Ujaas Energy Ltd. vs West Bengal Power Development Corporation Ltd.

2026 INSC 268 NON-REPORTABLE

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

JUDGMENT

DIPANKAR DATTA, J.

1. Leave granted.

2. The challenge in this civil appeal, at the instance of a corporate debtor1,

is to a judgment and order dated 2nd September, 20242 of the High Court

at Calcutta3 on an intra-court appeal4, whereby the judgment and order

dated 21st August, 2024 of a Single Judge (spurning a challenge to an

interim award of an Arbitral Tribunal5 laid by a public sector

undertaking6) was set aside and consequential directions were made.

3. Facts, relevant for the disposal of the present appeal, are as follows: Signature Not Verified Digitally signed by JATINDER KAUR Date: 2026.03.20 1

16:33:02 IST Reason: appellant 2 impugned order 3 High Court 4 APOT No. 312/2024 5 Tribunal 6 respondent 2

a. Respondent floated an e-tender on 15th 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)

dated 12th May, 2017 was issued in its favour.

c. More than three years later, on 17th September, 2020 to be precise,

the appellant was admitted into Corporate Insolvency Resolution

Process7 under the Insolvency and Bankruptcy Code, 20168.

d. Due to certain disputes relating to performance of the contract, the

appellant, through the resolution professional, invoked the

arbitration clause vide a notice dated 31st December, 2021. A

statement of claim was filed on 17th January, 2023 and the

respondent filed its statement of defence as well as a counterclaim

on 18th April and 12th 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.

7 CIRP 8 IBC 3

f. National Company Law Tribunal9, Indore accepted the resolution plan

on 13th 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

Act, 199610 contending that the Tribunal did not have jurisdiction to

take up the counterclaim in view of the moratorium under Section

14 of the IBC. The Tribunal turned down the said application on 22nd

December, 2023 and decided to proceed with the statement of claim

as well as the counterclaim.

h. On 10th 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.

i. On 30th 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

dismissed the same vide its judgment and order dated 21st August,

2024.

9 NCLT 10 A&C Act 4

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 5

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? 6

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

Reconstruction Co. Ltd.11, 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

11 (2021) 9 SCC 657 7

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.

8

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

rejected by the Tribunal on 22nd 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.

9

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”, 10

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 11

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

Wireless Ltd. (Resolution Professional)12 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

12 (2024) 4 SCC 668 12

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.