Insolvency and Bankruptcy Code, 2016 - Supreme Court Quarterly Digest Jan - Mar, 2026

Debenture Trust Deed (DTD) — Modification of Terms — Procedure for Restructuring — Supreme Court observed that the Corporate Debtor's claim of an existing moratorium was based on unilateral e-mail exchanges with only one debenture holder (ECLF) – Held that such negotiations could not bind other debenture holders or the Debenture Trustee in the absence of express authorization - Any modification, amendment, or waiver of the DTD terms must strictly adhere to the procedure prescribed within the deed itself—specifically requiring a "Special Resolution" passed by a three-fourths majority of debenture holders and a written document signed by all parties. [Paras 13-15, 18] Catalyst Trusteeship Ltd. v. Ecstasy Realty Pvt. Ltd., 2026 LiveLaw (SC) 192 : 2026 INSC 186 : AIR 2026 SC 1311

Doctrine of Election – Applicability to IBC Claims – Held: The doctrine of election is not attracted in the context of filing claims against both the debtor and the guarantor - Restricting a creditor to elect between the two would defeat the purpose of a guarantee and potentially lead to the loss of rights under the "clean slate" principle if the full debt is not claimed in a concluding CIRP - There is no statutory proscription in the IBC against filing such simultaneous claims. ICICI Bank v, Era Infrastructure, 2026 LiveLaw (SC) 203 : 2026 INSC 201 : AIR 2026 SC 1371

Double Enrichment – Safeguards under 2016 Regulations – Held: While concerns regarding double enrichment (recovering more than the total debt) are well-founded, they do not justify a bar on simultaneous proceedings - Sufficient safeguards exist in Regulation 12A (obligation of the creditor to update claims upon partial satisfaction from any source) and Regulation 14 (duty of the Resolution Professional to revise admitted claim amounts based on new information) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. ICICI Bank v, Era Infrastructure, 2026 LiveLaw (SC) 203 : 2026 INSC 201 : AIR 2026 SC 1371

Economic Policy and Legislative Intent — Excessive Judicial Review — Supreme Court cautioned against the strategic use of litigation by unsuccessful resolution applicants to delay the Corporate Insolvency Resolution Process (CIRP). Excessive judicial scrutiny beyond narrow statutory boundaries leads to value destruction, erodes the going-concern status of the Corporate Debtor, and discourages future bidders by introducing legal uncertainty - The IBC prioritizes speed, finality, and predictability to ensure efficient resource allocation in the economy. [Relied on Committee of Creditors of Essar Steel India Limited vs. Satish Kumar Gupta, (2020) 8 SCC 531; Kalyani Transco vs. Bhushan Power & Steel Ltd., 2025 SCC OnLine SC 2093; Swiss Ribbons Private Ltd. vs. Union of India, (2019) 4 SCC 17; Pratap Technocrats Private Ltd. vs. Monitoring Committee of Reliance Infratel Limited, (2021) 10 SCC 623; Paras 7-14] Torrent Power v. Ashish Arjunkumar Rathi, 2026 LiveLaw (SC) 207 : 2026 INSC 206 : AIR 2026 SC 1347

Extinguishment of Debt under Resolution Plan - The approval of a Resolution Plan under Section 31 of the IBC does not ipso facto result in the extinguishment of the entire debt against third-party sureties or security providers unless expressly provided for in the plan - Where a Resolution Plan (specifically Clause 3.2(ix) in this case) explicitly reserves the rights of financial creditors to proceed against third parties or promoters for the "unsustainable debt" portion, the discharge of the Corporate Debtor does not bar claims against such third-party security providers – Appeal dismissed. [Relied on Lalit Kumar Jain v. Union of India (2021) 9 SCC 321; Paras 23-25] UV Asset Reconstruction Company v. Electrosteel Castings, 2026 LiveLaw (SC) 33 : 2026 INSC 14 : AIR 2026 SC 439

Interaction between IBC and Benami Act – Overriding Effect – Held: While the IBC is a later and special enactment, it does not displace the statutory mechanism of the Benami Act regarding the determination of "tainted" assets - The "residuary jurisdiction" of the NCLT under Section 60(5) cannot be used to "short-circuit" the specialized adjudicatory hierarchy (Adjudicating Authority, Appellate Tribunal, and High Court) established under the Benami Act. S. Rajendran v. Deputy Commissioner of Income Tax, 2026 LiveLaw (SC) 199 : 2026 INSC 187 : AIR 2026 SC 1323

