Authority: Supreme Court of India
Order Date: 08-10-2026
Case Overview
- Parties: Modern Asset (appellant) vs KNK Constructions Private Limited (respondent).
- The appeal (Civil Appeal No.13536/2026) challenges an order related to set‑off and arbitration in the context of the Corporate Insolvency Resolution Process (CIRP) where the SRA (erstwhile promoters) accepted the appellant’s claim.
- The appellant seeks to raise a counterclaim solely for set‑off against the respondent’s claim; the respondent raised the issue of encashment of the bank guarantee furnished by it.
Final Outcome
- The Supreme Court allows the appellant to raise a counterclaim only for the purpose of set‑off; no positive recovery is permitted.
- The Arbitration Tribunal must allow set‑off up to the full amount of the appellant’s claim that was accepted in the CIRP resolution plan by the SRA.
- If the tribunal finds any amount payable by the appellant to the respondent, set‑off will be applied to the entire counterclaim.
- The appellant cannot claim any payment if the respondent’s claim is found untenable, as the appellant’s claim is extinguished against the corporate debtor and SRA.
- The issue of encashment of the bank guarantee furnished by the respondent shall also be considered by the Arbitration Tribunal.
- The impugned order is sustained with the above modification; pending applications are disposed.
Topics: Insolvency & Bankruptcy, Arbitration Set‑Off