Delhi HC says non-encashment of RCom's ₹800 crore bank guarantees won't count as RBI default till September 3
Banks and RCom's RP challenge DoT's invocation of guarantees, call it illegal and without jurisdiction
Government says it isn't recognised as RCom's operational creditor, defends its right to act independently
The Delhi High Court on Monday ruled that banks holding ₹800 crore worth of bank guarantees issued to Reliance Communications will not be treated as being in "RBI default" if they do not encash these guarantees before the next hearing on September 3, as per the Economic Times.
Justice Mini Pushkarna passed the order while hearing a batch of petitions filed by Yes Bank, State Bank of India, Punjab National Bank and Canara Bank, along with RCom and related entities, against the Department of Telecommunications' decision to invoke the guarantees. RCom, once part of Anil Ambani's Reliance Group, is currently undergoing insolvency proceedings. The bank guarantees in question remain valid until 2027.
1 August 2026
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The court reportedly said the legality of DoT's invocation of the guarantees, along with the banks' objections to it, would be examined in detail at the next hearing. Until then, any decision by the lenders to withhold encashment cannot be treated as a default.
RCom's resolution professional told the court that the company held spectrum licences from DoT on an annual payment basis but was now going through the Corporate Insolvency Resolution Process. According to the submission, the government had also filed a claim before the resolution professional as an operational creditor for dues linked to spectrum usage, but read the Supreme Court's February 13 verdict differently and proceeded to invoke the bank guarantees.
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The lending banks argued that the apex court's ruling, which dealt with the transfer of spectrum as an asset of the debt-ridden company, could not be used as grounds to invoke the guarantees. They described DoT's action as illegal, arbitrary and beyond its jurisdiction, and urged the court to quash it.
The government, in its response, said it had not been recognised as an operational creditor of RCom. It argued this gave it an independent right to act against the petitioners, adding that the banks themselves were sureties to the guarantees they had issued.
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The matter will next be heard on September 3.
