SC asks RCom to approach HC over DoT move to encash ₹802 cr bank guarantee

Supreme Court declines RCom's request for one-week interim protection but clarifies that it has not examined the merits of the challenge to the DoT's action

The Supreme Court on Thursday refused to intervene in Reliance Communications’ challenge to the Department of Telecommunications’ decision to encash bank guarantees totalling about Rs 801.91 crore towards the company’s spectrum-related dues.

 

A Bench of Justice P S Narasimha and Justice Alok Aradhe permitted RCom to seek relief from the appropriate High Court but declined the company’s request to preserve the existing position for a week to allow it to do so.

 

The Bench made it clear that RCom could argue before the High Court that the Supreme Court’s February 2026 ruling on spectrum under the Insolvency and Bankruptcy Code (IBC) did not, by itself, justify invocation of the guarantees.

 

 

The Court also clarified that it had not examined the merits of RCom’s challenge.

 

The plea was filed by RCom’s resolution professional along with petitions by Yes Bank, State Bank of India and Punjab National Bank, which had furnished guarantees for the telecom company’s deferred spectrum payments.

 

RCom contended that the DoT had allowed the guarantees to remain untouched for nearly eight years, from 2018 until 2026, and had invoked them only after the Supreme Court’s February ruling in the insolvency case.

 

The Bench, however, observed that the earlier judgment had not directed the DoT to invoke the guarantees.

 

The company argued that the amount recovered through the guarantees would otherwise remain part of the insolvency estate and be distributed among creditors under the IBC’s statutory priority framework. Its encashment, RCom said, would effectively allow the DoT to secure priority over other creditors.

 

RCom further pointed out that its review petition against the February judgment was pending. Encashing the guarantees before the review was decided, it argued, could effectively defeat the challenge.

 

The February ruling held that telecom spectrum is a public resource and does not constitute an asset of a telecom service provider that can be dealt with as part of insolvency proceedings. RCom maintained that the judgment did not specifically determine whether bank guarantees furnished against spectrum dues could be invoked while insolvency proceedings were underway.

 

The resolution professional also submitted that RCom was being operated as a going concern and that any action affecting its spectrum could seriously impair its ability to continue operations.

 

When the Bench directed the company to move the High Court, RCom sought interim protection for one week. The Court rejected the request and questioned the practice of invoking its jurisdiction under Article 32 of the Constitution and subsequently seeking interim protection when directed to approach the High Court.

 

RCom informed the Court that the DoT had, on August 15, invoked four guarantees: Rs 281.45 crore issued by Yes Bank, Rs 249.29 crore by State Bank of India, Rs 114.09 crore by Punjab National Bank and Rs 157.08 crore by Canara Bank.

 

The guarantees relate to spectrum purchased by RCom in auctions conducted between 2013 and 2016.