Key Directions issued by the Supreme Court – i. Engagement of NBCC: NBCC is directed to complete the pending projects within stipulated timelines using its own resources and 70% of project receivables; ii. Protection for Home Buyers: Existing allottees shall not be subjected to any cost escalation beyond the original Builder Buyer Agreements; iii. Administrative Oversight: Constitution of an Apex Court Committee and Project-wise Court Committees to monitor progress and approve fund transfers between projects; iv. No Judicial Interference: No Court or Tribunal shall pass interim orders stopping projects commenced by NBCC; any grievances must be brought directly to the Supreme Court; v. Appointment of Amicus Curiae: Mr. Rajiv Jain, Senior Counsel, and Mr. Amarendra Kumar are appointed as Amicus Curiae to assist the Tribunal and monitor ongoing projects. [Paras 15-22] Apex Heights Pvt. Ltd. v. Ram Kishor Arora, 2026 LiveLaw (SC) 142

Liquidation Estate and Beneficial Ownership – Section 36 IBC – Held: Only assets beneficially owned by the corporate debtor form part of the liquidation estate - Since a benamidar (the corporate debtor in this case) possesses no beneficial interest and holds property in a fiduciary capacity, such property is expressly excluded from the liquidation estate under Section 36(4)(a)(i) and cannot be distributed to creditors. S. Rajendran v. Deputy Commissioner of Income Tax, 2026 LiveLaw (SC) 199 : 2026 INSC 187 : AIR 2026 SC 1323

Object of Code – Resolution vs. Recovery – The fundamental object of the IBC is resolution and revival, not mere recovery - the concept of revival does not exclude recovery altogether; it only excludes the abuse of insolvency as a pressure tactic - Alternative remedies under SARFAESI or RERA remain available, but the presence of such recovery proceedings does not bar the initiation of CIRP under Section 7. [Para 10, 12] Elegna Co-Op. Housing and Commercial Society v. Edelweiss Asset Reconstruction, 2026 LiveLaw (SC) 51 : 2026 INSC 58

Protection of Homebuyers – Specific Directions – To ensure transparency and safeguard homebuyer interests during CIRP - issued mandatory directions: (i) The Information Memorandum must disclose comprehensive details of all allottees; (ii) The CoC must record specific written reasons if they find it not viable to approve handover of possession under Regulation 4E; and (iii) Any recommendation for liquidation must be accompanied by a reasoned justification. [Relied on Innoventive Industries Ltd. v. ICICI Bank (2018) 1 SCC 407; Pioneer Urban Land and Infrastructure Ltd v. Union of India (2019) 8 SCC 416; GLAS Trust Co. LLC v. BYJU Raveendran (2025) 3 SCC 625; Swiss Ribbons (P) Ltd. v. Union of India (2019) 4 SCC 17; Para 15] Elegna Co-Op. Housing and Commercial Society v. Edelweiss Asset Reconstruction, 2026 LiveLaw (SC) 51 : 2026 INSC 58

Real Estate Project – Default in Possession – Completion Certificate – Where a developer fails to obtain a final completion certificate and fails to execute tripartite sublease deeds as required by the lessor (UPSIDA), physical delivery of possession without such legal formalities has no legal import - The existence of a financial debt and default is established when units are not made ready or delivered in a fit state for occupation despite payment of consideration. [Relied on Manish Kumar vs. Union of India (2021) 5 SCC 1; Surendra Trading Company vs. Juggilal Kamlapat Jute Mills Company Limited (2017) 16 SCC 143; Edelweiss Asset Reconstruction Company Limited vs. Sachet Infrastructure Private Limited (2019) SCC OnLine NCLAT 592; Paras 31 - 37] Satinder Singh Bhasin v. Col. Gautam Mullick, 2026 LiveLaw (SC) 100 : 2026 INSC 104 : AIR 2026 SC 818

Resolution Plan — Modification vs. Clarification — Clarifications that reaffirm existing terms of a Resolution Plan—such as confirming the treatment of Bank Guarantees or the Net Present Value (NPV) of deferred payments—do not amount to an unauthorized enhancement or modification of a commercial offer after the conclusion of negotiations. Torrent Power v. Ashish Arjunkumar Rathi, 2026 LiveLaw (SC) 207 : 2026 INSC 206 : AIR 2026 SC 1347

