Lenders cannot treat spectrum as security interest under insolvency proceedings, NCLAT

The National Company Law Appellate Tribunal (NCLAT) on Tuesday ruled that debt-ridden telecom companies undergoing insolvency proceedings cannot claim rights to their spectrum, which is a natural resource, unless requisite spectrum usage payments have been made to the government. In what could be a landmark judgement amid multiple telecom players undergoing proceedings under the insolvency law, a three-member bench of the tribunal also made it clear that spectrum “cannot be treated as a security interest by the lenders”.

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