Central Bank Of India Limited vs Shri Gajanan Maharaj Sugar Limited

This is an Application bearing C.P. (IB) No.22/MB/2026 filed on 06.12.2025 by Central Bank of India, the Applicant (Financial Creditor) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “the Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as “the AAA Rules”) by Mr. Amrendra Jha – Authorised Representative of the Applicant vide Power of Attorney dated 11.03.2024 for initiating Corporate Insolvency Resolution Process (hereinafter referred to as “CIRP”) in respect of Shri Gajanan Maharaj Sugar Limited (Earlier known as Utech Sugar Limited), the Corporate Debtor (CD).

The Applicant is a public sector bank registered under Banking Companies (Acquisition & Transfer of Undertaking) Act, 1970. The CD, is a Public Limited Company incorporated under Companies Act, 1956 on 23.04.2012. The CD is engaged in business of manufacturing sugar from sugarcane and in the business of electricity generation.

The Applicant has proposed the name of Mr. Shekhar Arvind Parkhi, having registration no. IBBI/IPA-001/IP-P-02494/2021-2022/13801, to act as an IRP. The Applicant has attached written communication in Form-2 stating that no disciplinary proceedings is pending against the IRP and he has valid AFA till 31.12.2025. However, the Applicant filed renewed AFA of the proposed IRP, which is valid till 30.06.2027.

The Applicant has relied on the following documents:

The Applicant sought liberty to amend the Form-1 qua the date of default. This Tribunal vide interim order dated 27.01.2026 granted liberty to the Applicant to amend Form-1. In compliance of the said order the Applicant filed an Additional Affidavit dated 12.02.2026 thereby attaching the amended Form-1. The facts as per the amended Application are as under:

As per Part-IV of the amended Application the total amount claimed to be in default by the Applicant is Rs. 27,29,61,728.78/- (Twenty-Seven Crore Twenty-Nine Lakhs Sixty-One Thousand Seven Hundred and Twenty-Eight Rupees and Seventy-Eight Paisa).

It is submitted that the total amount of debt granted to the CD was Rs. 23.68 crores. The amount was disbursed on various dates.

To sanction financial assistance by way of a Term Loan of Rs. 23.68 crores, sanction letters dated 26.07.2016 and 25.10.2016 were issued.

The date of default is stated as 13.01.2025 (i.e. the date when OTS approval was revoked by the applicant bank i.e. the Financial Creditor upon failure of the Corporate Debtor to honour the One Time Settlement (OTS) Terms).

The CD had given OTS offer to the Applicant by letter dated 23.02.2023 which was duly approved by the Applicant by its approval letter dated 30.03.2023. However, the CD did not comply with the terms of OTS approved by the Applicant, hence the Applicant revoked the OTS Sanction by its letter dated 13.01.2025 and called upon the CD to pay the entire outstanding immediately. However, CD did not make any payment hence fresh date of default is to be reckoned as 13.01.2025.

The default also occurred on 02.01.2020 when notice u/s 13(2) of SARFAESI Act, 2003 was issued upon the CD demanding repayment of the outstanding amount from the CD.

It is submitted that in the present case limitation is available up to 12.01.2028 as detailed in the table below:

The Application is within the limitation considering the acknowledgement of debt by the CD in its OTS Proposal dated 23.02.2023, in their Balance Sheet as on 31.03.2024 and the revocation of the OTS by the Applicant on 13.01.2025.

The Applicant holds various securities as under:

a. Paripassu 1^st charge on Non-Agricultural land located at Gate No. 257 & 260 (Part), village Penjalwadi, Tal Bhor, Dist Pune owned by Mr. Ravindra Birole, Mrs. Ashwini Birole and Mr. Shantanu Birole.

b. Paripassu 1^st charge on residential flat No. 0020603 at Sector No. R2, tower no. 2, sixth floor, Amanora Park, Sadesatranali Hadapsar, Pune admeasuring 1600.00 sq.ft owned by Mr. Ravindra Birole and Mrs. Ashwini Birole.

c. Paripassu charge on Flat No. 101 adm.1128 sq.ft. & 102 adm. 1104 sq.ft. & Car Parking of both the flats adm. 100 sq.ft. each at Anant Residency, Sadashiv Peth, Pune owned by Mr. Ravindra Birole and Mrs. Ashwini Birole.

