NCLT Mumbai: Subscriber Dues Qualify as Operational Debt; Post-CIRP TRAI Penalties Not Admissible

March 10, 2026 : The Mumbai Bench-II of the National Company Law Tribunal (NCLT) has ruled that refundable security deposits of post-paid telecom subscribers and unspent balances of prepaid users must be treated as operational debt and included in the Corporate Insolvency Resolution Process (CIRP), even where individual claims have not been filed.

The ruliCESTAT: Mere Sale of Ad Space Not Taxable as ‘Advertising Agency Service’; Demand Set Asideng came in Telecom Regulatory Authority of India v. Vijaykumar V. Iyer, RP of Dishnet Wireless Limited (MA No. 4013/MB/2019 in CP (IB) No. 302/MB/2018), decided on 10 March 2026 by a Bench comprising Ashish Kalia (Judicial Member) and Sanjiv Dutt (Technical Member).

Subscriber Dues Must Be Recognised in CIRP

The Tribunal held that liabilities arising from unspent prepaid balances and refundable post-paid security deposits are duly reflected in the books of the Corporate Debtor and cannot be disregarded merely because subscribers failed to submit claims during CIRP. It emphasized that the objective of CIRP is to capture the complete liability profile of the Corporate Debtor, and such dues must be included in the Information Memorandum.

Relying on established insolvency jurisprudence, the Bench clarified that omission by creditors to file claims does not extinguish underlying liabilities. Accordingly, the Resolution Professional was directed to admit these subscriber-related dues as operational debt.

The Tribunal further observed that such amounts fall within the framework of the Telecommunication Consumers Education and Protection Fund Regulations, 2007, and where unclaimed, are liable to be transferred to the designated fund in accordance with regulatory provisions.

TRAI Penalties: Only Pre-CIRP Dues Admissible

On the issue of financial disincentives imposed by the Telecom Regulatory Authority of India (TRAI), the Tribunal drew a clear distinction based on timing. It noted that out of the total claim of ₹2.53 crore, only ₹17 lakh had been imposed prior to the commencement of CIRP, while the remaining ₹2.36 crore was levied after the moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 came into force.

The Bench held that Section 14 has a wide ambit and bars all proceedings and enforcement actions against the Corporate Debtor during CIRP. Consequently, regulatory penalties imposed after the insolvency commencement date are not admissible as claims, even if they relate to pre-CIRP conduct.

However, the Tribunal clarified that such financial disincentives are in the nature of operational debt (being penalties for non-compliance) and must be dealt with under the resolution plan to the extent they pertain to the pre-CIRP period.

IBC Overrides TRAI Framework

Reaffirming the primacy of the Insolvency and Bankruptcy Code, the Tribunal invoked Section 238 to hold that the Code overrides conflicting provisions of other statutes, including the TRAI Act. It reiterated that only liabilities existing as on the insolvency commencement date can be admitted in CIRP.

Outcome

The application filed by TRAI was partly allowed. The Tribunal directed inclusion of subscriber dues as operational debt in the resolution process, while restricting admissibility of TRAI’s financial disincentives to those imposed prior to commencement of CIRP.