Ujaas Energy Ltd. vs West Bengal Power Development Corporation Ltd.
- Court
- Supreme Court
NON-REPORTABLE
2026 INSC 268
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. ……… OF 2026
[ARISING OUT OF SLP (CIVIL) NO. 29651 OF 2024]
UJAAS ENERGY LTD. … APPELLANT
VS.
WEST BENGAL POWER
DEVELOPMENT CORPORATION LTD. … RESPONDENT
J U D G M E N T
DIPANKAR DATTA, J.
1. Leave granted.
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2. The challenge in this civil appeal, at the instance of a corporate debtor ,
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is to a judgment and order dated 2 September, 2024 of the High Court
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at Calcutta on an intra-court appeal , whereby the judgment and order
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dated 21 August, 2024 of a Single Judge (spurning a challenge to an
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interim award of an Arbitral Tribunal laid by a public sector
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undertaking ) was set aside and consequential directions were made.
3. Facts, relevant for the disposal of the present appeal, are as follows:
Signature Not Verified
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appellant
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impugned order
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High Court
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APOT No. 312/2024
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Tribunal
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respondent
Digitally signed by
JATINDER KAUR
Date: 2026.03.20
16:33:02 IST
Reason:
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th
a. Respondent floated an e-tender on 15 February, 2017, for
manufacture, procurement, installation, etc. of grid connected
rooftop solar PV power plant etc. at various locations of West Bengal.
b. Appellant, which is an MSME engaged in the business of supply,
installation and commissioning of solar PV power plants, successfully
participated in the bid process, whereupon a Letter of Award (LOA)
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dated 12 May, 2017 was issued in its favour.
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c. More than three years later, on 17 September, 2020 to be precise,
the appellant was admitted into Corporate Insolvency Resolution
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Process under the Insolvency and Bankruptcy Code, 2016 .
d. Due to certain disputes relating to performance of the contract, the
appellant, through the resolution professional, invoked the
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arbitration clause vide a notice dated 31 December, 2021. A
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statement of claim was filed on 17 January, 2023 and the
respondent filed its statement of defence as well as a counterclaim
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on 18 April and 12 May, 2023, respectively.
e. It is apposite to mention here that the claim raised in the
counterclaim was never pursued/filed before the Resolution
Professional during the CIRP but was priorly raised in course of the
proceedings before the Tribunal. As will unfold, the lis in the present
case revolves majorly around this fact.
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CIRP
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IBC
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f. National Company Law Tribunal , Indore accepted the resolution plan
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on 13 October, 2023, thereby concluding the CIRP.
g. Prior to the approval of the resolution plan, the appellant had filed
an application under Section 16 of the Arbitration and Conciliation
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Act, 1996 contending that the Tribunal did not have jurisdiction to
take up the counterclaim in view of the moratorium under Section
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14 of the IBC. The Tribunal turned down the said application on 22
December, 2023 and decided to proceed with the statement of claim
as well as the counterclaim.
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h. On 10 January, 2024, the appellant filed an application under
Section 31(6) of the A&C Act seeking dismissal of the counterclaim
on the ground that all claims against the appellant had been
extinguished by virtue of approval of the resolution plan. Much
emphasis was laid on the fact that once a resolution plan is approved,
all claims which did not form part of the resolution plan stood
extinguished.
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i. On 30 April, 2024, the Tribunal allowed the appellant’s application
under Section 31(6) of the A&C Act and thus rejected the
counterclaim vide an interim arbitral award.
j. Aggrieved, the respondent challenged the interim award under
Section 34 of the A&C Act, 1996. A Single Judge of the High Court
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dismissed the same vide its judgment and order dated 21 August,
2024.
