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Company & Insolvency LawSupreme Court of India

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

Civil Appeal · 2026 INSC 268Decided 20 Mar 2026
C.A. No.-003619-003619 - 2026
Justice Dipankar Datta · Justice Augustine George Masih · Justice Satish Chandra Sharma

Background

Ujaas Energy Ltd., a solar power contractor, was awarded a tender by West Bengal Power Development Corporation in 2017, but disputes over performance led Ujaas, by then undergoing Corporate Insolvency Resolution Process (CIRP) under the IBC, to invoke arbitration through its resolution professional. The Corporation filed a counterclaim in the arbitration, but never separately submitted that claim to the resolution professional during the CIRP, and the resolution plan was later approved without including it. The Arbitral Tribunal rejected the counterclaim outright by an interim award, reasoning that all claims not part of the approved resolution plan stood extinguished; a Single Judge upheld this, but the High Court's Division Bench set it aside and sent the matter back to the Tribunal, prompting Ujaas's appeal to the Supreme Court.

Decision Breakdown

The Supreme Court examined the resolution plan's clause barring "payments/settlements" of claims not included in it and held that, while it validly extinguished the Corporation's ability to independently pursue its counterclaim for a positive award of money, the clause did not expressly or impliedly bar the Corporation from raising the same facts purely as a defensive set-off against Ujaas's claim. The Court reasoned that a bar on affirmative claims for payment is different from using the same facts defensively, and distinguished its earlier ruling in Bharti Airtel v. Aircel as dealing with set-off during CIRP itself, not set-off under a plan approved after CIRP concluded. It therefore modified the Division Bench's order, permitting the Corporation to raise set-off only as a shield (to reduce or defeat Ujaas's claim) and not as a sword (it cannot recover any surplus even if its set-off amount exceeds what is owed to Ujaas), and clarified that if Ujaas withdraws its claim, the Corporation's defensive set-off also falls away. The appeal was partly allowed on these terms, with parties bearing their own costs.

Lesson Learnt

Once a company's insolvency resolution plan is approved, unclaimed dues against it are generally extinguished for recovery purposes, but a creditor may still be allowed to use the same facts defensively to resist a claim brought against it: the "clean slate" principle protects a resolved company from being forced to pay old dues, but does not necessarily let it recover the full amount of a fresh claim without accounting for a legitimate defensive set-off.

Ujaas Energy Ltd. v. West Bengal Power Development Corporation Ltd. – Legal Case Shots | LegalAware