The National Company Law Appellate Tribunal (NCLAT) has dismissed a plea by the Telecom Regulatory Authority of India challenging the National Company Law Tribunal’s order which classified the security balance of postpaid subscribers and unspent balances of prepaid subscribers of the now defunct Reliance Telecommunications and financial disincentive levied by the regulator as ‘operational debt‘.
The Telecommunication regulator contended that the TRAI Act is a special law governing all aspects of the provisions of telecommunications service in the country, whereas the IBC is a general law governing insolvency, hence the provisions of the TRAI Act would prevail with respect to matters dealing with the Regulations of the telecom companies.
The Appellate Tribunal held the IBC to be a special law and later enactment than the TRAI Act, which was enacted in 1997, whereas the IBC was enacted in 2016.
Further underlying the application of the code under Section 238 of the IBC which gives overriding effect due to which IBC prevails over TRAI Act, and not otherwise.
The Appellate Tribunal found the disincentive imposed by the TRAI on Reliance Telecom to be in nature of a penalty for non-compliance with Regulations 5A and 9A of Quality of Service Regulations 2009.
The Resolution Professional submitted that the outstanding dues were reflected in the books of account of Reliance Telecom, which remained outstanding on the date of commencement of the Corporate Insolvency Resolution Process.
The Appellate Tribunal upheld the Adjudicating Authority’s order under which the liabilities were treated as ‘operational debt’. “The Corporate Debtor, thus has accounted for liabilities, which include security as well as statutory dues. We do not find any error in the order of the Adjudicating Authority, accepting the said outstanding dues as ‘operational debt’, to be paid as per the provisions of the Resolution Plan,” reads the NCLAT order while classifying outstanding dues as ‘operational debt’.
The Judgment was Proniunced by Justice Ashok Bhushan (Chairperson), and Barun Mitra and Arun Baroka (Technical Member).
