Union Bank Of India vs Omkara Vijayalakshmi Strips Private Limited

The instant Petition CP (IB)/13/7/AMR/2026 (‘CP 13/2026’ or ‘Petition’) was e-filed on 22.04.2026 and refiled on 04.05.2026 and hard copy was filed on 06.05.2026 (vide Diary No.801) by Union Bank of India (‘Financial Creditor’ or “FC”) under Section 7 of the Insolvency and Bankruptcy Code, 2016 (‘IBC’ or ‘Code’) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (‘IB Rules’) seeking initiation of the Corporate Insolvency Resolution Process (‘CIRP’) against Omkara Vijayalakshmi Strips Private Limited (‘Corporate Debtor’ or “CD”) against the default amount of Rs.26,72,62,170.17/- (Rupees Twenty Six Crores Seventy Two Lakhs Sixty Two Thousand One Hundred Seventy and Seventeen Paisa only) as on 31.03.2026, together with agreed interest accrued from 01.04.2026 till the date of payment.

The Corporate Debtor is a Company incorporated on 08.03.2017 under the provisions of Companies Act, 2013 bearing CIN: U74999AP2017PTC105361, and its registered office is situated at 76-18-45, Plot No. 45, Iron Yard, Bhavanipuram, Krishna, Vijayawada-520012, Andhra Pradesh. Hence, the territorial jurisdiction lies with this Adjudicating Authority.

The Petition was initially e-filed on 22.04.2026 and was returned by the Registry on 30.04.2026 for compliance of certain defects. After rectifying the defects, the Financial Creditor re-filed the Petition on 04.05.2026 and filed the physical copy on 06.05.2026. Upon scrutiny, the Petition was numbered on 14.05.2026. Since the Tribunal was under Summer Vacation from 16.05.2026 to 30.05.2026, the matter was listed on 01.06.2026, being the first working day after reopening.

During the course of hearing on the said date, it was observed that a copy of the Petition had not been served upon the Corporate Debtor at its correct e-mail address. Accordingly, at the request of the Learned Counsel for the Financial Creditor, one week's time was granted to effect proper service of the Petition upon the Corporate Debtor.

During the next hearing on 10.06.2026, the Learned Counsel appearing for the Corporate Debtor accepted the notice on behalf of the Corporate Debtor and sought/ granted the time for filing Vakalatnama and Counter Affidavit. Subsequently, upon a further request made during the course of hearing on 16.06.2026 & 19.06.2026 on behalf of the Corporate Debtor, an additional time was granted for filing the Counter Affidavit.

Pursuant to the above orders, the CD vide Dairy No.1062 dated 22.06.2026 filed counter.

During the course of today’s hearing, the facts of the case, as elaborated by the Counsel for the FC, are summarized hereunder:

The Financial Creditor is Union Bank of India, a body corporate constituted under the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, having registered office is at 239, Union Bank Bhavan, Vidhan Bhavan Marg, Nariman Point, Mumbai, Pin – 400021, Maharashtra. It is being represented by its Authorized Representative, who is authorized vide the letter dated 09.05.2025. A copy of the Authorization Letter issued by Deputy Zonal Head is annexed at Page No.17 of the Petition.

The Corporate Debtor is engaged in the business of manufacturing ERW MS, GP Pipes and Rolling Sheets. It is categorised as a Micro, Small and Medium Enterprise (MSME).

The CD passed a Board Resolution dated 15.01.2024 authorising it to avail credit facilities from the Financial Creditor. On 22.02.2024, the Financial Creditor sanctioned credit facilities comprising a Cash Credit limit of Rs. 24.00 Crores and a Term Loan of Rs.0.98 Crores, subject to the terms and conditions stipulated in the sanction letter. In consideration of the sanction, the CD executed the requisite security documents and created a charge over its assets in favour of the Financial Creditor, which was duly registered with the Registrar of Companies on 22.02.2024. The borrowings and corresponding liabilities were also reflected in the Balance Sheet of the CD for the Financial Year 2023-2024.

On 24.06.2025, the Financial Creditor issued a demand notice under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act), demanding payment within sixty days. Neither the Corporate Debtor nor its Guarantors paid the demanded amount. Thereafter, a legal notice was issued through Advocate on 17.10.2025, demanding payment of the entire outstanding dues, which too remained unpaid. On 06.11.2025, the Financial Creditor filed an Original Application (O.A. No. 1190 of 2025) before the Debts Recovery Tribunal (DRT), Visakhapatnam, for recovery of Rs.25,56,11,954/-, which is pending adjudication. The Financial Creditor additionally classified the Corporate Debtor's account as fraud on 27.05.2026 pursuant to a Show Cause Notice dated 10.02.2026. Thereafter, the present Petition came to be filed under Section 7 of the Code.

