The principle of insolvency set-off is not applicable during the Corporate Insolvency Resolution Process under IBC.

NATIONAL COMPANY LAW TRIBUNAL

COURT ROOM NO. 1,

MUMBAI BENCH

Item No. 32

IA (I.B.C)/1789(MB)2025 IN C.P. (IB)/66(MB)2018

CORAM:

SH. PRABHAT KUMAR SH. SUSHIL MAHADEORAO KOCHEY HON’BLE MEMBER (TECHNICAL) HON’BLE MEMBER (JUDICIAL)

ORDER SHEET OF THE HEARING ON 17.09.2025

NAME OF THE PARTIES: ANCHOR LEASING PRIVATE LIMITED

V/s

EURO CERAMICS LIMITED

Section 7 & 60 (5) of the Insolvency and Bankruptcy Code, 2016

________________________________________________________________

ORDER

IA (I.B.C)/1789(MB)2025

1. Adv. Mahesh Rajpopat a/w Adv. Akshit Kothari for the Respondent

2. This Application has been filed by Resolution Professional, CA Nirav Tarkas

under Section 60 (5) of the Insolvency & Bankruptcy Code, 2016 (“Code”) R/W 11 National Company Law Tribunal Rules, 2016 seeking directions to The Deputy Commissioner of Income Tax, room No. 655 Aaykar Bhawan,

Mumbai. The Applicant has sought following relief;

i. Allow the present application. Allow the present application.

ii. To allow refund of Rs.53,22,217/- (in words Fifty lakh Twenty To

allow refund of Rs.53,22,217/- (in words Fifty lakh Twenty Two Thousand and Two Hundred and Seventeen only) with applicable interest in the liquidation account of CD immediately in the

interest of all stakeholders. the interest of all stakeholder.

iii. To direct the Income tax department to file appropriate claims to

direct the Income tax department to file appropriate claims before

liquidator as per the due process of IB code 2016.

iv. Pass such necessary order/ orders as may be deem fit in the Pass such necessary order/ orders as may be deem fit in the facts and circumstances of the case.

3. This tribunal had vide order dated 25.02.2019 admitted an application under Section 7 of the Code thereby commencing Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor. Thereafter the Corporate Debtor was admitted into Liquidation Process vide order dated 1.12.2020

4. The Corporate Debtor had filed its Income Tax Return for the AY 2019-2020 claiming the refund of Rs. 53,22,217/- (in words Fifty lakh Twenty Two Thousand and Two Hundred and Seventeen only) on 16.10.2019. The income tax department is stated to have determined the refund arising from said return, however, has adjusted the said refund amount against outstanding demand due from Corporate Debtor, as is discernible from the status of income tax refund available on e-filing portal, which shows as follows:

5. The Applicant liquidator is stated to have addressed a letter to the Respondent on 23.12.2024 seeking refund of the amounts unauthorizedly adjusted against the past dues, however no reply was received.

6. The Hon’ble Supreme Court in case of Bharti Airtel Ltd. and Anr. v.

Vijaykumar V. Iyer and Ors., (2024) ibclaw.in 02 SC explained the law on set off in CIRP process and Liquidation Proceedings under the IBC law. It held that “30. Given the aforesaid legal position, we do not think that the provisions of statutory set-off in terms of Order VIII Rule 6 of CPC or insolvency set-off as permitted by Regulation 29 of the Liquidation Regulations can be applied to the Corporate Insolvency Resolution Process. The aforesaid rule would be, however, subject to two exceptions or situations. The first, if at all it can be called an exception, is where a party is entitled to contractual set-off, on the date which is effective before or on the date the Corporate Insolvency Resolution Process is put into motion or commences. The reason is simple. The Corporate Insolvency Resolution Process does not preclude application of contractual set-off. During the moratorium period with initiation of the Corporate Insolvency Resolution Process, recovery, legal proceedings etc. cannot be initiated, enforced or remain in abeyance. Besides the moratorium effect, the terms of the contract remain binding and are not altered or modified.” In the present case, it is undisputed fact that the debt was owed by the Corporate Debtor to the Respondent Income Tax Department prior to commencement