Service Law – Indian Navy – Permanent Commission – Short Service Commission Officers – ACR Grading – Structural Prejudice – SSCWOs inducted into the Navy from 1991 onwards were, as a class, ineligible for consideration for Permanent Commission until 2009, and even thereafter only in limited branches/cadres – Male SSCOs in certain non-technical branches were similarly excluded for years – During this period, Annual Confidential Reports were filled with the understanding that these officers had no career progression ahead of them – Under the bell-curve-based appraisal system, higher gradings were reserved for those with promotion prospects, resulting in systematically middling grades for the Appellants – ACRs constituted 90% of the marks in the December 2020 Selection Board, making such historical grades determinative of inter se merit – Following introduction of formal PC endorsement columns in 2009, IOs/COs routinely marked ineligible officers as "Not Recommended for PC" as a matter of policy rather than performance evaluation – Under the Approach Paper, such officers were disqualified if marked "Not Recommended for PC" in three or more of the last five ACR cycles – Held: The institutional assumption that these officers had no future in the Navy was embedded in their service records and later invoked against them at the decisive stage – The circularity of past ineligibility being transformed into deemed unsuitability has materially distorted the assessment of inter se merit and resulted in an uneven playing field [Paras 9–17].

Dynamic Vacancy Model – Vacancy Computation – Rationality – Arbitrariness – Under Regulation 203 of the 1963 Regulations, grant of PC is subject to availability of vacancies in the stabilised cadre – In the December 2020 Selection Board, the Navy applied a Dynamic Vacancy Model, distributing the total cadre deficiency by dividing it across rounds using the divisor 15, with vacancies reducing dynamically with each successive round – Appellants challenged the model as having no policy provenance and artificially suppressing vacancy numbers – Respondents justified it as a one-time mechanism necessitated by the extraordinary situation of considering 24 batches simultaneously – Held: The material time for purposes of Regulation 203 was correctly treated as 2020, being when the Selection Board was convened pursuant to judicial directions – Division of deficiency by 15 corresponds to the approximate additional years of service upon grant of PC and is anchored in service realities rather than caprice – Non-exhaustion of all vacancies is a valid policy choice open to the Competent Authority and does not violate any right of the candidates – Dynamic Vacancy Model held rational and non-arbitrary [Paras 18–43].

Natural Justice – Procedural Fairness – Non-Disclosure of Evaluation Criteria – Unlike the Army and Air Force, which formally promulgated the criteria, vacancy computation methodology, and marks apportionment before conducting Special Selection Boards pursuant to judicial directions, the Indian Navy did not disclose any such material to the assessee officers prior to the December 2020 and September 2022 Selection Boards – Officers were thus unaware that their last five ACR cycles would constitute the exclusive basis of evaluation and had no opportunity to seek redressal of adverse remarks – This opacity was contrary to basic norms of fairness and transparency and, as noted in Amit Kumar Sharma, constituted a breach of natural justice – Held: The Navy was obligated to place relevant policy material in the public domain before commencement of the selection process – Non-disclosure vitiates the selection process – AFT's findings on this aspect affirmed [Paras 44–51].

Relief – Directions – Third Round of Litigation – Grant of Permanent Commission as One-Time Measure – This batch of appeals constitutes the third round of litigation regarding the Appellants' claim for PC before the Supreme Court – Given the inherently skewed ACRs suffered by the Appellants arising from prolonged ineligibility, a fresh Special Selection Board would not yield any equitable result – Held: Instead of remanding for yet another Selection Board, the Court exercised jurisdiction to grant PC directly as a one-time measure to: (a) SSCWOs inducted prior to January 2009; (b) SSCWOs inducted after January 2009 in branches/cadres other than Law, Education, and Naval Architecture; and (c) male SSCOs barred from PC consideration by their initial terms of service – Officers released during pendency of proceedings but falling in these categories deemed to have completed 20 years of qualifying service and entitled to pension and consequential benefits, except arrears of pay – Arrears, if any, to run from 01.01.2025 – For future Selection Boards, General Instructions laying down vacancies, criteria, and marks apportionment to be issued mandatorily before commencement of the Board [Paras 52–57].

Decision: Appeals allowed – Directions of the AFT in the Impugned Judgement dated 27.09.2024 and Impugned Orders dated 13.02.2025 and 06.03.2025 modified – PC granted as a one-time measure to specified categories of serving SSCOs subject to medical fitness and disciplinary clearance – Released officers of specified categories deemed to have completed 20 years of qualifying service and entitled to pension with effect from 01.01.2025 – Respondents directed to issue General Instructions prior to all future Selection Boards and undertake the policy examination directed by the AFT.

