New Delhi, July 14: The National Company Law Appellate Tribunal (NCLAT), New Delhi has set aside a ruling which allowed Airtel Companies to adjust certain dues owed to them by Aircel Companies, which are under insolvency proceedings.
It also directed the Airtel firms to pay back the adjusted amount to Aircel.
In 2018, the insolvency proceedings were ordered against Aircel Limited and Dishnet Wireless Limited. The Hindu reported.
In 2016, Aircel Limited and Dishnet Wireless Limited had entered into a spectrum trade agreement with Bharti Airtel Ltd and Bharti Hexacom Ltd.
The Mumbai Bench of National Company Law Tribunal had allowed the Airtel firms to set off a certain amount due to them from Aircel entities while making payment of ₹453 crore settled as per their spectrum trade agreement. As a result, Airtel adjusted an amount of about ₹112 crore and released the remaining about ₹341 crore to Aircel entities.
Against this, Vijay Kumar V Iyer, Resolution Professional for Aircel Ltd. And Dishnet Wireless Ltd moved the NCLAT. He pointed out that the NCLT, by allowing the adjustment, has granted Airtel entities a preferential payment over other operational creditors and it is also against the objective of the Insolvency and Bankruptcy Code and Article 14 of the Constitution.
In its response, Airtel said the setting off is a well-known concept in accounting and such right has been recognised for more than a century in the context of Insolvency /liquidation under the Companies Act, Presidency Insolvency Act, and Provincial Insolvency Act, 1920.
State Bank of India, on behalf of the committee of lenders of Aircel, also vehemently opposed the set off allowed to Airtel and pointed out that there is no such provision under the Insolvency and Bankruptcy Code.
NCLAT ruled that the insolvency and bankruptcy code (IBC) has a provision to override other laws and hence even if there are some such provisions in any other law, the IBC 2016 would prevail over that.
The IBC also provides the mechanism of moratorium during the insolvency process, till the resolution plan is approved or liquidation order is passed, it said.
Recently, the Mumbai Bench of the NCLT had approved the resolution plan submitted by UV Asset Reconstruction Company for Aircel.
According to a source, the NCLAT ruling won’t affect the approved resolution plan.