Section 7(1) Second Proviso – Threshold of 100 Allottees – Relevant Date for Calculation – The Supreme Court reaffirmed that the crucial date for ascertaining whether the minimum threshold of 100 allottees (or 10% of total allottees) is met is the date of filing of the petition, and not the date of its admission or hearing - Any subsequent settlements or withdrawals during the pendency of the proceedings do not render the petition non-maintainable if the threshold was met at the time of presentation. [Para 9, 21] Satinder Singh Bhasin v. Col. Gautam Mullick, 2026 LiveLaw (SC) 100 : 2026 INSC 104 : AIR 2026 SC 818

Section 7(2) and 7(5)(b) — Adherence to Form — An application under Section 7 is not liable to be rejected for insignificant omissions or technical errors if it is substantially in conformity with Form 1and discloses the essential ingredients: (a) applicant is a financial creditor, (b) existence of a financial debt, (c) occurrence of default, and (d) default meets the threshold under Section 4 - The Adjudicating Authority may allow the rectification of applications and the filing of additional documents at any time before the final order. B. Prashanth Hegde v. State Bank of India, 2026 LiveLaw (SC) 156 : 2026 INSC 155

Section 7 – Admission of CIRP – Mandatory Nature – Discretion of Adjudicating Authority – Supreme Court issued a set of directions regarding the functioning of the Committee of Creditors (CoC) under the Insolvency & Bankruptcy Code, noting that while the commercial wisdom of the CoC is paramount, such power must be exercised with responsibility, transparency and proper application of mind, particularly in real estate insolvencies where homebuyers' interests are deeply involved - Held, the inquiry under Section 7(5)(a) is confined strictly to the determination of debt and default - Once the Adjudicating Authority is satisfied that a financial debt exists and a default has occurred, it must admit the application unless it is incomplete - Considerations such as project viability, business status (going concern), stage of completion, or perceived prejudice to homebuyers are extraneous and irrelevant at the admission stage. [Para 12] Elegna Co-Op. Housing and Commercial Society v. Edelweiss Asset Reconstruction, 2026 LiveLaw (SC) 51 : 2026 INSC 58

Section 7 and Section 31 — Contract Act, 1872; Section 126 — "See to it" Guarantee — Distinction between an Undertaking to Infuse Funds and a Contract of Guarantee — Extinguishment of Debt against Third-Party Sureties - Contract of Guarantee vs. Deed of Undertaking - A "Deed of Undertaking" requiring a promoter to arrange for the infusion of funds into the borrower to comply with financial covenants does not, by itself, constitute a contract of guarantee under Section 126 of the Indian Contract Act, 1872 - To constitute a guarantee, there must be a direct and unambiguous promise to the creditor to perform the promise or discharge the liability of the third person in case of default - An obligation to facilitate the borrower's compliance with covenants is not equivalent to a promise to discharge the borrower's liability to the lender. [Para 20-22] UV Asset Reconstruction Company v. Electrosteel Castings, 2026 LiveLaw (SC) 33 : 2026 INSC 14 : AIR 2026 SC 439

Section 7 – Corporate Insolvency Resolution Process (CIRP) – Real Estate Projects – Role of Third-Party Entities – National Company Law Appellate Tribunal (NCLAT) Jurisdiction – Article 142 of the Constitution of India – The Supreme Court upheld the NCLAT's direction to engage NBCC India Ltd., a Government of India entity, to complete 16 stalled residential projects of M/s. Supertech Limited - held that the primary consideration in insolvency proceedings involving real estate companies is to protect the interests of home buyers who have waited decades for shelter - Claims of secured creditors, operational creditors, and land authorities (Noida, Greater Noida, and Yamuna Expressway) are, for the time being, considered secondary to the delivery of units with basic amenities – Held that such an equitable mechanism, aimed at completing construction on a "war footing," does not violate the IBC and warrants protection under the umbrella of Article 142 of the Constitution. Apex Heights Pvt. Ltd. v. Ram Kishor Arora, 2026 LiveLaw (SC) 142

