SC directs Airtel to pay Rs 112 crore to bankrupt Aircel for past dues

SC directs Airtel to pay Rs 112 crore to bankrupt Aircel for past dues

The Supreme Court has dismissed telecom operator Bharti Airtel’s plea and directed it to pay Rs 112 crore to now defunct Aircel, towards the past 4G spectrum dues.

In an order dated January 3, the Supreme Court upheld the National Company Law Appellate Tribunal’s (NCLAT) decision which had directed Airtel to clear Rs 112 crore dues of Aircel as the same cannot be a set-off against the amount Aircel owes to it on other transactions.

As part of the approval process, DoT demanded bank guarantees in relation to certain licence dues and spectrum usage dues from the Aircel entities, for which the latter approached Airtel. Since Airtel had to pay the amount for spectrum to Aircel, it gave bank guarantees for approximately Rs 453.73 crore on behalf of Aircel to DoT and also paid Rs 298 crore cash to DoT.

In 2018, however, Aircel filed for bankruptcy under the Insolvency and Bankruptcy Code (IBC), 2016. At that time, Airtel owed Aircel Rs 453 crore towards spectrum and other dues. In 2019, Airtel only paid only Rs 341 crore and adjusted Rs 112 crore towards dues which Aircel owed it on account of other transactions.

However, as per the provisions of the IBC, in case a company is under insolvency, any set-off is not allowed between the creditors and debtors as the same is violative of the basic principles. The same cannot be permitted till the date of completion of the insolvency resolution process.

Based on this, the Supreme Court rejected Airtel’s plea to set-off Rs 112 crore, which net-net it has to receive from Aircel.