s 346 Mutual credit and set‑off
346.—(1) Where there have been any mutual credits, mutual debts or other mutual dealings between a bankrupt and any creditor, the debts and liabilities to which each party is or may become subject as a result of such mutual credits, debts or dealings are to be set off against each other and only the balance is to be a debt provable in bankruptcy. (2) The following are excluded from any set-off under subsection (1):(a) any debt or liability of the bankrupt that is not a debt provable in bankruptcy; (b) any debt or liability that arises by reason of an obligation incurred at a time when the creditor had notice that a bankruptcy application relating to the bankrupt was pending.