NCLT Chennai Rejects DBS Bank’s ₹46 Crore Lease Rental Claim in Orchid Pharma CIRP, Calls It ‘Operational Debt’ Not IRPC

April 2, 2026 : The National Company Law Tribunal (NCLT), Chennai Bench has dismissed an application filed by DBS Bank India Limited (formerly Lakshmi Vilas Bank) seeking recovery of over ₹46 crore towards lease rentals and CIRP-related expenses in the insolvency proceedings of Orchid Pharma Ltd., holding that such claims cannot be treated as Insolvency Resolution Process Costs (IRPC) without approval of the Committee of Creditors (CoC) and cannot be raised after approval of the resolution plan.

The application was filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, seeking directions for payment of ₹46.36 crore towards lease rentals for the period during which the corporate debtor occupied the applicant’s premises during the Corporate Insolvency Resolution Process (CIRP), along with ₹34.12 lakh towards reimbursement of expenses incurred in initiating the CIRP.

DBS Bank contended that it was the owner and lessor of the premises occupied by Orchid Pharma and that the corporate debtor continued to use the property throughout the CIRP period without making payments. It argued that such continued occupation entitled it to claim lease rentals as CIRP costs. The bank also sought reimbursement of expenses incurred in initiating insolvency proceedings under Regulation 33 of the CIRP Regulations.

The respondents, including the corporate debtor, monitoring agent, and successful resolution applicant, opposed the plea, arguing that the bank had already submitted its claim as an operational creditor during the CIRP. They contended that once the resolution plan was approved, it became binding on all stakeholders and any claim not included in the plan stood extinguished. They further submitted that lease rentals arising from a contractual arrangement constitute operational debt and cannot be retrospectively classified as IRPC.

The Tribunal examined its jurisdiction under Section 60(5) and reiterated that while it has wide powers to adjudicate disputes arising out of insolvency proceedings, such jurisdiction cannot be used to reopen claims settled under an approved resolution plan. Relying on the Supreme Court’s ruling in Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta, the Bench emphasized that all claims not forming part of an approved resolution plan stand extinguished.

On the core issue, the Bench clarified that for any expense to qualify as IRPC, two conditions must be satisfied: it must be incurred by the Resolution Professional for running the corporate debtor as a going concern or for conducting the CIRP, and it must be approved or ratified by the CoC.

Applying this test, the Tribunal held that the lease rentals claimed by DBS Bank arose from a contractual lease arrangement and therefore fall within the category of operational debt. It noted that there was no material to show that the Resolution Professional had treated the lease as essential for running the corporate debtor as a going concern or that the CoC had approved such payments as CIRP costs.

The Bench further observed that allowing such claims at this stage would amount to reopening settled claims after approval of the resolution plan, which is impermissible under the IBC framework. With respect to reimbursement of CIRP expenses, the Tribunal noted that under Regulation 33, such costs are initially borne by the applicant and are reimbursable only to the extent ratified by the CoC. In the absence of any such ratification, the claim could not be sustained.

Concluding that the applicant failed to establish that the amounts claimed qualified as IRPC, the Tribunal held that the application was misconceived and dismissed it.

Case Title: DBS Bank India Limited v. Orchid Pharma Limited & Ors.
Case No.: IA(IBC)/784/(CHE)/2020 in CP(IBC)/540/(CHE)/2017
Coram: Shri Jyoti Kumar Tripathi (Member Judicial) and Shri Ravichandran Ramasamy (Member Technical)