel Ltd, arguing that the plan doesn’t address the “huge amount” of dues owed by the company against fees for telecom license and right to use spectrum.

The appellate tribunal has directed the parties to file affidavits within five days and will next hear the matter on Sept. 11.

The case emanates from an order of the Mumbai bench of the National Company Law Tribunal in June, which approved a Rs 6,630-crore resolution plan proposed by the asset reconstruction company. The resolution plan will be primarily funded through zero-coupon optionally convertible debentures.

Aircel had obtained a “Unified Access Service License” for 20 years by paying Rs 6,249 crore as licence fee for providing telecom services in India’s nine telecom circles. The licence agreement obligates Aircel to make periodic payments to the Telecom Department as per the licence agreement, failing which the department reserves the right to suspend or terminate licences.

The present case is not the first instance where the telecom department has been at loggerheads with the bankrupt cellular operator. It had earlier proposed cancellation of Aircel’s spectrum and telecom licenses after issuing a demand notice for Rs 55 crore as the company failed to make timely payments of the license fee.

Aircel’s resolution professional had then moved the tribunal apprehending that the Telecom Department may cancel its licenses on account of the default. The dedicated insolvency tribunal had ruled in the company’s favour citing that the telecom licences were the only valuable asset available with the company and it would not be revived if the licenses were cancelled.