A set off benefit under Liquidation Regulation 29 cannot be claimed during Liquidation Process where the due amount was demanded by Resolution Professional(RP) during the CIRP but not paid – Ritu Tandon Vs. M/s Rain Automotive India Pvt. Ltd. – NCLAT New Delhi

During the CIRP, the RP requested the Appellant to refund the amount of security deposit as it was the part of the estate of the Corporate Debtor and could not have been retained by the Appellant in view of prohibition contained in Section 14(1)(c) of the Code but the Appellant did not abide by it nor claim a set off in Form B which was submitted by her to the RP. Therefore, it was only an afterthought on the part of the Appellant who had perhaps waited for the initiation of the liquidation proceedings and at that time the claim of set off, in terms of the provisions of Liquidation Regulation 29 of the Regulations, as alleged was raised. NCLAT held that had it been a case where the RP had not even asked for the amount of security to be returned as it could not have been retained by the Appellant in view of Section 14(1)(c) of the Code or a case where RP had not gone to the Adjudicating Authority in a case where the Appellant had claimed a set off despite the provisions of Section 14(1)(c) then the matter would have been altogether different and perhaps the Appellant might have been right in its approach because there is no dispute that the rigours of Section 14 would come to an end as soon as the liquidation order is passed but the Appellant cannot be allowed to take advantage of its own wrong.

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