Facts
The Corporate Insolvency Resolution Process (CIRP) against Karnal Agriculture Industries Ltd. (Corporate Debtor) commenced on 10.12.2024 via a Section 7 application by Punjab National Bank (PNB).
Source reference: p.2On 18.12.2024, the Appellate Tribunal stayed the constitution of the Committee of Creditors (CoC) while allowing the IRP to collate claims.
Source reference: p.3During this interim period, the Corporate Debtor reached a settlement and obtained One Time Settlements (OTS) from its three Financial Creditors—PNB, SBI, and ARCIL (representing 100% voting share).
Source reference: p.3-4Consequently, PNB filed an application under Section 12A of the IBC for withdrawal of the CIRP.
Source reference: p.3On 30.10.2025, the Adjudicating Authority (NCLT) allowed the withdrawal but imposed a cost of Rs. 5,00,000/- on each Financial Creditor, citing "laxity," "unduly prolonged" resolution, and "substantial haircuts."
Source reference: p.4The Financial Creditors appealed solely against the imposition of these costs.
Source reference: no citationIssues
Whether the Adjudicating Authority was justified in imposing a cost of Rs. 5,00,000/- on each Financial Creditor while allowing the withdrawal of CIRP under Section 12A of the IBC.
Source reference: p.4 / para. 13Law 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.
Source reference: p.3The legal principle established by the Supreme Court in *Glass Trust Company (LLC)*, noting that while other creditors have the right to object to a Section 12A withdrawal, the primary objective of the Code is the resolution of insolvency, which may include settlement between parties.
Source reference: p.5Reasoning
The Appellate Tribunal found that the Adjudicating Authority’s reasons for imposing costs—namely the "haircut" taken by banks and the time taken to settle—were not valid grounds for penalties.
Source reference: p.4-5The Tribunal noted that because of the stay order dated 18.12.2024, the CoC was never formally constituted, and the Financial Creditors (who represented 100% of the possible voting share) were within their rights to enter into an OTS with the Corporate Debtor.
Source reference: p.4The Tribunal observed that no other creditors had filed objections to the withdrawal application.
Source reference: p.5Since the Financial Creditors followed the prescribed procedure of filing Form-FA after receiving payment and clearly disclosed all facts in the Section 12A application, there was no evidence of "laxity" or "lack of due diligence" that warranted punitive costs.
Source reference: p.5Holding
The NCLAT held that the imposition of costs on the Financial Creditors lacked a valid legal basis.
The Tribunal set aside the portion of the impugned order dated 30.10.2025 that imposed a cost of Rs. 5,00,000/- on SBI, PNB, and ARCIL.
Source reference: para. 14The appeals were allowed to that extent, while the order permitting the withdrawal of the CIRP remained intact.
Source reference: para. 15Original Court PDF
State Bank of India v. Ravi Bansal Interim Resolution Professional & Anr. [Comp. App. (AT) (Ins) No. 58, 138, and 276 of 2026]
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