SLP – Recall of Order – Maintainability of Miscellaneous Application after dismissal – Application sought recall of non-speaking order dismissing SLP based on subsequent developments in insolvency proceedings – Whether such MA maintainable – Held: Post-disposal MA maintainable only in rare cases such as clerical errors or impossibility of execution – Court becomes functus officio after disposal – Present case does not fall within exceptions – MA not maintainable [Paras 4–5]

Subsequent Events – Scope in disposed proceedings – Reliance on OTS, CIRP withdrawal and CoC decisions after dismissal of SLP – Whether subsequent developments can reopen final adjudication – Held: Subsequent events in separate statutory proceedings cannot be examined in collateral MA nor used to reopen concluded SLP – Remedy lies before appropriate forum [Paras 6, 9]

Doctrine of Merger – Dismissal of SLP – Effect – Held: Dismissal of SLP by non-speaking order does not attract doctrine of merger – However, absence of merger does not permit reopening through MA beyond settled parameters [Para 7]

Fraud – Allegation of suppression – Recall jurisdiction – Held: Fraud must be clearly established – Mere allegation insufficient – Non-speaking dismissal order did not rest on any representation alleged to be suppressed – No ground to recall order on fraud basis [Para 8]

IBC – Commercial Wisdom of CoC – Judicial Review – Challenge to settlement and comparative offers – Held: Decisions under Section 12A IBC fall within domain of CoC’s commercial wisdom – Courts cannot sit in appeal over such decisions or compare financial offers – Limited judicial review permissible only on statutory grounds in appropriate proceedings [Paras 10–12]

Finality of Proceedings – Reopening concluded litigation – Attempt to use MA to revisit merits and introduce new grounds beyond original lis – Held: Impermissible – Finality cannot be disturbed through collateral proceedings [Paras 6, 13]

Decision: Miscellaneous Application dismissed – Recall of order dated 25.02.2025 refused – Liberty granted to pursue remedies in appropriate forum – No opinion expressed on merits of pending civil suit or IBC proceedings.

Arbitration – Manning Agreement – Excepted Matters – Interpretation of Default Clause and Arbitration Clause – Rule of Law – Appellant entered into a Manning Agreement with the Andaman and Nicobar Administration for manning 17 vessels – Vessel M.V. Long Island grounded, and the Administration unilaterally recovered Rs. 2,87,84,305/- from the appellant's pending bills as penalty – Appellant disputed liability – Matter referred to arbitration before a former Judge of this Court – Arbitrator held Clause 3.20 void under Section 28 of the Contract Act, construed Clauses 3.20 and 3.22 harmoniously, and awarded the recovered amount with interest – District Judge upheld the award – High Court set aside the award holding the dispute fell within the "excepted matter" of Clause 3.20 – Held: High Court's reasoning is seriously flawed – Clause 3.20 can only operate in cases where the Manning Agent does not dispute liability – Where liability itself is disputed, the administration cannot act as judge in its own cause – The arbitration clause (Clause 3.22) being widely worded covers all disputes and prevails in cases of disputed liability – Award restored [Paras 20–29, 40–44].

Contract Law – One Party Cannot Be Decision-Maker on Disputed Breach – Fundamental Rule of Law – A contract cannot provide that one party will be the arbiter to decide whether it has committed breach or the other party has committed breach – Where the Manning Agent disputed wilful action or negligence on its part, the question of liability could only be decided by an adjudicatory forum, i.e., a court or arbitral tribunal – Administration's decision is final and binding only in cases where liability is admitted and the administration proceeds to quantify the amount – Held: The administration's claim to decide disputed liability and place such decision beyond all judicial scrutiny is opposed to the fundamental principle that no party shall be a judge in its own cause – Rule of Law is not alien to interpretation of contractual clauses, especially where the State and its instrumentalities are parties [Paras 25–28, 33–34].

Contract – Clause Barring Both Court Proceedings and Arbitration – Void – Vacuum in Legal Remedies Impermissible – Section 28 of the Indian Contract Act, Section 9 CPC – Clause 3.20 purported to bar recourse both to courts of law and to arbitration, leaving the Manning Agent remediless – Held: No construction shall be placed on a contract that leads to a vacuum in legal remedies – The maxim ubi jus ibi remedium admits no exception – Matters may be excepted from arbitration, but exclusion of all judicial remedies cannot be countenanced – Such clauses must not be incorporated in contracts between private parties and the State – "Except matters one may, but exclude justice, one cannot" [Paras 30–33, 38–39].

