The Supreme Court rejected the telecom provider Bharti Airtel’s appeal and ordered it to reimburse the now-defunct Aircel for earlier 4G spectrum payments in the amount of Rs 112 crore.
The National Company Law Appellate Tribunal (NCLAT) ordered Airtel to pay Aircel Rs 112 crore in arrears since the money could not be deducted from Aircel’s debt to Airtel for previous transactions. The Supreme Court confirmed this finding in an order dated January 3.
In order to acquire the right to use the spectrum allotted to Dishnet Wireless in the 2300 MHz band, Airtel engaged into eight spectrum trading agreements with the latter two companies in 2016. This is when the litigation began. The transaction, worth Rs. 4,022.75 crore, was subject to Department of Telecommunications (DoT) approval.
The Aircel entities asked Airtel to get bank guarantees related to specific license dues and spectrum usage dues, which were required by the DoT as part of the approval procedure. Given that Airtel was required to reimburse Aircel for the cost of the spectrum, Airtel provided the DoT with bank guarantees of roughly Rs 453.73 crore on Aircel’s behalf in addition to cash payments of Rs 298 crore.
Nonetheless, Aircel declared bankruptcy in 2018 in accordance with the 2016 Insolvency and Bankruptcy Code (IBC). Airtel owed Aircel Rs 453 crore at the time in unpaid spectrum and other amounts. Airtel only paid Rs 341 crore in 2019; the remaining amount was modified to account for Rs 112 crore in arrears that Aircel owed it for other transactions.
However, in accordance with the IBC’s rules, any set-off between creditors and debtors is prohibited in the event of a company’s insolvency because it violates fundamental principles. Until the insolvency resolution procedure is completed, the same cannot be allowed.
On the basis of this, the Supreme Court denied Airtel’s request to deduct the Rs 112 crore that Aircel owes it net.
