Appellate Tribunal allows appeal, directs payment to Aircel Entities. IBC provisions override Accounting Conventions.

The Appellate Tribunal allowed the appeal filed by the Resolution Professional, setting aside the order permitting the set off amount. They directed the Respondents to pay the set off amount to Aircel Entities. The decision was based on the overriding effect of IBC provisions, emphasizing that Accounting Conventions cannot prevail over specific laws like IBC. Any interim orders issued were vacated, and no costs were awarded.

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Issues:
Appeal filed by Resolution Professional against order permitting set off amount to be paid by Aircel Companies to Airtel Companies. Interpretation of provisions of Insolvency and Bankruptcy Code, 2016 regarding set off during Corporate Insolvency Resolution Process. Validity of set off in the context of Accounting Conventions and Moratorium under IBC.

Analysis:
The Appeal was filed by the Resolution Professional of Corporate Debtors against the order allowing a set off amount to be paid by Aircel Companies to Airtel Companies. The Adjudicating Authority permitted the set off of approximately Rs. 112 Crores from the total consideration of Rs. 453 Crores settled as per Spectrum Trade Agreement. The Resolution Professional argued that this set off granted preferential payment to the Respondents and was against the objectives of I&B Code and Article 14 of the Constitution.

The Respondents claimed they released Rs. 341.80 Crores to Aircel entities and applied the balance for set off against undisputed principal amounts owed by Aircel entities to Airtel entities. The State Bank of India, representing Committee of Creditors, opposed the set off, stating it violated the IBC objectives, Moratorium, and was prejudicial to secured creditors. They argued that set off was not permitted under IBC or CIRP Regulations and was against the principles of insolvency laws.

Various case laws were cited by both parties to support their arguments. The Appellate Tribunal analyzed the provisions of IBC, particularly Section 238, which states that the Code shall override other laws. They emphasized that Accounting Conventions cannot supersede express provisions of IBC. The Tribunal referred to previous judgments highlighting that during Moratorium, no dues can be set off, and any amount due prior to CIRP admission cannot be appropriated.

Ultimately, the Tribunal allowed the appeal, setting aside the order permitting the set off. They directed the Respondents to pay the set off amount to Aircel Entities. The decision was based on the overriding effect of IBC provisions, emphasizing that Accounting Conventions cannot prevail over specific laws like IBC. Any interim orders issued were vacated, and no costs were awarded.

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