The NCLAT (National Company Law Appellate Tribunal), on 13th July, 2020, ordered the company Bharti Airtel (popularly known as Airtel) to pay Rs. 112 crore to Aircel, which are both telcoms. This order was passed by overturning a previous tribunal order that was passed in May, 2019, and has given a financial boost to the bankrupt Aircel, which is about to exit its insolvency proceedings.
This order has come as a setback to Airtel, according to sources, and may lead to the leading telco to take the matter to the Supreme Court.
The three-member NCLAT bench held that express provisions of the laid down provisions of any specific law on the subject cannot be superseded by some Accounting Conventions. The Insolvency and Bankruptcy Code, 2016, provides a mechanism of Moratorium during the CIRP (Corporate Insolvency Resolution Process) till the Resolution Plan is approved or a Liquidation order is passed. Hence, even if there are other such provisions in any other law, the IBC provisions will prevail over that.
The dispute had arisen when Airtel had given bank guarantees for Rs. 453.7 crores, and paid Rs. 298 crores in cash to the Department of Telecommunications (DoT), on behalf of Aircel, after adjusting the amount against its Rs. 3500 crore deal to buy the latter's 4G spectrum. DoT had thus demanded both the telcos to clear the deal.
The Supreme Court had upheld a previous order of a tribunal and had cancelled bank gaurantees. Meaning, Airtel had to pay the amount to Aircel, and the DoT was asked to return Rs. 298 crores cash to Aircel.
Airtel had thus paid Rs. 341.8 crores to Aircel, in January 2019, and had further adjusted the remaining amount of Rs. 112 crores against what it claimed were "inter-connection charges" due from Aircel.
According to experts, the case became extremely complicated when the question arose as to whether a creditor, i.e. Airtel, can pay its corporate debtor, i.e. Aircel, after making deductions, despite the fact that the debtor is undergoing insolvency proceedings, and is under a payment moratorium.
