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TMI Blog2020 (3) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... there is a clause of Force Majure which prescribes that in addition to any act of God even by an act of State or direction from Statutory Authority the licensor shall not be entitled to terminate the license. Since the signing parties have duly agreed upon the terms and conditions, therefore, it shall be unfair on the part of the DoT to suspend the license at this juncture. This Bench is of the view that, admittedly the License/Spectrum is an asset of State over which the Corporate Debtor has no right of ownership, therefore, up to this extent the argument of the Government is hereby accepted. The relief sought by the Corporate Debtor is that due to issuance of Demand Notice by DoT an apprehension is that the same may be suspended. We hereby direct that the clauses of Moratorium are squarely applicable on this Corporate Insolvency Resolution Process Proceedings, hence need not be interrupted or hampered by any authority - As far as the Insolvency Proceedings are concerned, we are governed by the object set out in the 'Preamble' of the Insolvency Code wherein it is prescribed to maximize the assets of the Company as well as to protect the value so as to get good Resol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MHz frequency across various circles in India ( Spectrum ), which has been allotted to it by the Department of Telecommunication (DoT). The Petitioner Company along with group entities i.e. Dishnet Wireless Limited and Aircel Cellular Limited operated under the brand name AIRCEL offering 2G and 3G Services across India. The details of Telecom Licenses obtained is tabulated below :- Sl. No. Circle Telecom License No. Date of grant of license Expire Date 1. Andhra Pradesh UASL 05.12.2006 04.12.2026 2. Delhi UASL 05.12.2026 04.12.2026 3. Gujarat UASL 05.12.2026 04.12.2026 4. Karnataka UASL 05.12.2026 04.12.2026 5. Maharashtra UASL 05.12.2026 04.12.2026 6. Mumb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. Learned Counsel has raised a serious concern that in case of termination the value of the Petitioner should get severely eroded. A great prejudice shall be caused if any action is taken by the said department. 5.1 Further it is informed that the Company had made a huge investment of ₹ 6249.27 Crores for procuring the license. It is further pleaded that the terms and conditions of License Agreement for Provision of Unified Access Services do not permit for revocation of license when the period has not expired. In support placed reliance on the following Clauses of the Agreement:- NOW THIS AGREEMENT WITNESSETH AS FOLLOWS :- 1. In consideration of the payment of Licence fee, and due performance of all the terms and conditions mentioned in this Licence Agreement on the part of the LICENSEE, the LICENSOR does, hereby grant under Section 4 of the Indian Telegraph Act, 1885 on a non-exclusive basis, this Licence to set up and operate the Unified Access Services in the licensed service area described in SCHEDULE appended hereto. 2. The LICENSE hereby granted will remain valid for 20 (Twenty) years from the Effective date unless revoked earlier for any reason wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard of right to commercially use the allocated spectrum block) are being offered for award. The relevant provisions in case of breach of those conditions, as per the NIA 2010 are :- 3.7 Breach, revocation and surrender The spectrum assignment may be revoked, withdrawn, varied or surrendered in accordance with applicable license conditions or any other applicable laws, rules, regulations or other statutory provisions. The spectrum assignment may also be revoked if the Government determines the user of the spectrum to be in serious breach of any of the conditions of the award of the spectrum (including adherence to the Auction Rules) and the consequent obligations. 6.3 One of the legal argument is that as per the provisions of Section 18(1)(f) of the I B Code, 2016 to be read along with Explanation an asset if owned by the Third Party but in possession of the Corporate Debtor, can be repatriated back to the owner. In this regard reliance was placed on the decision NCLT Chandigarh dated 26.04.2019 in the case of Weather Makers (P.) Ltd. v. Parabolic Drugs Ltd. in CA-206/2019 In C.P.(IB)-102/CHD/2018 Order was passed on 26.04.2019 wherein it was held that although vi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al lines a legal proposition has been laid down by the Hon'ble Supreme Court in the case of (2012) 3 Supreme Court Cases 1 (Writ Petition No. 423 of 2010) in Centre for Public Interest Limitation (supra) Subramanian Swamy (supra) Others dated 02.02.2012 that :- Natural resources belong to the people but the State legally owns them on behalf of its people and from that point o view natural resources are considered as national assets, more so because the State benefits immensely from their value. The State is empowered to distribute natural resources. However, as they constitute public property/national asset, while distributing natural resources, the State is bound to act in consonance with the principles of equality and public trust and ensure that no action is taken which may be detrimental to the public interest. 7. FINDINGS : - Arguments of both the sides heard at some length. Undisputedly the Corporate Debtor i.e. Aircel Limited had paid a sum of ₹ 6249.27 Crores to get License and Spectrum. These licenses are being used across India being Telecom License is required to run the business of the Company. The apprehension is that by issuance of demand notice for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o this extent there should not be any controversy that since the intangible asset is used for business purpose by the Corporate Debtor, the provisions of Moratorium must apply. The Licensor/DoT can be prohibited from taking any step which may be prejudicial to the interest of the Licensee/Aircel. 7.4 An exception to this general rule is that if an asset is in possession of the Corporate Debtor under contractual arrangement the same can be demanded back by the owner of the asset, refer Section 18(1)(f) of the Code. In this regard a decision of NCLT Chandigarh has also been relied upon by UOI. On examination of facts we have noticed that while admitting the Petition of the Corporate Debtor (Aircel Limited) under section 10 of the I B Code, vide Order dated 12.03.2018 it was duly acknowledged that on one hand the employees of the debtor company and other Trade Creditors are regularly demanding their outstanding dues, however, on the other hand there was an apprehension of suspension of Telecom License. For ready reference para 3.4 and 4 of the said NCLT Order are reproduced below:- 3.4 A pressing urgency has also been stated for Admission of this Petition that the Banks have f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,00,511/-. There are other Financial Liabilities of ₹ 22,87,13,45,246/-. Attention has also been drawn on the Trade Receivables totaling ₹ 432,30,02,623/-. As against that, Trade Payables are ₹ 35,58,40,94,097/-. Therefore, since inception of the Insolvency Proceedings the advantage of having license to run telecom business has been acknowledged by this Bench. Without such an asset, no party shall take interest in acquiring this Debtor company, hence approved the commencement of CIRP. 7.6 As far as the apprehension of cancellation of license by DoT is concerned, on examination we have noticed that there is a clause of Force Majure which prescribes that in addition to any act of God even by an act of State or direction from Statutory Authority the licensor shall not be entitled to terminate the license. Since the signing parties have duly agreed upon the terms and conditions, therefore, it shall be unfair on the part of the DoT to suspend the license at this juncture. 7.7 An important point which has been brought to our notice is that the Applicant or the Resolution Professional is not demanding the 'ownership' of the license as a product but si ..... X X X X Extracts X X X X X X X X Extracts X X X X
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