# Modern Asset vs. KNK Construction Private Limited

> SC judgment dated 2026-10-08. Citation: TCN-2026-SC-00116. Modern Asset (appellant/Operational Creditor) and KNK Construction Private Limited…

- **Court:** SC
- **Order date:** 8 Oct 2026
- **Citation:** TCN-2026-SC-00116
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/supreme-court-of-india/modern-asset-vs-knk-construction-private-limited-l78iq

## Summary

### Background

Modern Asset (appellant/Operational Creditor) and KNK Construction Private Limited (respondent/Corporate Debtor) had a contract for civil and structural work. KNK Construction Private Limited was admitted into Corporate Insolvency Resolution Process (CIRP). Modern Asset filed a claim of Rs.12,26,30,840/-, but only 0.72% (Rs.8,82,942/- with interest) was admitted in the resolution plan, which was approved by the NCLT. The erstwhile promoters of KNK Construction Private Limited became the Successful Resolution Applicant (SRA). Post-CIRP, KNK Construction Private Limited (SRA) initiated arbitration against Modern Asset for pre-CIRP dues arising from the same contract. Modern Asset argued that its claim was extinguished by the resolution plan and allowing the SRA's claim

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## Facts

Modern Asset and KNK Construction Private Limited entered into a contract for civil and structural work on 09.07.2018 for a total amount of Rs.133.68 Crores.

The contract included an arbitration clause (Clause 19.13) for dispute resolution.

Modern Asset paid a mobilization advance, and KNK Construction Private Limited furnished a bank guarantee of Rs.1,56,13,250/-.

Work commenced on 01.06.2018, with a timeline extended to 31.12.2019, and 95% of the work was completed.

Modern Asset threatened termination due to unrectified defects and subsequently terminated the contract on 25.02.2020.

KNK Construction Private Limited was admitted into Corporate Insolvency Resolution Process (CIRP) on 11.12.2019.

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## Issues and analysis

### Issue 1: Whether an Operational Creditor (OC) who suffered a major haircut in the Corporate Insolvency …

**Ratio:** An Operational Creditor whose claim was extinguished in CIRP with a major haircut can

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**Reasoning:** The Court found it inequitable for the SRA (erstwhile promoters) to pursue claims against

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**Interpretation:** The 'clean slate' principle under IBC Section 31, while extinguishing claims

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**Application:** The High Court's order appointing an Arbitrator is upheld, but modified. The

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## Parties

- **Judges:** K. VINOD CHANDRAN,…; J.B. Pardiw…
- **Appellants:** Modern…
- **Respondents:** KNK Construction…
- **Other parties:** Committee of…; Directors of the…; +3 more
- **Advocates:** Shyam D…; Nikhil N…

## Timeline

- **2018-07-09 — Contract Ag…**: Appellant and respondent entered into a…
- **2018-06-01 — Work Commen…**: Work on the contract…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 240A(1) — Application of this Code to micro, small and…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-240a)

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