Personal Guarantee of all the directors in personal capacity

Mr. Ravindra Purushottam Birole

Mrs. Ashvini R. Birole

Mr. Shantanu Ravindra Birole

M/s Utech Engineering Works (India) Ltd. M/s Rama Agro Foods Pvt. Ltd.

The copy of Statement of Account No. 3578160374 maintained by the Applicant for the Loan of the CD along with Certificate under Section 2A of the Banker’s Books’ Evidence Act 1891 and NPA Certificate is annexed as Annexure - 14 Colly.

It is submitted that no order of court Adjudicating Authority on the default has been made. However, the applicant had earlier filed Section 7 application wherein the NCLT, Mumbai vide CP(IB) No. 275/ 2023 dismissed the same as settled in view of the OTS approved by the bank. The NCLT had also granted liberty to the applicant that in the event of noncompliance in payments towards OTS, the Applicant may approach this Tribunal for initiation of CIRP of the CD.

The CD filed Affidavit-in-Reply dated 05.05.2026, which is affirmed by Mr. Ravindra P. Birole – Authorised Representative of the CD vide Board Resolution dated 03.03.2026.

The CD in its reply states that the Applicant has failed to disclose the date(s) of disbursement of the alleged financial debt as specifically required under Para 1 of Part IV of Form-I. Mere annexure of a sanction letter dated 25.10.2016 and 26.07.2016 cannot constitute proof of actual disbursement of funds.

In the earlier petition filed by the Applicant on 18.12.2025, the alleged date of default was stated to be 30.09.2019, whereas in the amended Form 1, the Applicant seeks to rely upon the alleged revocation of OTS dated 13.01.2025 as constituting the date of default. However, the records uploaded with NESL in Form-D allegedly reflect the date of default as 30.06.2021.

The Applicant has failed to disclose the basis, contractual provision, or legal foundation on which such alleged revocation of OTS can itself constitute a "date of default" within the meaning of Section 3(12) of the Code.

The Applicant has failed to disclose any clause from the sanction letter dated 25.10.2016 and 26.07.2016 or any alleged loan agreement authorizing levy of the exorbitant interest claimed in the Petition. No applicable rate of interest, basis of capitalization, penal charges, or period-wise calculation has been disclosed. The alleged claim therefore appears to be unilateral, excessive, and unsupported by law or contract.

It is submitted that no Board Resolution has been annexed authorizing filing and institution of the present proceedings. In absence of such resolution, it cannot be ascertained whether the persons purportedly executing the Power of Attorney and/ or authorization were themselves duly authorized by the Board of Directors to delegate such authority in favour of Mr. Jha.

The Applicant itself has admitted that Original Application No. 936/2023 is pending before the Hon'ble Debts Recovery Tribunal, Pune for recovery of the alleged dues from the CD and the same is presently pending adjudication. The conduct of the Applicant in simultaneously pursuing recovery proceedings and invoking the insolvency jurisdiction under Section 7 of the Code clearly demonstrates that the present proceedings are initiated with mala fide intent and for purposes alien to the object and scheme of the Code.

The Applicant filed the written submissions which are similar to the facts of the case and hence, the same are not reiterated for the sake of brevity.

The CD has not filed written submissions.

We have heard the Ld. Counsels for the Applicant and the CD and have perused the records as placed before us. Our findings in the matter are as under: -

The present Application has been filed under Section 7 of the Code seeking initiation of Corporate Insolvency Resolution Process ("CIRP") against the CD on account of alleged default in repayment of the financial facilities extended by the Applicant.