Arbitral Award – Scope of Jurisdiction – Section 37 of Arbitration and Conciliation Act – The arbitrator rightly interpreted Clauses 3.20 and 3.22 harmoniously to hold that the dispute was arbitrable – Arbitrator correctly found that the Manning Agent's duty was limited to recruiting and placing seafarers with the technical agent, that seafarers' employment contracts were with the technical agent, and that the Manning Agent had no on-board functions or obligation for safe operation of the ship – These findings being within the domain of the arbitrator, the High Court exceeded its jurisdiction under Section 37 in interfering with the award [Paras 40–43].

Decision: Appeals allowed – Judgment and order dated 11.07.2018 of the High Court at Calcutta (Circuit Bench, Port Blair) set aside – Arbitral award dated 08.05.2017 restored – No order as to costs.

Insolvency and Bankruptcy – Corporate Insolvency Resolution Process (CIRP) – Moratorium – Section 14 IBC – Security Deposit – Appropriation of Pre-CIRP Dues – Appellant (CTUIL) held a cash deposit of Rs. 108.44 crores from the Corporate Debtor (KMPCL) as a Payment Security Mechanism (PSM) in lieu of a Letter of Credit – After CIRP commenced on 03.10.2019, the Appellant adjusted Rs. 85.13 crores against bills raised prior to the commencement date – NCLT and NCLAT held such appropriation illegal – Held: A security deposit remains the property of the entity making the deposit until a valid adjustment is made; once the moratorium under Section 14 IBC kicks in, the recovery of pre-CIRP dues must concede to the procedure envisaged in the IBC; the creditor must file a claim before the Resolution Professional rather than resorting to unilateral appropriation; such adjustment after the insolvency commencement date violates the moratorium and the pari passu principle [Paras 1–4, 13, 24–25].

Insolvency Law – Set-off in CIRP – Contractual and Equitable Set-off – Applicability – Appellant argued a right of set-off as the title to the money was impeached upon default – Held: Statutory set-off under CPC or insolvency set-off under Liquidation Regulations does not apply to CIRP; contractual set-off is permissible only if it occurred before or on the date the CIRP was put in motion; set-off of dues payable by the Corporate Debtor for a period prior to the commencement of CIRP cannot be made from dues payable to or assets held for the Corporate Debtor post-commencement; the deposit in question was an asset of the Corporate Debtor as on the insolvency commencement date and was not amenable to set-off post-moratorium [Paras 14–19, 22].

Insolvency and Bankruptcy – Nature of Security – Letter of Credit (LoC) vs. Cash Deposit – Section 14(3)(b) IBC – Appellant contended the deposit was in lieu of an LoC which could be enforced despite CIRP – Held: Even if the deposit were equated to an LoC, its encashment or enforcement after the insolvency commencement date is prohibited by the moratorium under Section 14; Section 14(3)(b) refers to a contract of guarantee to a Corporate Debtor (enforceable for the benefit of the CD) and not from the CD; an operational creditor cannot use a security deposit to bypass the priority of claims established under the IBC; the deposit must be reckoned as an asset of the Corporate Debtor for the purposes of the Resolution Plan [Paras 20–22, 25].

Decision: Appeals dismissed – Orders of NCLT and NCLAT affirmed – The apportionment of pre-CIRP dues from the security deposit after 03.10.2019 held violative of Section 14 IBC – Appellant directed to satisfy pre-CIRP dues through the claim process admitted by the Resolution Professional.

Motor Vehicles Act – Liability – Requisitioned Vehicle – Determination of “Owner” – Bus requisitioned by District Election Officer for Gram Panchayat elections caused fatal accident – High Court shifted liability from insurer to State authority – Held: During period of requisition, control and possession vest with State – Registered owner loses effective control – Person in control and possession deemed “owner” under Section 2(30) – Liability rightly fastened on requisitioning authority [Paras 5-7].

Insurance Liability – Scope of Policy – Vehicle used under statutory requisition – Insurance contract contemplates ordinary use by insured – Compelled use for public purpose beyond control of insured not covered within normal risk – Insurer cannot be made liable for risks arising out of State-controlled deployment – Extending liability would unjustly enlarge contractual risk [Paras 9].

State Liability – Requisition of Private Property – When State exercises statutory power to requisition vehicle, it assumes complete control and corresponding responsibility – Owner divested of possession and decision-making power – Liability for accident during such period must rest with State authority – Principle of control determines liability [Paras 9].

