Supreme Court refuses RCom plea against invocation of ₹802 crore bank guarantees over unpaid spectrum dues

The Supreme Court on Thursday declined to entertain a petition filed by Reliance Communications Limited (RCom) against the Department of Telecommunications’ invocation of bank guarantees worth approximately ₹801.91 crore.

A Bench of Justices PS Narasimha and Alok Aradhe granted RCom liberty to approach the appropriate High Court. It declined the company’s request to maintain status quo for a week to enable it to move the High Court.

The Bench said that RCom could argue before the High Court that the Supreme Court’s earlier judgment on the treatment of spectrum under the Insolvency and Bankruptcy Code (IBC) could not form the basis for invoking the bank guarantees.

The Court clarified that it had expressed no opinion on the merits of the case.

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.

Counsel representing RCom’s resolution professional argued that the Department had not invoked the guarantees for 8 years, from 2018 to 2026. It had now done so by citing the Supreme Court’s February 2026 judgment in State Bank of India v Union of India, the Court was told.

The Bench pointed out that its earlier judgment had not directed the Department to invoke the guarantees.

RCom argued that 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 invocation would instead give the Department priority over the amount, it was submitted.

The company also said that a review petition against the spectrum judgment was pending. Invocation of the guarantees before the review was decided would render the review infructuous, it argued.

In February, the Supreme Court held that spectrum is a public resource and cannot be treated as an asset belonging to a telecom service provider for the purposes of insolvency proceedings. RCom contended that the judgment did not decide whether guarantees securing spectrum dues could be invoked during the corporate insolvency resolution process.

Counsel further submitted that RCom was being operated as a going concern by its resolution professional. Any action affecting the company’s spectrum allocation would cripple its operations, the Court was told.

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.

“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,” it said.

RCom disclosed on August 15 that the Department had invoked guarantees issued by Yes Bank amounting to ₹281.45 crore, State Bank of India amounting to ₹249.29 crore, Punjab National Bank amounting to ₹114.09 crore and Canara Bank amounting to ₹157.08 crore.

The guarantees related to spectrum acquired by RCom in auctions held between 2013 and 2016.

RCom was represented by Senior Advocates Abhishek Manu Singhvi, Gopal Jain and Niranjan Reddy.