Section 7 — Effect of Counterclaims and Criminal Proceedings — Mere pendency of a counterclaim for damages or the institution of criminal proceedings against the officials of a Financial Creditor does not bar the initiation of CIRP - Such proceedings have no bearing on the existence of the financial debt or the right of the creditor to invoke IBC – Appeal dismissed. [Relied on Asset Reconstruction Company (India) Ltd. v. Bishal Jaiswal & Anr. (2021) 6 SCC 366; Dena Bank v. C. Shivakumar Reddy (2021) 10 SCC 330; M. Suresh Kumar Reddy v. Canara Bank (2023) 8 SCC 387; Paras 31, 37-40, 45-51, 54, 55] B. Prashanth Hegde v. State Bank of India, 2026 LiveLaw (SC) 156 : 2026 INSC 155

Section 7 — Initiation of Corporate Insolvency Resolution Process (CIRP) — Admissibility of Application — Existence of Debt and Default — The Supreme Court set aside the concurrent findings of the NCLT and NCLAT which had refused to initiate CIRP against the Corporate Debtor - held that for admission of an application under Section 7, the adjudicating authority is only required to examine and satisfy itself that a financial debt exists and there is a default in relation thereto - The concept of a "pre-existing dispute," relevant for operational creditors under Section 9, has no bearing on applications filed by financial creditors under Section 7. [Para 12] Catalyst Trusteeship Ltd. v. Ecstasy Realty Pvt. Ltd., 2026 LiveLaw (SC) 192 : 2026 INSC 186 : AIR 2026 SC 1311

Section 7 — Limitation Act, 1963; Section 18 and Article 137 — Acknowledgement of Debt — The Supreme Court upheld the NCLAT's finding that a Section 7 application was within limitation despite the initial default occurring years prior - held that entry of debt in the Corporate Debtor's (CD) balance sheets serves as a valid acknowledgement under Section 18 of the Limitation Act, 1963, provided it is signed by a director (who acts as an agent of the company) – Noted that how a bank classifies its debt for asset classification (NPA) under RBI norms is not a determining factor for the starting point of limitation if the debt is subsequently restructured and acknowledged in fresh agreements. B. Prashanth Hegde v. State Bank of India, 2026 LiveLaw (SC) 156 : 2026 INSC 155

Section 7 – Locus Standi of Homebuyer Societies – Held, a society or Resident Welfare Association (RWA) does not possess locus standi to intervene in Section 7 proceedings at the pre-admission stage - At this stage, proceedings are in personam between the applicant creditor and the corporate debtor - While individual allottees are "financial creditors" under the Explanation to Section 5(8)(f), this status does not automatically extend to a society unless it is a creditor in its own right or a statutorily recognized authorized representative. [Para 13] Elegna Co-Op. Housing and Commercial Society v. Edelweiss Asset Reconstruction, 2026 LiveLaw (SC) 51 : 2026 INSC 58

Section 7 – Maintainability of Joint Petition – Multi-Corporate Entities – Threshold Requirement – Supreme Court upheld the maintainability of a single Section 7 application against two separate corporate entities (Grand Venezia Ltd. and Bhasin Ltd.) where they were found to be "intrinsically linked" in the construction and implementation of a real estate project -Noted that interlinkage of related corporate debtors is beneficial for value maximization and for continuing companies as going concerns. [Para 11 - 16, 20 - 26] Satinder Singh Bhasin v. Col. Gautam Mullick, 2026 LiveLaw (SC) 100 : 2026 INSC 104 : AIR 2026 SC 818

Section 7 vs. Companies Act, 1956 – Sections 391-394 – Overriding effect of IBC – Redundancy of Scheme of Arrangement (SOA) due to gross delay – The Supreme Court held that proceedings under Section 7 of the IBC cannot be stalled on the grounds of "judicial discipline" due to a pending Scheme of Arrangement under the Companies Act, especially when such a scheme has become defunct and inoperative due to a decade-long delay and non-compliance with statutory timelines - Noted that the IBC is a special statute aimed at the revival of companies, and its provisions prevail over inconsistent provisions in other laws by virtue of Section 238. Omkara Assets Reconstruction v. Amit Chaturvedi, 2026 LiveLaw (SC) 191 : 2026 INSC 189 : AIR 2026 SC 1205