It is well settled that while considering an application under Section 7 of the Code, the Adjudicating Authority is required to examine whether (i) a financial debt exists; (ii) default has occurred; and (iii) the application is complete in all respects as contemplated under Section 7(5) of the Code. The Adjudicating Authority is not expected to enter into an adjudication of disputed questions relating to the quantum of claim or to conduct a trial on contractual disputes.

From the material placed on record, it is evident that the Applicant sanctioned financial assistance aggregating to Rs.23.68 Crores to the CD vide Sanction Letters dated 26.07.2016 and 25.10.2016. The facilities were secured by creation of primary and collateral securities, personal guarantees of the Directors and corporate guarantees of group entities.

The Applicant has placed on record the NeSL record of default in Form D as per which the status of authentication of default is “Authenticated” and date of default is stated as 30.06.2021.

A bare perusal of Explanation II to the amended Section 7 sub-section 5 of the Code reveals that where a financial institution produces a record of default registered with an Information Utility, such record shall be deemed sufficient for the Adjudicating Authority to ascertain the existence of default. In the instant case, the Applicant—being a Scheduled Bank i.e. a financial institution within the meaning of Section 2(14)(a) of the Code—has produced the NeSL Form D, which reflects the status of default as 'AUTHENTICATED.' Section 7 of the Code, as amended, is reproduced hereunder:"

It is important to note that the above Explanation II is inserted to section 7(5) of Insolvency Code, pursuant to the IBC (Amendment) Act, 2026, which has been notified vide Notification No. S.O.2625(E) dated 25.05.2026, to provide that record of default in respect of financial debt owned by financial institution will be sufficient evidence to ascertain existence of default under Section 7 of the Code. As such as the NeSL record of default in Form D reflects the status of authentication of default as “Authenticated” in view of the Explanation II as above said, the same is sufficient evidence of existence of default under Section 7 of the Code. In any case, not only the record of default is relied upon to ascertain the default, but there are other records such as sanction letters, loan agreements and OTS proposals which establish the debt and default committed by the CD. Also, the Explanations added to a provision are clarificatory in nature and hence, they are applicable retrospectively. The Hon’ble Supreme Court in S. Sundaram Pillai vs. V.R. Pattabiraman, A.I.R. 1985 SC 582 has held that an explanation added to a statutory provision is not a substantive provision, but as the plain meaning of the word itself suggests, it is merely meant to explain or clarify certain ambiguities, which may have crept into interpreting the statutory provision. It would make it abundantly clear that it was meant to clear ambiguity in the application of the earlier Law and not to withdraw any substantive rights. Therefore, there would be no bar to allow the said clarification to operate retrospectively. The relevant portion of the judgment is reproduced hereunder:

Though the debt and default stand established and therefore, we are not supposed to go into the further objections raised by the CD. However, we hold that said objections are without any merit. The CD has contended that the Applicant has failed to disclose the dates of disbursement of the loan amount. This contention is without merit. The sanction letters, loan documents, account statements, and the certified statement of accounts placed on record establish that financial facilities were sanctioned and availed by the CD. The CD has nowhere disputed that the loan facilities were in fact availed or that the banking relationship existed. Mere absence of tabulation of individual dates of disbursement in Part-IV of Form-1 cannot defeat a Section 7 application when the disbursement is otherwise evidenced from the documents forming part of the record. The Bank statements attached at page no. 211 of the Application show the disbursement of the loan amount.

Accordingly, this Tribunal is satisfied that the Applicant has established the existence of a "financial debt" within the meaning of Section 5(8) of the Code.

The Applicant has placed on record that the loan account became irregular on 29.12.2019 and proceedings under the SARFAESI Act were initiated by issuance of demand notice under Section 13(2) on 02.01.2020. Subsequently, at the request of CD, a One Time Settlement (OTS) proposal dated 23.02.2023 was submitted and the same was accepted by the Applicant vide approval letter dated 30.03.2023.

