Ujaas Energy Ltd. Vs West Bengal Power Development Corporation Ltd. (Supreme Court of India)
The Supreme Court examined an appeal arising from arbitration proceedings involving a corporate debtor that had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016. The dispute centered on whether a counterclaim raised by the respondent in arbitration could survive after approval of a resolution plan and whether a plea of set-off could still be permitted.
The appellant had been awarded a contract for installation of solar power plants in 2017. Subsequently, it entered CIRP in September 2020. During the pendency of disputes, arbitration proceedings were initiated, wherein the appellant filed its claim and the respondent filed a counterclaim. Notably, the respondent had not filed this claim before the Resolution Professional during CIRP. The resolution plan was approved by the National Company Law Tribunal in October 2023, concluding the CIRP.
The appellant challenged the maintainability of the counterclaim, arguing that once the resolution plan was approved, all claims not included therein stood extinguished under Section 31 of the IBC. The arbitral tribunal initially rejected this objection but later, upon application by the appellant, dismissed the counterclaim through an interim award. This decision was upheld by a Single Judge of the High Court but subsequently set aside by the Division Bench, which directed continuation of arbitration proceedings.