Distinction – Requisition vs Contractual Use – Cases where vehicles operated under agreement distinguishable – In contractual arrangements, insurer may remain liable – However, in statutory requisition (compulsory takeover), liability shifts to State – Earlier rulings on contractual operation not applicable [Para 10].

Driver’s Status – Implied Acceptance by State – Though statute does not expressly provide for requisition of driver, authorities often utilize driver along with vehicle – By accepting services of driver, State implicitly acknowledges competence and assumes operational control – Reinforces State’s liability [Para 11].

Motor Accident Compensation – Liability Determination – Tribunal awarded compensation – High Court enhanced compensation and shifted liability to State – Supreme Court upheld High Court’s findings – No error in fastening liability on State authority instead of insurer [Paras 2-4, 7].

Decision: Appeal dismissed – Liability of compensation upheld against requisitioning authority (State) – Insurer absolved – No interference with impugned judgment.

Service Law – Public Recruitment – Select List – No Right to Claim Vacancy Arising from Non-Joining of Selected Candidate – Karnataka Recruitment of Gazetted Probationers Rules, 1997, Rules 4(3) and 11 – KPSC issued notification in 2011 for 362 posts of Gazetted Probationers – Respondent (ex-serviceman) was selected and appointed as Assistant Commissioner of Commercial Taxes, Group A – Another candidate selected for the post of Assistant Commissioner, Karnataka Administrative Service, Group A (GM/Ex-MP category) did not undergo mandatory medical examination or police verification and did not report for duty – Respondent claimed that as the candidate immediately next below, the unfilled post ought to be offered to him – DPAR rejected the claim holding that the 1997 Rules contain no provision for an additional select list and that the vacancy must be treated as a fresh vacancy – Tribunal upheld the rejection – High Court allowed the writ petition holding that the vacancy remained unfilled since the selected candidate had not undergone the mandatory medical examination, and directed consideration of the respondent – Held: High Court erred – The 1997 Rules contemplate service-wise lists prepared equal to the number of notified vacancies and do not provide for any reserve, waiting, or additional list – A vacancy arising from non-completion of pre-appointment formalities or non-joining by a selected candidate cannot be claimed as of right by the next candidate below [Paras 6–10, 19–20].

Select List – Nature and Scope – Inclusion Does Not Confer Indefeasible Right to Appointment – Rule 11 of the 1997 Rules provides for preparation of separate service-wise lists equal to the number of available vacancies – The list is not an open-ended reservoir of candidates and ceases to operate once the notified vacancies are filled or the selection process has run its course – The first proviso to Rule 11(3) makes clear that inclusion in the list does not by itself result in appointment, which remains subject to Government satisfaction as to suitability – The Rules contain no enabling provision permitting the State to revert to the same list and travel downward to fill a post left unfilled by a selected candidate – Held: The statutory scheme does not permit such operation of the select list beyond its statutory framework [Paras 7–9, 15].

Preference-Based Allocation – Multi-Service Recruitment – Post Facto Adjustment Not Permissible – Sub-rule (3) of Rule 4 requires candidates to indicate their order of preference and debars consideration for posts not preferred – Recruitment being to multiple services and groups of posts in Group A and Group B, the process was one of service-wise selection and allocation against notified vacancies – Any post facto adjustment upon non-joining of a selected candidate would unsettle a service-wise and preference-based allocation exercise which had already attained finality – Respondent's claim to be shifted to another post, in the absence of express statutory sanction, cannot be sustained [Paras 13, 16].

Validation Act – Legislative Finality – Karnataka Civil Services (Validation of Selection and Appointment of 2011 Batch Gazetted Probationers) Act, 2022, Section 3 – The Validation Act validates the KPSC's 2011 batch selection and mandates issuance of appointment orders as per the KPSC selection list – It further bars any suit or proceeding for review of such appointments – Any direction reopening the concluded 2011 process and compelling recourse to a mode of appointment not contemplated by the 1997 Rules would be plainly inconsistent with this legislative finality [Para 18].

Decision: Appeal allowed – Impugned judgment and order dated 21.04.2025 of the High Court of Karnataka set aside – Writ Petition No. 24455 of 2023 (S-KSAT) dismissed – Order of the Karnataka State Administrative Tribunal dated 13.10.2023 and communication of DPAR dated 27.06.2022 restored.

