Set-off in liquidation requires mutual dealings between the same parties; cross-dues against separate group entities could not defeat admitted liability.

Set-off against an admitted liquidation liability was unavailable where the claimed cross-dues related to separate group entities rather than the same parties. The corporate debtor was treated as a distinct juristic person, each entity had undergone separate insolvency or liquidation proceedings, and Regulation 29 of the Liquidation Process Regulations permits set-off only on mutual dealings between the same parties. Separate load security deposits and separate billing supported the absence of mutuality. The liquidator was acting within statutory duties under the Insolvency and Bankruptcy Code, and the admitted dues remained recoverable assets of the liquidation estate. The Electricity Act argument did not change this result, and payment of the admitted amount with interest was upheld.

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Issues: Whether the operational creditor could resist payment of the admitted liability by invoking the group of companies doctrine and set-off against alleged dues payable by other group entities under Regulation 29 of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016.

Analysis: The corporate debtor was treated as a separate juristic person distinct from the other entities of the group, and each entity had undergone separate insolvency or liquidation proceedings. The claimed cross-dues related to different legal entities and could not be aggregated against the admitted liability of the present corporate debtor. Regulation 29 permits set-off only where there are mutual dealings between the same parties. The records also showed separate load security deposits and separate billing for each entity. The liquidator was acting within the statutory duties under the Insolvency and Bankruptcy Code, 2016, and the admitted dues formed part of the recoverable assets of the liquidation estate. The plea based on the Electricity Act, 2003 did not assist the appellant, and the doctrine of set-off was held inapplicable on the facts.

Conclusion: The request to set off dues against other group entities was rejected, and the direction to pay the admitted amount with interest was upheld.

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