Assam Power Distribution's Set-Off Claim Against Brahmaputra Group Rejected; Liquidator's Demand for Dues Supported by Tribunal
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) upheld the separate legal entity doctrine, rejecting Assam Power Distribution Company Ltd.'s (APDCL) claim for a set-off against dues owed by other entities of the Brahmaputra Group. The judgment, delivered on July 3, 2026, emphasized that set-off under Regulation 29 of the IBBI (Liquidation Process) Regulations, 2016, is only permissible between the same parties and cannot be extended to third-party entities or dissolved companies.
The case arose from an appeal against an order by the National Company Law Tribunal (NCLT), Guwahati Bench, which directed APDCL to pay Rs. 37,66,906.80 plus applicable interest to the liquidator of Brahmaputra Rolling Mills Pvt. Ltd. APDCL had argued for a set-off, citing amounts owed by other companies within the Brahmaputra Group, amounting to over Rs. 9 crore. However, the NCLAT ruled that each company within the group is a distinct legal entity and cannot be treated collectively for insolvency proceedings.
The tribunal further dismissed APDCL's reliance on the Group of Companies Doctrine, stating that this principle does not override the separate legal identities of entities under the Insolvency and Bankruptcy Code (IBC), 2016. The judgment reiterated that the overriding effect of Section 238 of the IBC applies, dismissing claims based on the Electricity Act, 2003.
Highlighting the duties of a liquidator under Section 35 of the IBC, the tribunal supported the liquidator's actions to recover admitted dues as part of the liquidation process. The NCLAT's decision underscores the importance of adhering to the legal framework governing insolvency and affirms the doctrine of separate legal personality.
Bottom line:-
Insolvency and Bankruptcy Code (IBC) - The doctrine of set-off under Regulation 29 of the IBBI (Liquidation Process) Regulations, 2016, applies only where the corporate debtor and another party owe money to each other. It does not apply to claims involving different legal entities or dissolved entities.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 35, Regulation 29 of the IBBI (Liquidation Process) Regulations, 2016, Insolvency and Bankruptcy Code, 2016 Section 238.