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NCLT
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A&C Act
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k. Respondent thereafter challenged the judgment and order of the
Single Judge before the Division Bench of the High Court which, upon
perusing the interim award, noted that the same read like a full-
fledged judgment and decree with elaborate discussion on facts and
evidence. This, in the opinion of the Division Bench, could have been
done only upon a full trial, after considering both the claim and the
counterclaim. Accordingly, the Division Bench directed the Tribunal
to continue the arbitral proceedings. It was clarified that it was open
to the Tribunal to decide upon the status of the counterclaim while
passing the award.
l. Crestfallen on account of the challenge of the respondent having
succeeded, the appellant is now in appeal before us.
4. Taking exception to the impugned order, Mr. Abhijit Sinha, learned
senior counsel for the appellant argued that since the respondent failed
to raise its claim before the Resolution Professional within the prescribed
time, it could not subsequently assert the same by way of counterclaim
in the arbitration proceedings, as the claim stands barred upon approval
of the resolution plan. He further contended that the Tribunal and the
Single Judge rightly ruled that, after such approval, the respondent
cannot maintain any counterclaim in respect of a claim that was not
submitted to the Resolution Professional prior thereto. Allowing such a
course, it was submitted, would defeat the ‘clean slate’ principle.
According to him, the resolution plan represents the culmination of the
CIRP; once it is approved by the Committee of Creditors (CoC) and the
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adjudicating authority, it completes the CIRP and extinguishes all claims
against the corporate debtor as of that date.
5. On the other hand, Mr. Jishnu Choudhury, learned senior counsel for the
respondent while supporting the reasoning set out in the impugned
order also submitted that the ‘clean slate’ principle should not be applied
so rigidly as to defeat the rights of genuine litigants.
6. Having sensed that the reasons assigned by the Division Bench are
unlikely to impress us for the respondent to sail through, Mr. Choudhury
deviated from what was argued before the Division Bench and initially
before us. He submitted that the respondent’s counterclaim, if not
allowed to be prosecuted independently and/or found to be barred, the
respondent would not seek enforcement of its dues against the
appellant, having not lodged its claim before the resolution plan was
approved; nonetheless, referring to the concept of set-off, he contended
that, at least, the plea of set-off ought to be permitted to be raised for
adjustment against the appellant’s claim, should the appellant ultimately
succeed before the Tribunal.
7. We have heard learned senior counsel for the parties and perused the
materials on record including the terms of the resolution plan and the
governing statutory laws.
8. The sole issue which we are called upon to decide is, whether the
respondent ought to be allowed to raise the plea of set-off before the
Tribunal, having regard to extinguishment of the respondent’s
counterclaim for its failure to raise such claim before the Resolution
Professional during the CIRP and prior to approval of the resolution plan?
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9. The CIRP is a time-bound, creditor-driven statutory mechanism
incorporated under the IBC to resolve the corporate distress of a
corporate debtor as a going concern.
10. Section 31(1) of the IBC provides the effect of approval of a resolution
plan. It reads as follows:
31. Approval of resolution plan.—
(1) If the Adjudicating Authority is satisfied that the resolution plan as
approved by the committee of creditors under sub-section (4) of section 30
meets the requirements as referred to in sub-section (2) of section 30, it
shall by order approve the resolution plan which shall be binding on the
corporate debtor and its employees, members, creditors, including the
Central Government, any State Government or any local authority to whom
a debt in respect of the payment of dues arising under any law for the time
being in force, such as authorities to whom statutory dues are owed,
guarantors and other stakeholders involved in the resolution plan.
Provided that the Adjudicating Authority shall, before passing an order for
approval of resolution plan under this sub-section, satisfy that the
resolution plan has provisions for its effective implementation…
(emphasis ours)
11. The terms of Section 31(1) are clear. The effect of the said provision is
that the plan’s terms are binding, as they stand, and it attaches finality
to the resolution plan. Terms of the plan are to be read strictly, given
the binding nature and extinguishment of claims not part of it which
aligns with the resolution objective of the IBC.
