The Supreme Court’s recent ruling on January 3 has mandated Indian telecom giant Airtel to disburse Rs 112 crore to the now-defunct Aircel, encompassing Spectrum Trade Agreements (STA) and other outstanding dues. In 2016, Airtel engaged in eight spectrum trading agreements with Aircel Limited and its subsidiary Dishnet Wireless, obtaining the right to use spectrum in the 2,300 MHz band. However, in 2018, Aircel underwent Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code (IBC), 2016.
Upon Aircel’s insolvency admission, Airtel found itself obligated to pay Rs 453 crore for STA and other dues. The Resolution Professional (RP) of Aircel formally requested Airtel to settle the amount in 2019. Nevertheless, Airtel only remitted Rs 341 crore, retaining Rs 112 crore, asserting it was owed by Aircel for other transactions. In the complex framework of the IBC, operational creditors (OCs) and financial creditors (FCs) play distinct roles. OCs, suppliers of goods and services unpaid by the business, contrast with FCs, who extend financial loans to the company.
The RP, noting Airtel’s outstanding Rs 112 crore, contacted the company, warning of steps to recover the sum if left unpaid. The RP argued that Airtel’s attempt to set off the dues violated IBC regulations. Subsequently, Airtel contested the matter at the National Company Law Tribunal (NCLT). Despite the RP’s contention that setting off Rs 112 crore would provide Airtel preferential treatment, conflicting with the IBC’s objectives, the NCLT permitted Airtel to proceed with the set-off.
This legal saga highlights the intricacies and nuances within the insolvency framework, emphasizing the delicate balance between the rights of creditors and the objectives of the IBC. The Supreme Court’s intervention solidifies the obligation on Airtel to fulfill its financial commitments to Aircel, setting a precedent for how such disputes are navigated within the ambit of insolvency proceedings.
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