Section 7 vs. Section 9 – Discretion of Adjudicating Authority (NCLT) – Held: The use of the word "may" in Section 7(5)(a) confers a degree of discretion upon the NCLT to admit a financial creditor's application, whereas "shall" in Section 9(5)(a) for operational creditors is mandatory - this discretion must be exercised reasonably and not arbitrarily – Noted that the NCLT should admit a Section 7 application upon satisfaction of financial debt and default, unless there are "good reasons" to the contrary. [Relied on BRS Ventures Investments Ltd. v. SREI Infrastructure Finance Ltd. & Anr. (2025) 1 SCC 456; Maitreya Doshi v. Anand Rathi Global Finance Ltd. (2023) 17 SCC 606; Axis Bank Ltd. v. Vidarbha Industries Power Ltd. (2022) 8 SCC 352; Paras 77-104] ICICI Bank v, Era Infrastructure, 2026 LiveLaw (SC) 203 : 2026 INSC 201 : AIR 2026 SC 1371

Sections 7, 60(2), and 60(3) – Simultaneous Proceedings – Maintainability of Corporate Insolvency Resolution Process (CIRP) against Principal Debtor and Corporate Guarantor – Held: Simultaneous proceedings for CIRP under the IBC against both the principal debtor and its corporate guarantor (or vice-versa) are maintainable - The liability of a surety is co-extensive with that of the principal debtor under Section 128 of the Indian Contract Act, 1872 - The IBC permits separate or simultaneous proceedings to be initiated by a financial creditor against both entities. ICICI Bank v, Era Infrastructure, 2026 LiveLaw (SC) 203 : 2026 INSC 201 : AIR 2026 SC 1371

Section 12A – Recall of Order – Maintainability – Commercial Wisdom of CoC - The Supreme Court dismissed a Miscellaneous Application (MA) seeking to recall a prior order dated 25.02.2025 that had dismissed a Special Leave Petition (SLP) - The applicant sought recall based on subsequent events, specifically a settlement reached under Section 12A of the IBC and the withdrawal of the Corporate Insolvency Resolution Process (CIRP) - Supreme Court reiterated that the decision to accept a settlement or a commercial course of action under Section 12A falls within the "collective commercial wisdom" of the Committee of Creditors (CoC) - held that a higher offer by an applicant does not, by itself, provide a ground to unsettle steps taken within the insolvency framework or to reopen the dismissal of an SLP. Lamba Exports Pvt. Ltd. v. Dhir Global Industries Pvt. Ltd., 2026 LiveLaw (SC) 286 : 2026 INSC 275

Section 14 — Moratorium — Appropriation of Security Deposit against pre-CIRP dues — Held: The appropriation of a cash security deposit available with a creditor after the initiation of the Corporate Insolvency Resolution Process (CIRP) towards dues that arose prior to the CIRP is impermissible and contrary to the moratorium imposed under Section 14 of the IBC - Such a deposit remains the property of the Corporate Debtor until a valid adjustment is made - While payments for maintaining the supply of goods and services during the moratorium period (post-CIRP) to keep the Corporate Debtor as a going concern are permissible under Section 14(2A), the recovery of pre-CIRP dues must strictly follow the claim procedure envisaged in the IBC. Central Transmission Utility of India v. Sumit Binani, 2026 LiveLaw (SC) 289 : 2026 INSC 284

Section 14 – Moratorium – Liability of Natural Persons – While a moratorium under Section 14 shields the corporate debtor, it does not extend to its directors or promoters - the mere absence of a moratorium-related bar does not automatically make directors liable in execution proceedings unless their independent liability was established during the adjudicatory process - A company is a distinct legal entity from its shareholders and directors - The doctrine of "piercing the corporate veil" is an exceptional measure that requires specific pleadings and a determination of fraud or dishonest misuse of the corporate personality, which cannot be introduced for the first time at the execution stage. [Relied on Rajbir v. Suraj Bhan (2022) 14 SCC 609; Electronics Corpn. of India Ltd. v. Secy., Revenue Deptt., Govt. of A.P. (1999) 4 SCC 458; Paras 11-20] Ansal Crown Heights Flat Buyers Association v. Ansal Crown Infrabuild Pvt. Ltd., 2026 LiveLaw (SC) 40 : 2026 INSC 51