The record further reveals that the CD failed to comply with the terms and conditions of the approved OTS. Consequently, the Applicant revoked the OTS vide communication dated 13.01.2025 and recalled the entire outstanding dues. The terms of the OTS are reproduced as under:

As can be seen from the above, the Applicant had agreed to accept a sum of Rs. 14 crores in full and final settlement of its claims against the CD. The settlement amount was agreed to be paid by the CD in quarterly instalments commencing from 31.03.2023 and till 31.03.2023. As per the agreed terms of the OTS the amounts were due and payable upto March 2024, which the CD failed to pay, and hence the Applicant vide letter dated 13.01.2025, revoked the OTS dated 30.03.2023. Even though the original date of default dates back to 2019, it is seen that the CD defaulted in making payment as per the settlement i.e., on or before 31.03.2024. As there was a default in making payment of settlement amount, Applicant revoked the OTS vide notice dated 13.01.2025. Hence, the Applicant has taken the date of default as 13.01.2025.

The CD has argued that revocation of OTS cannot constitute a date of default. This contention cannot be accepted in the facts of the present case. The default had already occurred when the loan account became irregular and recovery proceedings under the SARFAESI Act were initiated. The subsequent OTS constituted an arrangement in the nature of novation of the terms of lending, granting an opportunity to the CD to clear the settled amount in the revised agreed timelines. Upon failure of the CD to honour the OTS terms as per the revised timelines and consequent revocation thereof, the Applicant became entitled to recall the entire outstanding amount. The same is in terms of clause 4 of the settlement terms.

It is settled that for the purposes of Section 7, the Adjudicating Authority is only required to ascertain whether default exists, from the record. As has been stated earlier the existence of debt and default stands established from NeSL Form D. In any case, the documents produced by the Applicant including account statements, recall notice, OTS documents and other financial records also confirm the existence of debt and occurrence of default exceeding the threshold of Rs.1 crore as per Section 4 of the Code.

In regard to the above, this Tribunal places reliance on the judgment of Hon’ble Supreme Court in Power Trust (Promoter of Hiranmaye Energy Ltd.) v. Bhuvan Madan, IRP of Hiranmaye Energy Ltd. and Ors. [Civil Appeal No(s). 2211/2024 decided on 18.02.2026] while examining the validity of the admission of the Corporate Debtor to CIRP has laid down as under :-

To summarize the above judgment, we observe as under: -

a. The Code prescribes whenever a corporate debtor defaults on a debt that is due and payable, an insolvency process must be initiated. Section 3(12) defines “default” as non-payment of a debt which has become due and payable, and includes default in respect of a part or instalment thereof.

b. When the financial creditor initiates the insolvency process for the purposes of admission, the Adjudicating Authority is only to ascertain the existence of a default from the records of the information utility or the evidence furnished by the financial creditor within fourteen days from the receipt of such application. At this stage, neither is a corporate debtor entitled nor is the Adjudicating Authority required to examine any dispute regarding the existence of such debt. This significantly reduces the scope of enquiry at the stage of a time-bound admission of an insolvency process by a financial creditor.

c. The adjudicating authority is empowered only to verify whether a default has occurred or if a default has not occurred. Based upon its decision, the adjudicating authority must then either admit or reject an application, respectively. These are the only two courses of action which are open to the adjudicating authority in accordance with Section 7(5).

d. The Adjudicating Authority is not required to go into the inability of a corporate debtor to pay its debt.

e. The Code restricts the scope of enquiry for admission of an insolvency process by a financial creditor merely to the existence of default of a debt due and payable and nothing more.

The Applicant has demonstrated that the Application is within limitation by virtue of acknowledgements of liability reflected in the balance sheets of the CD as well as the in OTS proposals, submitted by the CD.

