Corporate law and insolvency experts have welcomed a recent Supreme Court ruling that clarified a key issue under the Insolvency and Bankruptcy Code (IBC), holding that a creditor whose claim was largely extinguished during the insolvency process can still raise it as a counterclaim for the limited purpose of set-off in subsequent arbitration proceedings.
The case arose from a dispute between infrastructure developer Modern Asset and construction firm KNK Construction, both Bengaluru-based. Modern Asset received only 0.72% of its admitted claim under KNK Construction’s insolvency resolution plan after the latter entered the corporate insolvency resolution process (CIRP) before the National Company Law Tribunal (NCLT).
The two companies…