12. In Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset
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Reconstruction Co. Ltd. , this Court speaking through the Chief
Justice reiterated this principle thus:
102.1. That once a resolution plan is duly approved by the adjudicating
authority under sub-section (1) of Section 31, the claims as provided in the
resolution plan shall stand frozen and will be binding on the corporate
debtor and its employees, members, creditors, including the Central
Government, any State Government or any local authority, guarantors and
other stakeholders. On the date of approval of resolution plan by the
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(2021) 9 SCC 657
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adjudicating authority, all such claims, which are not a part of resolution
plan, shall stand extinguished and no person will be entitled to initiate or
continue any proceedings in respect to a claim, which is not part of the
resolution plan.
(emphasis ours)
13. We are, therefore, in agreement with the argument of the appellant,
represented by Mr. Sinha, that on the date of approval of the resolution
plan by the adjudicating authority, all such claims, which are not a part
of the resolution plan, shall stand extinguished. Even though not prayed
by Mr. Choudhury in the changed scenario, we have no hesitation to
conclude that we cannot permit the respondent to seek any affirmative
relief from the Tribunal. This is owing to the simple reason that the
respondent’s said claim, raised by way of counterclaim before the
Tribunal, does not find place in the resolution plan and hence stands
extinguished.
14. However, as noticed above, Mr. Choudhury rather wisely has not carried
the argument forward with regard to the respondent’s counterclaim
lodged before the Tribunal; instead, he has urged that the respondent
be permitted to raise the plea of set-off before the Tribunal, not with a
view to payment and settlement of its current and future dues but to
ensure that the respondent, a public sector undertaking, does not lose
on both fronts being required to pay the appellant despite the appellant’s
default, without taking into account or setting off the amount that the
appellant actually owes to the respondent.
15. This submission of Mr. Choudhury has persuaded us to take note of
certain facts and to examine whether, if at all, a limited indulgence is
warranted in the matter.
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16. Three aspects have particularly engaged our attention: first, that the
respondent had raised its counterclaim prior to the approval of the
resolution plan; second, that the Resolution Professional was aware of
the said counterclaim, yet, the same was not made part of the resolution
plan; and third, that the resolution plan bars all future “payments/
settlements” in respect of claims which were not raised before it.
17. Even though the respondent did not raise any claim before the
Resolution Professional prior to approval of the resolution plan, for
reasons best known to it, it is evident that the counterclaim was filed by
the respondent before the Tribunal well within time. Appellant had
objected, before approval of the resolution plan, to the respondent’s
counterclaim in view of the moratorium and such objection stood
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rejected by the Tribunal on 22 December, 2023. The resolution plan,
which we propose to quote hereafter, does reflect exclusion of a
counterclaim in connection with any arbitration proceedings. The
language in which the relevant paragraph is couched gives rise to an
impression that the Resolution Professional, despite being aware of the
counterclaim raised by the respondent in the arbitration proceedings
(initiated by the Resolution Professional itself), did not take the same
into consideration while formulating the resolution plan and getting the
same approved by the CoC and the adjudicating authority. These facts,
in our opinion, though not decisive in any manner prompt us to slightly
drift towards considering whether some equity in favour of the
respondent does accrue or not.
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18. For this purpose, we need to take note of the definition of the term “claim”
as provided under Section 3(6) of IBC. It reads:
(6) “claim” means—
(a) a right to payment, whether or not such right is reduced to
judgment, fixed, disputed, undisputed, legal, equitable, secured or
unsecured;
(b) right to remedy for breach of contract under any law for the time
being in force, if such breach gives rise to a right to payment, whether or
not such right is reduced to judgment, fixed, matured, unmatured,
disputed, undisputed, secured or unsecured;
19. Clauses (a) and (b) encompass “right to payment”; (a) is irrespective of
whether such right has been reduced to a judgment (i.e., ordered by a
court), whether it is disputed or undisputed, whether it is secured or
unsecured, or whether it is legal or equitable and (b) is the right arising
from a breach of contract.