Environmental Law – NGT – Abdication of Adjudicatory Functions – Expert Committee – Petrol pump sought to be established on a National Highway in a commercial area designated under the Haridwar Master Plan 2025 – First respondent approached the NGT alleging violation of CPCB siting guidelines (50-metre distance from schools, hospitals, and designated residential areas) – NGT, without adjudicating on merits, delegated the decision to a committee and disposed of the petition – On execution petition, NGT directed compliance on the first date without notice to the parties – Held: NGT grossly abdicated its adjudicatory powers by entrusting a committee to decide on compliance and disposing of the matter without any finding – Expert committees constituted by courts are meant to assist adjudication, not to adjudicate – Adjudicatory functions conferred on the NGT under Sections 14 and 15 of the NGT Act cannot be delegated to committees, even expert committees – Both impugned orders set aside [Paras 3, 10–14, 16, 19–20].

Natural Justice – NGT – Execution Petition – Order Without Notice – The NGT disposed of the execution petition on the first date of consideration without issuing notice to the respondents and without considering the contents of the committee report – Held: Such disposal is in clear violation of Section 19(1) of the NGT Act which expressly mandates compliance with principles of natural justice – The NGT cannot blindly adopt the conclusion of a fact-finding committee without giving parties an opportunity to object [Paras 5, 13, 19].

CPCB Siting Guidelines – Designated Residential Area – Compliance – The CPCB guidelines require a minimum 50-metre distance from schools, hospitals (10 beds and above), and residential areas designated as per local laws – In the present case, the proposed site was situated in a commercially designated area as per the Haridwar Master Plan 2025 – The single residence and residential colony found in the vicinity were not within a designated residential area under local laws – Play school in the vicinity was no longer operational – High-tension line was approximately 5 metres from the site, not passing overhead – Third committee report found full compliance with CPCB guidelines – Held: No violation of siting guidelines established on record [Paras 2, 16–18].

Locus Standi – NGT – Petitioner with No Perceivable Grievance – The first respondent had no residence in the vicinity of the proposed site and could not satisfactorily explain his locus before this Court – Held: A remand would be prejudicial to the appellants and the public interest in establishing a public utility outlet, particularly when the reports are clear and locus of the complainant is doubtful – Matter not remanded [Paras 9, 19–20].

Decision: Appeals allowed – Orders of the NGT dated 01.02.2021 and 11.11.2022 set aside – District Magistrate, Haridwar directed to consider the matter afresh, obtain statutory clearances as required, and permit establishment of the petrol pump if in compliance with extant laws.

Environmental Law – Forest (Conservation) Act, 1980 – Deemed Forest – Statutory Master Plan – Primacy – Subject land acquired in 1986 as agricultural land, allotted to Railways in 2008 for development of Bijwasan Integrated Metropolitan Passenger Terminal, incorporated in Master Plan of Delhi 2021 for mixed-use development – RFP issued in 2022 – Challenged before NGT on the ground that approximately 1100 trees on subject land make it deemed forest requiring prior Central Government approval under Section 2 of 1980 Act – NGT dismissed OA – Held: Land earmarked under a duly approved statutory Master Plan, which was not forest land or deemed forest at the time of its coming into force, cannot subsequently be declared a deemed forest overriding the statutory binding force and sanctity of such Master Plan – Subsequent growth of vegetation or increase in tree cover does not alter the legal character of land for purposes of 1980 Act – Relevant date for determining nature of land as deemed forest is the date of coming into force of the Master Plan – Appeal dismissed [Paras 25, 47, 60, 65].

Deemed Forest – Definition and Scope – T.N. Godavarman Principle – The word "forest" must be understood in its dictionary meaning and the 1980 Act applies to areas recorded as forest in government records irrespective of ownership – Concept of deemed forest evolved to extend protection beyond formally notified forests – However, mechanical application of T.N. Godavarman without regard to historical land use and contemporaneous official records is impermissible – Determination of whether land is deemed forest must take into account historical character, revenue records, and the planning framework within which land is situated – Subject land was recorded as agricultural land at time of acquisition and was not treated as deemed forest at time of Master Plan formulation – Subsequent proliferation of vegetation, especially invasive species, cannot alter legal status [Paras 27-32, 44-48, 58-60].

Master Plan – Statutory Force and Finality – A Master Plan is not a mere policy document but a statutory planning instrument with binding force on all stakeholders once approved and notified by competent authority – Development projects under a Master Plan are conceived based on conditions prevailing at time of its formulation – If subsequent natural changes in vegetation were to unsettle operation of a Master Plan, it would introduce perpetual instability into statutory planning – Courts and tribunals cannot mandate fresh plans or interfere with implementation of a finalised Master Plan under guise of applying environmental principles – Sanctity and statutory binding force of Master Plan shall prevail – No permission under Section 2 of 1980 Act required where land was not forest or deemed forest at time of Master Plan's coming into force [Paras 38-48, 60].

