Relevance: GS II (Governance & Polity) & GS III (Infrastructure/Economy) | Source: The Hindu
1. The Context: A Landmark Verdict
A Supreme Court Bench has ruled that Telecom Service Providers (TSPs) do not own the spectrum they use.
- The Issue: The judgment addressed whether spectrum held by bankrupt telecom companies (like Aircel or RCom) could be treated as a corporate “asset” and sold under the Insolvency and Bankruptcy Code (IBC) to pay off bank loans.
- The Verdict: The Court held that spectrum cannot be included in the pool of liquidation assets because the TSPs never owned it—they only had a right to use it.
2. Key Legal Arguments (The “Why”)
The judgment relies on the “Trustee Principle” (Public Trust Doctrine):
- Sovereign Resource: Spectrum is a “scarce, finite, and renewable natural resource” that belongs to the people of India. The Union Government holds it in trust for the public good.
- License vs. Ownership: A telecom license grants only a limited, revocable privilege to use the airwaves. It does not transfer proprietary title (ownership) to the company.
- IBC vs. Sovereign Rights: The Court ruled that the Insolvency and Bankruptcy Code (IBC)—which aims to recover commercial debts for banks—cannot override the sovereign right of the government to control natural resources.
3. Implications
- For Banks (Creditors): A setback. Banks cannot sell the spectrum of bankrupt telcos to recover their loans, significantly reducing the recovery value of such companies.
- For Government (DoT): A victory. It upholds the Department of Telecommunications’ (DoT) stance that sovereign dues (like license fees) take precedence over commercial debts.
UPSC Value Box
| Concept / Term | Relevance for Prelims |
| Public Trust Doctrine | A legal principle stating that certain resources (air, sea, waters, forests) are preserved for public use, and the government is the trustee (guardian) of these resources, not the owner. Established in India via the M.C. Mehta vs Kamal Nath case (1997). |
| WPC Wing | Wireless Planning and Coordination Wing. It is the nodal agency within the Department of Telecommunications (DoT) responsible for Frequency Spectrum Management in India. |
| Adjusted Gross Revenue (AGR) | The usage and licensing fee that telecom operators are charged by the DoT. It is calculated based on the total revenue earned by the company (including non-telecom revenue, as per SC). |
With reference to the management of natural resources in India, the “Public Trust Doctrine” implies that:
- The State is the absolute owner of all natural resources and can sell them at its discretion for profit.
- Certain resources like air, water, and spectrum are held by the State as a trustee for the benefit of the people.
- Private entities can acquire permanent ownership rights over natural resources through long-term leases.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) 2 and 3 only
(d) 1, 2 and 3
Correct Answer: (b)
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