20. It is apposite to refer to and read the relevant paragraph of the
resolution plan now, for a complete understanding of what is barred and
what is not barred. Paragraph 12.4.1 reads as follows:
“12.4.1. Other than the payments/settlements under this Resolution Plan,
no other payments or settlements (of any kind) will have to be made to any
other Person in respect of the claims of any Person or Governmental
Authority against the Company (whether or not filed or admitted by the
Resolution Professional) all such claims against the Company including
counter claims under any pending arbitration proceedings along with all
related proceedings, including proceedings for enforcement of any
securities/security interest shall stand irrevocably and unconditionally
abated, discharged, settled and extinguished in perpetuity on the NCLAT
Approval Date.”
21. Paragraph 12.4.1 of the resolution plan has been read. Going by the
very words employed in such paragraph of the plan, it does not appear
to bar a plea of set-off being raised as a ‘defence’ in any pending arbitral
proceedings, although claims for any “payment” or “settlement”,
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including a counterclaim, not included therein is specifically not
recoverable.
22. Given that non-inclusion of a claim in the resolution plan results in its
extinguishment, it is only logical to conclude that any claim which is not
expressly included in the resolution plan, and which is not expressly
barred as per such plan, cannot be inferred to have been included
therein.
23. In our opinion, the abovementioned clause of the resolution plan does
not expressly, or even impliedly, exclude the plea of set-off as a defence;
the same merely bars any claim for the purpose of payment or
settlement. Since such defensive use has not been expressly provided
and, in our view, is also not expressly covered, an intention to exclude
it would ordinarily be inferred by application of the maxim expressio
unius est exclusio alterius .
24. In the light of the alternative plea of the respondent, as noted above,
vis-à-vis the contents of paragraph 12.4.1 of the resolution plan, we are
inclined to take a path different from the one taken by the Single Judge
and the Division Bench.
25. Upon a cumulative consideration of all relevant factors, we hold that the
respondent, although not entitled to independently pursue its claim by
way of counterclaim post approval of the resolution plan, ought to be
permitted to raise the plea of set-off at least by way of defence. It is
ordered accordingly.
26. We, however, clarify that the respondent shall not derive any positive or
affirmative relief on the basis of the said defence and may only defend
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itself against the claim raised by the appellant. In other words, the
respondent may rely upon the same in defence, to the extent necessary
to prevent the appellant from succeeding in the arbitration proceedings
either entirely or in part.
27. We also clarify as follows:
a. In the event the amount claimed in the counterclaim of the
respondent, or any part of it, is found to be due and payable to the
respondent by the appellant and such amount exceeds the amount
awarded to the appellant, the surplus amount shall not be
recoverable by the respondent.
b. Conversely, if any amount remains payable to the appellant after
adjustment of the respondent’s defence plea, the same shall be
recoverable by the appellant and the Tribunal may order accordingly.
c. Further, if the arbitration proceedings initiated by the appellant are
withdrawn, the counterclaim of the respondent shall also fail, as the
same is permitted only for the limited purpose of defence.
28. Needless to mention, this judgment has been rendered considering the
terms of paragraph 12.4.1 of the resolution plan and is, thus, limited to
the facts and circumstances of the present case.
29. The decision of this Court in Bharti Airtel Ltd. v. Aircel Ltd. & Dishnet
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Wireless Ltd. (Resolution Professional) has been perused. The law
laid down therein cannot be doubted. However, we find that the ratio of
such decision may not be directly applicable in the present facts and
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(2024) 4 SCC 668
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circumstances. While Bharti Airtel Ltd. (supra) dealt with the aspect
of set-off at the time of the CIRP, in this case, we are called upon to
decide the issue of set-off in the light of the resolution plan which alone
is binding apart from the fact that the claim arose before the resolution
plan was approved by the CoC and the adjudicating authority.
30. For the reasons aforesaid, the impugned order of the Division Bench
stands modified.
31. The appeal stands partly allowed, on the aforesaid terms.
32. Parties shall bear their own costs.
……………………..…………………J.
(DIPANKAR DATTA)
……….…………….…………………J.
(AUGUSTINE GEORGE MASIH)
New Delhi;
March 20, 2026.