The Supreme Court of India has held that while a creditor’s counterclaim against a corporate debtor stands extinguished if it is not included in an approved Resolution Plan, the creditor may still raise the plea of “set-off” as a defensive measure in pending arbitral proceedings.
A Bench comprising Justice Dipankar Datta and Justice Augustine George Masih modified a judgement of the Calcutta High Court, striking a balance between the “clean slate” principle of the Insolvency and Bankruptcy Code (IBC) and the equitable right of a defendant to adjust dues against a claimant.
Background of the Case
The dispute originated from a 2017 contract between Ujaas Energy Ltd. (the Appellant), an MSME, and the West Bengal Power…