This is the list of scenarios in which net-off happens
The margin requirement for all Stock F&O contracts will be increased 2 days prior to expiry (Wednesday and Thursday of the expiry week) to twice of the exchange mandated SPAN + Exposure margin required.
You can read more about Zerodh’s policy reg. physical settlement here.
In case you trade spreads and scenario arises where one of your position is ITM on expiry, I’ve explained here what happens in that case Physical delivery otm - #12 by ShubhS9