Expert Take: Clean Slate Under The Insolvency And Bankruptcy Code, 2016 — Not A One-Way Street

Introduction

In the recent judgment in Modern Asset v. KNK Construction Private Limited (decided on October 8, 2026 reported as 2026 SCC OnLine SC 2088) (“Judgment“), the Hon’ble Supreme Court of India (“Supreme Court“) considered whether an operational creditor, which had suffered a major haircut in the corporate insolvency resolution process (“CIRP“) of a corporate debtor, can be proceeded against by the successful resolution applicant for the pre-CIRP dues allegedly owed by the operational creditor to the corporate debtor, under the very same contract (on the basis of which the operational creditor had filed its claims in the CIRP of the corporate debtor).

Background

Factual background