Punjab National Bank vs M/S Karnal Agricultural Industries ...

IN THE MATTER OF: State Bank of India ...Appellant(s)

Versus Ravi Bansal Interim Resolution Professional & Anr. ...Respondent(s)

Present: For Appellant : Mr. Siddharth Sangal, Ms. Richa Mishra, Ms. Mrinalini Tandon, Ms. Kashis T, Advocates for SBI

For Respondents : Mr. Ravi Bansal, Mr. Devvart Rana, Advocates for IRP

With Comp. App. (AT) (Ins) No. 276 of 2026

IN THE MATTER OF: Asset Reconstruction Company (India) Ltd. in capacity ...Appellant(s) of Trustee of ARCIL- ATS-021-Trust Versus Karnal Agriculture Industries Ltd. & Ors. ...Respondent(s)

Present: For Appellant : Mr. Anoop Prakash Awasthi, Advocate for ARCIL

For Respondents : Mr. Ravi Bansal, Mr. Devvart Rana, Advocates for IRP

With Comp. App. (AT) (Ins) No. 58 of 2026 & I.A. No. 207 of 2026

IN THE MATTER OF: Punjab National Bank ...Appellant(s)

Versus Karnal Agriculture Industries Ltd & Anr. ...Respondent(s)

Present: For Appellant : Mr. Azel Aekram, Advocate

For Respondents : Mr. Rishi Kapoor, Advocate for CD Mr. Devvart Rana, Advocate for IRP ORDER

(Hybrid Mode)

27.02.2026 I.A. No. 207 of 2026 Heard Ld. Counsel for Applicant

and Ld. Counsel appearing for Respondent No. 1.

2. This is an Application praying for condonation of 14 days delay in filing

the Appeal. The ground given in the Application is that after coming to know

about the imposition of cost of Rs. 5,00,000/- by the Adjudicating Authority by

order dated 30/10/2025, Bank had referred the matter to the Headquarters in

Delhi in first week of November, thereafter after advice of the head office

obtained approval for filing the Appeal.

3. We find sufficient cause has been shown in Paragraph 2 of the

Application.

4. Delay condoned.

Comp. App. (AT) (Ins) No. 58 of 2026, Comp. App. (AT) (Ins) No. 138 of 2026,

Comp. App. (AT) (Ins) No. 276 of 2026 These three Appeals have been filed

by State Bank of India, Asset Reconstruction Company (India) Ltd. and Punjab

National Bank challenging the only part of the order dated 30/10/2025 passed

by the National Company Law Tribunal, New Delhi in I.A 5150 of 2025. Under

section 12 (A), Appellants are aggrieved against the impugned order in so far as

it has imposed cost of Rs. 5,00,000/- on each of the Financial Creditors while

allowing the Application under section 12(A) .

2. Brief facts necessary to be noticed for deciding these Appeals are; the

Corporate Insolvency Resolution Process against the Corporate Debtor

commenced on 10/12/2024 on an application filed by Punjab National Bank 2 of 2 against Karnal Agricultural Industries Ltd. Appeal was filed in this Tribunal

challenging the order under section 7 in which Appeal, an interim order was

passed on 18/12/2024, which is as follows :

"Counsel for the Appellant submits that the Section 7 Application filed by the Punjab National Bank was barred by time since according to Part IV the NPA was declared by Bank on 30.09.2013 and Application under Section 7 was filed dated 16.03.2020 and no acknowledgment has been referred to in the Impugned Order to give the benefit of Section 18 of the Limitation Act. It is submitted that the Adjudicating Authority has not adverted to the question of Limitation on the basis of the material on the record.

2. Submission needs scrutiny.

3. Issue Notice.

4. Let Reply be filed within three weeks. Rejoinder be filed within further two weeks.

5. List this Appeal on 27th January, In the meanwhile, IRP shall proceed to collate the claim but shall not constitute the CoC."

3. The CD, after the aforesaid interim order proceeded with offer of settlement

with Punjab National Bank and there being State Bank of India and another

financial creditors, the Corporate Debtor, also proceeded and obtained OTS from

the Banks and the entire amount being received, the Punjab National Bank filed

a Section 12 (A) Application before the Adjudicating Authority for withdrawal of

the proceedings through the IRP. It is the Application I.A 5150/ ND/ 2025 which

has been permitted to be withdrawn by the Adjudicating Authority by the order

dated 30/10/2025.

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4. While allowing the aforesaid application, Adjudicating Authority has

imposed cost of Rs. 5,00,000/- on each of the Financial Creditors in Paragraph

18 of the order, which is as follows :

"18. We further note that even under the eventual settlement, the Financial Creditors have agreed to a substantial haircut. In the facts and circumstances of the case, we deem it appropriate to impose costs upon the Financial Creditors, who permitted the matter to remain unresolved for an unduly prolonged period before arriving at a settlement involving such significant concessions. This Adjudicating Authority expresses its strong disapproval of the laxity displayed in the conduct of this matter and observes that the delay and lack of due diligence have ultimately resulted in financial prejudice. Accordingly, this Adjudicating Authority is inclined to impose costs of INR 5 lakh each upon the Financial Creditors i.e. Punjab National Bank, State Bank of India and Asset Reconstruction Company (India) Limited to be paid to Prime Minister's National Relief Fund (PMNRF) within 7 days of passing of this order".

5. Ld. Counsel for Appellant, challenging the direction to impose cost against

the Appellant has come up with this Appeal.

6. It is submitted that in view of the interim order, the Committee of Creditors

(COC) was not constituted and the Financial Creditors were fully entitled to enter

into the OTS with CD, which was entered, and thereafter 12(A) Application was

filed by the Punjab National Bank, who has filed Section 7 Application, in which

order is passed.

7. It is submitted that observations made by the Adjudicating Authority in

Paragraph 14 & 15, that other creditors were not afforded opportunity and that

payment shall be effectively a preferential payment, are uncalled for.

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8. No other claimant has filed any Application objecting the 12(A) Application,

hence those observations were not required to be made. It is submitted that

Financial Creditors had not committed any such Act which may invite imposition

of cost on the Financial Creditors. Financial Creditors has only entered into the

settlement with the CD and after receiving the payment, all facts were clearly

mentioned in the Application in 12(A).

9. Ld. Counsel for the IRP has submitted that IRP has nothing to say on the

imposition of cost. IRP filed the Application after receiving the Form-FA. IRP has

further submitted that all the three financial creditors in fact constitute the

100% voting share.

10. After having heard the Ld. Counsel for Parties, we are of the view that

Adjudicating Authority by order dated 30/08/2025 has allowed 12(A)

Application.

11. Present is not a case where any other creditor has filed objection under

12(A) Application objecting to the withdrawal. The Financial Creditor who has

initiated Section 7 Application has filed 12(A) after having entered into

settlement.

12. It is true that in view of the judgement of Supreme Court in Glass Trust

Company (LLC), other creditors had right to file objection in 12(A) proceeding,

but no objection have been noted in the impugned order, it is not necessary to

make any observation with that regard.

13. We, however fail to see any reason in the impugned order in imposing the

cost on the Financial Creditors. In the event that Adjudicating Authority was

satisfied that present was not a case for allowing 12(A), it was open for the 2 of 2 Adjudicating Authority to take or allow other course of action, but imposing cost

on Financial Creditor is not for any valid reason.

14. We thus are of the view that the impugned order dated 30/10/2025, in so

far as it imposed cost of Rs. 5,00,000/- on each of the Financial Creditor deserve

to be set aside.

15. Appeals are allowed to the above extent.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical) Prerana/md

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