Invasive Species – Ecological Character of Land – Mere presence of vegetation, particularly invasive alien species introduced through historical human intervention, does not signify the presence of a natural forest ecosystem – Approximately 70% of trees on subject land comprise invasive species such as Vilayati Kikar (Prosopis juliflora) and Subabul – Invasive species displace indigenous vegetation, reduce biodiversity, disrupt food chains and alter soil and hydrological conditions – In assessing whether land possesses forest ecosystem character, distinction must be drawn between naturally evolved indigenous vegetation and invasive species which may signify ecological disturbance – Directions issued to plant native/indigenous trees and replace invasive species [Paras 49-54, 66-67].

Environmental Safeguards – Undertakings – Respondents RLDA and Ministry of Railways undertook to obtain all necessary permissions including under 1980 Act for patches identified as deemed forest before carrying out any work – RFP mandates obtaining all statutory clearances – 20% of project area to be maintained as green land – Tree transplantation and compensatory afforestation to be undertaken strictly in accordance with applicable provisions – All implementing agencies directed to ensure transplantation of native/indigenous trees to maximum extent possible [Paras 61-63, 67].

Decision: Appeal disposed of – NGT order upheld – Land earmarked under Master Plan held not to be deemed forest – Relevant date for determination is date of coming into force of Master Plan – Respondents directed to obtain all statutory permissions for identified patches and to carry out compensatory afforestation before commencement of work – Native tree plantation directed – Contempt Petition (C) No. 860 of 2024 also disposed of – No order as to costs [Paras 64-71].

Insolvency and Bankruptcy Code, 2016 – Resolution Plan – Extinguishment of Claims – Clean Slate Principle – Arbitration – Set-off as Defence – Appellant-corporate debtor admitted into CIRP in 2020 – Arbitration invoked by resolution professional – Respondent filed counterclaim before Tribunal but failed to raise its claim before the Resolution Professional during CIRP – Resolution plan approved by NCLT on 13/10/2023 – Tribunal allowed appellant's application under Section 31(6) of A&C Act and rejected counterclaim vide interim award – Single Judge upheld – Division Bench set aside and directed Tribunal to continue proceedings including counterclaim – Held: On approval of resolution plan, all claims not forming part thereof stand extinguished; respondent cannot pursue counterclaim independently or seek affirmative relief – However, respondent permitted to raise plea of set-off as a defence, to the limited extent of defending against appellant's claim, and not to recover any surplus – Appeal partly allowed – Impugned order of Division Bench modified [Paras 8-27].

Clean Slate Principle – Section 31(1), IBC – Effect of Approval of Resolution Plan – Once resolution plan is approved by adjudicating authority, it is binding on all stakeholders and all claims not forming part of resolution plan stand extinguished – Respondent's counterclaim, raised before Tribunal but not lodged before Resolution Professional and not included in resolution plan, held extinguished – Respondent cannot seek any affirmative or independent relief from Tribunal on the basis of such counterclaim [Paras 10-13].

Set-off – Plea of Defence – Paragraph 12.4.1 of Resolution Plan – Resolution plan bars all "payments/settlements" in respect of claims not raised before Resolution Professional, including counterclaims in pending arbitration – However, plain language of Paragraph 12.4.1 does not expressly bar a plea of set-off raised purely as a defence – Applying maxim expressio unius est exclusio alterius, intention to exclude defensive plea of set-off cannot be inferred where it is neither expressly included nor expressly barred – Respondent permitted to raise set-off as defence only; no affirmative or surplus recovery permissible – If arbitration withdrawn by appellant, counterclaim/defence of respondent also fails [Paras 20-27].

Clarifications – (a) If amount in counterclaim found due and exceeds amount awarded to appellant, surplus not recoverable by respondent – (b) If any amount remains payable to appellant after adjustment, same recoverable by appellant – (c) Judgment limited to facts and terms of Paragraph 12.4.1 of the resolution plan [Paras 27-28].

Decision: Appeal partly allowed – Impugned order of Division Bench of Calcutta High Court modified – Respondent not entitled to independently pursue counterclaim but permitted to raise plea of set-off as defence before Arbitral Tribunal on terms specified – Parties to bear their own costs [Paras 30-32].