The OTS proposal dated 23.02.2023 admittedly originated from the CD. The said proposal clearly constitutes an acknowledgment of liability in writing. It is also the Applicant's case that the CD has consistently acknowledged the outstanding dues in its balance sheets.

The Hon'ble Supreme Court in the matter of Dena Bank v. C. Shivkumar Reddy, (2021) 10 SCC 330 and Hon’ble NCLAT in Dinesh G Jaiswal vs. Punjab National Bank, Asset Recovery Branch and Anr. (2022) ibclaw.in 802, has consistently held that acknowledgment of debt under Section 18 of the Limitation Act extends the period of limitation and that entries in duly signed balance sheets constitute acknowledgment of liability. Likewise, a written OTS proposal acknowledging outstanding dues also extends limitation. For reference, the calculation is as under:

Therefore, the objection regarding limitation is devoid of merit. The present Application filed after the acknowledgments and subsequent revocation of the OTS is well within the prescribed period of limitation

The CD has sought to rely upon different dates reflected in the pleadings and in the records maintained with the Information Utility. This objection is also not sustainable. The date of default mentioned in Form-1 is intended to indicate the default relied upon by the Applicant for maintaining the present proceedings. Merely because an earlier date of default or continuing default is reflected in the Information Utility or earlier proceedings would not invalidate the present Application, particularly where the debt remains unpaid and limitation stands extended by acknowledgments.

It is trite law that default in repayment of a financial debt is a continuing event until the debt is discharged. The record sufficiently demonstrates that the CD continues to remain in default.

The CD has questioned the calculation of interest and alleged absence of contractual basis for the amount claimed.

Such objections pertain to reconciliation and quantification of the outstanding dues. At the stage of admission under Section 7, this Tribunal is not required to undertake an accounting exercise to determine the exact quantum payable. The existence of financial debt and occurrence of default alone are relevant. Any reconciliation of claims may appropriately be undertaken during the Corporate Insolvency Resolution Process by the Interim Resolution Professional/Resolution Professional in accordance with the provisions of the Code. It is also seen that even the default of principal amount committed by the CD is more than the threshold of Rs. 1 Crore.

A perusal of the record reveals that the present Application has been instituted through a duly authorized officer of the Applicant Bank. The Applicant has placed on record the requisite authorization, including the Power of Attorney (POA)/authorization document empowering the concerned officer to initiate and prosecute proceedings under the Insolvency and Bankruptcy Code, 2016. On perusal of the Power of Attorney on page no 342 of the Application, it is seen that the same is executed by two directors of the Applicant bank named Shri. Vivek Wahi and Shri. M.V. Murali, who have signed at the foot of the said POA in the presence of a Company Secretary named Shri. Chandrakant Bhagwat, along with affixation of common seal of the Applicant bank on the POA. Considering the same we find that the signatory of the Application is duly authorised vide a properly executed POA.

The CD has also contended that Original Application No.936 of 2023 is pending before the Debts Recovery Tribunal and, therefore, the present proceedings are not maintainable.

This contention is untenable. Proceedings before the Debts Recovery Tribunal are recovery proceedings, whereas proceedings under Section 7 of the Code are proceedings in rem intended for resolution of insolvency. The remedies are distinct and independent. Pendency of recovery proceedings before the Debt Recovery Tribunal does not bar initiation of proceedings under the Code.

Upon consideration of the pleadings, documents, loan records, account statements, security documents, OTS correspondence, recall notice and acknowledgments of liability, this Tribunal is satisfied that:

The Applicant has proposed the name of Mr. Shekhar Arvind Parkhi to act as the Interim Resolution Professional (IRP) having valid AFA till 30.06.2027.

Thus, it is clear from perusal of the record that an amount of more than the threshold limit of Rs.1 Crore under Section 4 of the Code, was due and payable by the CD to the Applicant. Hence, we find that the Applicant has been able to substantiate the existence of a financial debt due and payable by the CD which remained unpaid. The debt so owed by the CD to the Applicant falls within the definition of “financial debt” under Section 5(8) of the Code.

