![Cost cannot be imposed on financial creditors for entering into a settlement and seeking withdrawal under Section 12A.. State Bank of India v. Ravi Bansal Interim Resolution Professional & Anr. [Comp. App. (AT) (Ins) No. 58, 138, & 276 of 2026]. NCLAT. LawLens](/stories/thumbnails/cost-cannot-be-imposed-on-financial-creditors-for-entering-into-a-settlement-and-seeking-w-194431312c8c4aceb8aa036aa7945863.webp)
01Facts
Punjab National Bank (PNB) initiated Corporate Insolvency Resolution Process (CIRP) against Karnal Agriculture Industries Ltd. (Corporate Debtor/CD) on 10.12.2024.
p. 2Upon appeal, the NCLAT stayed the constitution of the Committee of Creditors (CoC) but directed the IRP to collate claims.
p. 3During this interim period, the CD entered into One-Time Settlements (OTS) with its three financial creditors—SBI, PNB, and ARCIL—who collectively held 100% voting share.
pp. 4-5Consequently, PNB filed I.A. 5150/2025 under Section 12A of the IBC for withdrawal of the CIRP.
p. 3The Adjudicating Authority (NCLT) allowed the withdrawal on 30.10.2025 but imposed a cost of ₹5,00,000 on each financial creditor, citing "laxity," "unduly prolonged period" in settling, and "financial prejudice" due to haircuts.
p. 4, para 18The Appellants challenged only the imposition of these costs.
02Issues
i.Whether the Adjudicating Authority was justified in imposing costs on Financial Creditors while allowing an application for withdrawal under Section 12A of the IBC.
p. 5, para 1303Law Applied
The Court applied Section 12A of the Insolvency and Bankruptcy Code, 2016, which permits the withdrawal of an application admitted under Section 7, 9, or 10 with the approval of 90% voting share of the CoC.
p. 4It further referenced the procedural requirements of Form-FA for such withdrawals.
p. 5, para 9Regarding the rights of other creditors to object during withdrawal proceedings, the court noted the principles established by the Supreme Court in *Glass Trust Company (LLC) v. BYJU Raveendran & Ors.*
p. 5, para 1204Reasoning
The NCLAT reasoned that since the CoC had not yet been formally constituted due to a prior stay order, the Financial Creditors were within their rights to enter into an OTS with the Corporate Debtor.
p. 4, para 6The court observed that the three appellant banks constituted 100% of the voting share, satisfying the statutory threshold for withdrawal.
p. 5, para 9The NCLAT rejected the NCLT’s findings of "laxity" or "preferential payment," noting that no other creditors had filed objections to the Section 12A application.
p. 5, para 8, 12The Tribunal found that the Financial Creditors had followed due process by filing the necessary Form-FA after receiving settlement payments.
pp. 5, para 8-9Consequently, the Tribunal determined that the act of settling a debt and seeking withdrawal does not constitute a "valid reason" or "misconduct" that invites the imposition of punitive costs.
p. 6, para 1305Holding
The NCLAT held that there was no justification for imposing costs on the Financial Creditors for settling their dues and opting for withdrawal under Section 12A.
p. 6, para 13The Tribunal set aside the portion of the impugned order dated 30.10.2025 that imposed a cost of ₹5,00,000 on each of the three Financial Creditors.
p. 6, para 14The appeals were allowed to that extent.
p. 6, para 15Original Court PDF
State Bank of India v. Ravi Bansal Interim Resolution Professional & Anr. [Comp. App. (AT) (Ins) No. 58, 138, & 276 of 2026]
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