Section 14 – Moratorium – Scope – Held: The moratorium under Section 14 is intended to protect the corporate debtor from "creditor actions" for debt recovery -It does not act as an automated stay against sovereign in rem proceedings initiated for the attachment or confiscation of property under penal statutes like the Benami Act - The protection under Section 32A is "event-based" and only triggered upon the approval of a resolution plan or a liquidation sale to an unconnected third party -It does not validate a defective title or retrospectively convert benami property into assets of the corporate debtor during the pendency of proceedings. [Relied on Embassy Property Developments (P) Ltd. v. State of Karnataka (2020) 13 SCC 308; State Bank of India v. Union of India (2026 INSC 153); Gujarat Urja Vikas Nigam Ltd. v. Amit Gupta (2021) 7 SCC 209; Controller of Estate Duty, Lucknow v. Aloke Mitra (1981) 2 SCC 121; Paras 13-24] S. Rajendran v. Deputy Commissioner of Income Tax, 2026 LiveLaw (SC) 199 : 2026 INSC 187 : AIR 2026 SC 1323

Section 14 — Moratorium vs. Arbitral Continuity — Noted that the High Court erred in nullifying arbitral orders passed during a moratorium period while exercising jurisdiction under the Arbitration Act - The Supreme Court used its powers under Article 142 to declare transactions (sale of flats) made pursuant to such arbitral orders as lawfully valid to protect third-party homebuyer rights. [Relied on Yashwith Constructions Pvt. Ltd. v. Simplex Concrete Piles India Ltd. & Anr. (2006) 6 SCC 204; Interplay Between Arbitration Agreements under Arbitration and Conciliation Act, 1996 & Stamp Act, 1899, In re, (2024) 6 SCC 1; Hindustan Construction Co. Ltd. v. Bihar Rajya Pul Nirman Nigam Ltd., 2025 SCC OnLine SC 2578; Official Trustee v. Sachindra Nath Chatterjee, 1968 SCC Online SC 103; Paras 28-47] Ankhim Holdings Pvt. Ltd. v. Zaveri Construction Pvt. Ltd., 2026 LiveLaw (SC) 133 : 2026 INSC 137 : AIR 2026 SC 1042

Sections 14, 36, 60(5), and 238 – Prohibition of Benami Property Transactions Act, 1988 – Sections 24 and 27 – Jurisdiction of NCLT/NCLAT over Benami Proceedings – Held: The National Company Law Tribunal (NCLT) and the National Company Law Appellate Tribunal (NCLAT) do not have the jurisdiction to adjudicate upon the legality or validity of provisional attachment orders or confiscation proceedings initiated under the Benami Act - Such proceedings fall within the realm of public law and sovereign functions of the State, which are distinct from private proprietary disputes or debt recovery actions. S. Rajendran v. Deputy Commissioner of Income Tax, 2026 LiveLaw (SC) 199 : 2026 INSC 187 : AIR 2026 SC 1323

Sections 18(f) and 36(4) – Applicability to Spectrum – Ownership vs. Right to Use – Held, Spectrum allocated to Telecom Service Providers (TSPs) cannot be subjected to proceedings under the IBC - While spectrum may be recorded as an "intangible asset" in the TSPs' books of account for accounting purposes in compliance with AS 26 and Ind AS 38, such recognition is not determinative of ownership - The IBC explicitly excludes assets owned by a third party but held by the corporate debtor under contractual arrangements from the insolvency/liquidation estate - Since the Union of India retains exclusive privilege and ownership over spectrum as a trustee for the public, the TSPs hold only a limited, conditional, and revocable "right to use". [Paras 60, 61, 63, 69] State Bank of India v. Union of India, 2026 LiveLaw (SC) 152 : 2026 INSC 153

Sections 30(2), 31, 61(3), and 62 — Doctrine of Commercial Wisdom — Scope of Judicial Review — The Supreme Court reaffirmed that the commercial wisdom of the Committee of Creditors (CoC) is paramount and non-justiciable - The Adjudicating Authority (NCLT) and Appellate Authority (NCLAT) have limited jurisdiction to interfere with the CoC's decision, restricted strictly to ensuring compliance with statutory requirements under Section 30(2) and identifying material irregularities under Section 61(3) – Held that courts cannot act as courts of equity or substitute their commercial assessment for that of the CoC, which comprises financial creditors who bear the economic consequences of the corporate debtor's failure. Torrent Power v. Ashish Arjunkumar Rathi, 2026 LiveLaw (SC) 207 : 2026 INSC 206 : AIR 2026 SC 1347

