#Corporate Separateness

The NCLAT has clarified that Regulation 29 of the IBBI Liquidation Regulations does not permit set-off claims between a corporate debtor and a creditor through affiliated group entities, upholding the doctrine of corporate separateness. This ruling directly impacts how operational creditors and liquidators assess mutual obligations in insolvency proceedings, preventing cross-entity netting that could distort the waterfall of claims under the IBC.

The Kerala High Court has ruled that directors of Tata Consumer Products Ltd. cannot be named as parties in an industrial dispute between Tata Coffee Ltd. and its employee, affirming that only the actual employer entity is a proper respondent under Section 10(1)(c) of the Industrial Disputes Act. This clarifies a critical boundary in labour litigation, shielding holding companies and their leadership from being dragged into operational disputes of subsidiary entities.

Bombay HC clarifies that corporate affiliation alone does not bind non-signatory group companies to arbitration. Consent must be inferred from active participation in contract negotiation, performance, or dispute resolution-setting a higher threshold for piercing the corporate veil in arbitration disputes.