In view of the above, we find that requisite conditions necessary to trigger CIRP in respect of the CD are fulfilled, the Application is complete as all the relevant documents have been attached by the Applicant along with the Application. As a result, the matter deserves to be admitted under Section 7 of the Code.

At this stage we are not quantifying the exact amount under default, which the IRP will do. We are satisfied that there exists a debt which is in default in excess of Rs. 1 Crore.

In view of the aforesaid findings, Application bearing C.P.(IB) No.22/MB/2026 filed under Section 7 of the Code by Central Bank of India, the Applicant, for initiating CIRP in respect of Shri Gajanan Maharaj Sugar Limited, the Corporate Debtor is hereby admitted.

We further declare moratorium under Section 14 of the Code with consequential directions as mentioned below: -I. We prohibit-a) the institution of suits or continuation of pending suits or proceedings against the Corporate Debtor including execution of any judgment, decree or order in any court of law, tribunal, arbitration panel or other authority; b) transferring, encumbering, alienating or disposing of by the Corporate Debtor any of its assets or any legal right or beneficial interest therein; c) any action to foreclose, recover or enforce any security interest created by the Corporate Debtor in respect of its property including any action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;

II. That the supply of essential goods or services to the Corporate Debtor, if continuing, shall not be terminated or suspended or interrupted during the moratorium period.

III. That the order of moratorium shall have effect from the date of this order till the completion of the CIRP or until this Tribunal approves the resolution plan under Section 31(1) of the Code or passes an order for the liquidation of the Corporate Debtor under Section 33 thereof, as the case may be.

IV. That the public announcement of the CIRP shall be made in immediately as specified under Section 13 of the Code read with Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and other Rules and Regulations made thereunder.

V. That this Bench hereby appoints Mr. Shekhar Arvind Parkhi a registered Insolvency Professional having Registration Number IBBI/IPA-001/IP-P-02494/2021-2022/13801 and e-mail address [email protected] having valid Authorisation for Assignment up to 30.06.2027 as the IRP to carry out the functions under the Code.

VI. That the fee payable to IRP/RP shall be in accordance with such Regulations/Circulars/ Directions as may be issued by the IBBI.

VII. That during the CIRP Period, the management of the Corporate Debtor shall vest in the IRP or, as the case may be, the RP in terms of Section 17 or Section 25, as the case may be, of the Code. The officers and managers of the Corporate Debtor are directed to provide effective assistance to the IRP as and when he takes charge of the assets and management of the Corporate Debtor. Coercive steps will follow against them under the provisions of the Code read with Rule 11 of the NCLT Rules for any violation of law.

VIII. That the IRP/IP shall submit to this Tribunal monthly reports with regard to the progress of the CIRP in respect of the Corporate Debtor.

IX. In exercise of the powers under Rule 11 of the NCLT Rules, 2016, the Applicant is directed to deposit a sum of Rs.3,00,000/- (Rupees Three Lakh) with the IRP to meet the initial CIRP cost arising out of issuing public notice and inviting claims, etc. The amount so deposited shall be interim finance and paid back to the Applicant on priority upon the funds available with IRP/RP from the Committee of Creditors (CoC). The expenses incurred by IRP out of this fund are subject to approval by the CoC.

X. A copy of this Order be sent to the Registrar of Companies, Maharashtra, Mumbai for updating the Master Data of the Corporate Debtor.

XI. The IRP is directed to issue notice of admission upon all the statutory authorities of the Corporate Debtor without fail.

XII. A copy of the Order shall also be forwarded to the IBBI for record and dissemination on their website.

XIII. The Registry is directed to immediately communicate this Order to the Applicant, the Corporate Debtor and the IRP by way of Speed Post, e-mail and WhatsApp. XIV. Compliance report of the order by Designated Registrar is to be submitted today.