Sections 31, 43, and 45 – Modification of Resolution Plan – Avoidance Transactions – Noted that the NCLT cannot, while adjudicating a miscellaneous application, grant rights to a Successful Resolution Applicant (SRA) that are better than or different from those recognized in the Committee of Creditors (CoC) approved Resolution Plan - Any such declaration amounts to an impermissible modification of the approved plan - the NCLT cannot suo motu or "by a sidewind" neutralize transactions as preferential (Section 43) or undervalued (Section 45) without a formal application by the Resolution Professional (or under Section 47 by a creditor) and without providing the affected party clear notice and a fair opportunity to respond - Such summary findings are perverse and violate principles of natural justice. Gloster Cables Ltd. v. Fort Gloster Industries Ltd., 2026 LiveLaw (SC) 80 : 2026 INSC 81 : AIR 2026 SC 748

Section 31(1) — Arbitral Proceedings — Counterclaim vs. Set-off — 'Clean Slate' Principle — Whether a respondent can raise a plea of set-off in arbitration proceedings after the approval of a Resolution Plan, even if its counterclaim was not part of the plan and stands extinguished - Held, that once a Resolution Plan is approved under Section 31(1) of the IBC, all claims not included in the plan stand extinguished - a respondent cannot seek any affirmative relief through a counterclaim that was not part of the approved plan - if the specific terms of the Resolution Plan only bar payments or settlements and do not expressly or impliedly exclude the plea of set-off as a defense, such a plea can be raised to defend against the appellant's claim - The plea of set-off is permitted only as a defensive tool to prevent the appellant from succeeding entirely or in part - If the amount due to the respondent exceeds the amount awarded to the appellant, the surplus is not recoverable. If the appellant's proceedings are withdrawn, the counterclaim/set-off defense fails. [Relied on Ghanashyam Mishra & Sons (P) Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. (2021) 9 SCC 657; Bharti Airtel Ltd. v. Aircel Ltd. & Dishnet Wireless Ltd. (Resolution Professional) (2024) 4 SCC 668; Paras 21-27] Ujaas Energy Ltd. v. West Bengal Power Development Corporation Ltd., 2026 LiveLaw (SC) 272 : 2026 INSC 268 : AIR 2026 SC 1541

Section 60(5)(c) – Jurisdiction of Adjudicating Authority (NCLT) – Declaration of Title to Assets – Held, the NCLT cannot exercise its residuary jurisdiction under Section 60(5)(c) to adjudicate upon complex disputes of title to property (such as trademarks) that are dehors the insolvency proceedings - The nexus with the insolvency of the Corporate Debtor must exist for the NCLT to exercise power under this section – Noted that in the present case, where the approved Resolution Plan itself recognized rival claims and "beliefs" regarding the ownership of the "Gloster" trademark rather than an undisputed assertion of title, the NCLT exceeded its jurisdiction by recorded a finding that the trademark was an asset of the Corporate Debtor. Gloster Cables Ltd. v. Fort Gloster Industries Ltd., 2026 LiveLaw (SC) 80 : 2026 INSC 81 : AIR 2026 SC 748

Section 61(3)(ii) — Material Irregularity — Seeking clarifications from resolution applicants by the Resolution Professional (RP) under the specific instructions of the CoC does not constitute "material irregularity." - The RP acts as a communicator for the CoC's queries to ensure a comprehensive evaluation of the feasibility and viability of resolution plans - Such conduct does not amount to an independent or unilateral modification of the process by the RP. Torrent Power v. Ashish Arjunkumar Rathi, 2026 LiveLaw (SC) 207 : 2026 INSC 206 : AIR 2026 SC 1347

Set-off in CIRP — Pari Passu Principle — Held - The principle of insolvency set-off as permitted in liquidation regulations cannot be applied to CIRP - Set-off of dues payable by the Corporate Debtor for a period prior to the commencement of the CIRP cannot be made from dues (or assets) payable to or belonging to the Corporate Debtor post the commencement of the CIRP - Allowing such a set-off would mitigate against the pari passu principle essential to the scheme of the IBC. [Relied on Bharti Airtel Ltd. v. Aircel Ltd. & Dishnet Wireless Ltd. (Resolution Professional), (2024) 4 SCC 668; Paras 15-25] Central Transmission Utility of India v. Sumit Binani, 2026 LiveLaw (SC) 289 : 2026 INSC 284