The ruling says spectrum remains a conditional public resource, not company property that can automatically pass to a buyer through insolvency proceedings.
The Supreme Court of India has drawn a sharper line between insolvency law and the State’s control over scarce natural resources, ruling in State Bank of India v Union of India that spectrum cannot be treated as the property of a distressed telecom company simply because the business has entered insolvency. The decision narrows a long-held assumption among resolution applicants that the Insolvency and Bankruptcy Code can deliver a fully clean slate, including continuity in licences or rights that ultimately depend on government approval.
According to the judgment, spectrum is a finite public resource governed by a constitutional and statutory framework that leaves the licence-holder with only a conditional privilege, not an absolute proprietary interest. The court said the State acts as a public trustee in administering such resources and that this role cannot be displaced by insolvency proceedings. In practical terms, that means natural resources allocated to a corporate debtor do not automatically become divisible assets available for resolution under the code.
The ruling is likely to affect how bids are priced in telecom and other resource-dependent sectors, where investors may have assumed that an insolvency process would preserve operating rights essential to the business. The court’s reasoning creates a risk that some of the value built into resolutions on the expectation of licence continuity may not survive judicial scrutiny. That is especially significant for lenders and applicants that had factored access to spectrum, mining rights or similar privileges into their recovery models.
Indian Kanoon’s text of the 13 February 2026 judgment shows that the bench dismissed the appeals by State Bank of India and others, while partly allowing the Union government’s appeal through the Department of Telecommunications. The same record indicates the court also set out the wider constitutional basis for the decision, linking natural resource allocation to public interest obligations rather than private ownership. For insolvency practitioners, the message is clear: the clean slate doctrine remains important, but it does not override sovereign control where the asset in question is a public resource.
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