A-6 Weekly Browser
Operational creditor is legally entitled to set off amount recoverable
from debtor at CIRP stage
Bharti Airtel Ltd. v. Vijaykumar V. Iyer [2019] 106 taxmann.com 103
(NCLT - Mum.)
In
given
case,
the
Corporate-debtor
entered
into
Spectrum
Trading
Agreements
‘STAs’^
with
operational
creditor
‘Airtel’
to
transfer
right
to
use
spectrum
in
fa
vour -
of
operational
creditor.
Since
the
corporate-debtor
did
not
have
financial
capability,^
operational
creditor
furnished
bank
guarantees
of
`453. 75
crores
to^
Department
of
Telecommunication
(DoT)
on
behalf
of
corporate
debtor
for^
spectrum
trading.
The
said
amount
was
withheld
by
operational- creditor
from^
total
consideration
of
`
4022. 75
crores
payable
to
corporate
debtor
under
STA.^
Due
to
difference
on
certain
points,
there
was
a
fall
out
of
said
STA
and
bank^
guarantee
stood
cancelled.
Out
of
withheld
amount
of
`453. 73
crores,
operational-creditor
retained`
112
crores
recoverable
from
corporate-debtor
in
another
transaction
and^
balance
amount
was
remitted
to
corporate
debtor.
It
was
a
case
of
Res
olution -
Professional
that
stage
of
admission
of
claims
had
not
reached,
as
stage^
ought
to
be
Liquidation
proceedings
and
operational-creditor
didn’t
have^
right
for
equitable
set
off
at
Corporate
Insolvency
Resolution
Process
(CIRP)^
stage.
The
NCLT
stated
that
there
is
no
specific
bar
or
barrier
in
the
Insolvency
and
Bankruptcy^
Code,
2016
that
up
to
CIRP
only
gross
amount/claims
are
to
be
taken^
into
account
and
netting
is
permissible
only
in
case
of
start
of
liquida
tion. -
Also,
operational-creditor
had
lodged
its
claims
in
Form
B
which
was
a
‘proof^
of
claim
by
operational
creditor
except
workmen
and
employees’,
under
regulation^
7
of
IBBI
(Insolvency
Resolution
Process
of
Corporate
Persons)
Regulations,^
2016
wherein
set-off
of
mutual
credits
or
mutual
debits
were
to
be^
informed
and
accordingly
to
be
claimed
during
CIRP.
Since
submission
of^
Form
B
by
operational
creditor
had
given
an
entitlement
of
netting
off
amount^
and
thus,
during
CIRP
operational
creditor
was
legally
entitled
to
set^
off
`112
crores
while
making
a
payment
of
amount
retained
out
of
total
consideration.^Overdue towards goods supplied would be operational debt; CIRP
was to be admitted on default in payment
Bonus Plastics (P.) Ltd. v. Gopala Polyplast Ltd. [2019] 106 taxmann.
com 222 (NCLT - Ahd.)
The
operational
creditor
was
manufacturer
and
exporter
of
synthetic
fil
ament -
yarn,
narrow
woven
fabric,
polyster
webbings
etc.
The
Operational
creditor^
supplied
polypropylene
multifilament
yarn
to
the
corporate
debtor.