Spectrum Is Not an Asset Under IBC: Supreme Court Holds Telecom Spectrum Cannot Be Restructured in Insolvency Proceedings

Case Name: State Bank of India v. Union of India & Ors.
Citation: 2026 INSC 153 (Civil Appeal Nos. 1810 of 2021 and connected matters)
Date of Judgment/Order: 13 February 2026
Bench: Hon’ble the Chief Justice of India Dr. D.Y. Chandrachud, Hon’ble Mr. Justice J.B. Pardiwala and Hon’ble Mr. Justice Manoj Misra

Held: The Supreme Court held that spectrum, being a scarce and finite natural resource held by the Union of India in public trust under Section 4 of the Telegraph Act, does not constitute an “asset” owned by a telecom service provider and therefore cannot be subjected to restructuring, transfer, or extinguishment of dues under the Insolvency and Bankruptcy Code, 2016; the right conferred under a telecom licence is merely a limited, conditional and revocable right to use spectrum, and insolvency proceedings cannot override statutory and regulatory conditions governing its use, transfer, or payment obligations.

Summary: The appeals arose from insolvency proceedings initiated by telecom service providers undergoing Corporate Insolvency Resolution Process under the IBC, wherein financial creditors contended that spectrum usage rights constituted intangible assets of the corporate debtor capable of resolution under the Code, while the Union of India asserted that spectrum is a sovereign resource held in trust for the people and that licence dues could not be wiped off through insolvency; the Court examined the constitutional framework governing natural resources, the public trust doctrine, Section 4 of the Telegraph Act, the TRAI Act, telecom policies, licence agreements, tripartite arrangements, and the Spectrum Trading Guidelines, and undertook a reconciliatory interpretation of the IBC and telecom law to determine whether spectrum could be treated as property of the corporate debtor; it held that although a licence may have contractual attributes, it emanates from sovereign statutory power and does not vest ownership or proprietary interest in the licensee, and that regulatory control, payment obligations, and statutory conditions cannot be defeated by invoking moratorium or resolution mechanisms under the IBC.

Decision: The Supreme Court allowed the appeals filed by the Union of India in part, set aside the findings of the NCLAT to the extent that spectrum was treated as an asset of the corporate debtor amenable to insolvency proceedings and that government dues were liable to be compromised under a resolution plan, clarified that spectrum usage rights remain subject to statutory and regulatory control and cannot be transferred or continued without clearance of dues, and disposed of all connected appeals accordingly.