Although a preamp can clip at the outputs, a "CLIPPING" indicator is usually associated with power amps.
When the BP17 preamp which uses the same dress panel as the B135) was designed, an LED indicating clipping became redundant.
The LED needed to be used for something, so it was decided to indicate the "BYPASS" function.
On the B135 Amplifier, bypass is indicated by both "BALANCE" LEDs turning red when the bypassed input is selected.
I hope this helps.