The FC has relied upon the Form-D Record of Default issued by the National E-Governance Services Limited (NeSL) at page 320 of the Petition, which records a default amount of Rs.25,54,71,494.29/- in respect of the loan accounts of the Corporate Debtor. The said Record of Default further reflects the date of default as 23.06.2025 and the status of authentication as "Authenticated".

The FC has also placed reliance upon the Certificate issued under Section 2A(a) &(c) of the Bankers' Books Evidence Act, 1891, appearing at page 184 of the Petition, together with the Statements of Account of the CD at pages 186 to 319, in support of the outstanding debt and occurrence of default.

The amount of debt is more than Rupees one crore, this Adjudicating Authority has jurisdiction to entertain/ admit the Petition.

Ms. Neha Jain Nemani, bearing Regn. No. IBBI/IPA-001/IP-P-02465/2021-2022/13927) has been proposed as the IRP in the matter, who is having valid AFA up to 30.06.2027 and thus is permitted to act as an Insolvency Professional in accordance with the Code and the applicable rules and regulations.

As per Part IV of Form-1, the amount in default in respect of the Cash Credit Facility Account No. 122625010000002 is Rs.26,27,36,150.29, with the date of default being 25.03.2025 and in respect of the Term Loan Account No. 122626390000001, the amount in default is Rs.45,26,019.88, with the date of default being 22.04.2025. Accordingly, the aggregate amount claimed to be in default is Rs.26,72,62,170.17.

Owing to the continued irregularity in the loan accounts, the same were classified as Non-Performing Assets (NPA) on 23.06.2025. Thus, the dates of default in both the loan accounts precede the date of NPA classification.

During the course of hearing, the Corporate Debtor, relying upon the Counter Affidavit filed on record, opposed the admission of the present Petition and, inter alia, contended as follows:

The present Petition is not a bona fide insolvency proceeding but a recovery-oriented action initiated after the Financial Creditor had already invoked remedies under the SARFAESI Act, instituted proceedings before the DRT, and undertaken fraud-classification proceedings in respect of the same account.

The CD is a running MSME manufacturing concern employing a substantial workforce and is not commercially insolvent. It was contended that admission of the Corporate Debtor into CIRP would adversely affect the business operations of the Corporate Debtor and the livelihood of its employees and other stakeholders.

The FC had renewed the credit facilities vide sanction letter dated 17.05.2025. Having renewed the facilities, the subsequent classification of the account as NPA on 23.06.2025 was stated to be arbitrary, contrary to banking norms and inconsistent with the conduct of the Financial Creditor. It was further contended that the account remained operational and continued to receive credits even after the renewal.

The NPA classification dated 23.06.2025 is under challenge before the Hon'ble High Court of Andhra Pradesh in W.P. No. 23842 of 2025 and that interim protection has been granted in relation to the SARFAESI proceedings. It was submitted that the Financial Creditor had failed to disclose the pendency of the said proceedings as well as other related proceedings before the DRT and the Hon'ble High Court.

It was further argued that the FC had not produced the complete renewal appraisal file, SMA records, NPA working sheets, drawing power calculations, fraud-classification materials and other relevant documents, and therefore the alleged default and NPA classification require detailed examination.

The CD contended that the renewal sanction created a legitimate expectation that the facilities would continue and that the Financial Creditor is estopped from treating the account as viable for renewal purposes while simultaneously seeking initiation of insolvency proceedings on the basis of the same account.

The fraud classification dated 27.05.2026 was also challenged as being contrary to the principles of natural justice and it was contended that the allegations relating to fraud involve disputed questions of fact, which cannot be summarily adjudicated in proceedings under Section 7 of the Code.

It was further submitted that the Corporate Debtor is willing to regularise the account and repay its dues under a commercially viable repayment and restructuring framework and that the Financial Creditor, being a secured creditor having adequate securities and guarantees, is not without remedies.

During the course of hearing the counsel of the CD relying on the judgments of the Hon'ble Supreme Court in Vidarbha Industries Power Ltd. v. Axis Bank Ltd., submitted that the CD is a solvent company and ready to pay all liabilities after adjudication of NPA dispute, and the admission of the present Petition would be premature and contrary to the object of the Code.

On the aforesaid grounds, the Corporate Debtor prayed for dismissal of the present Petition or, in the alternative, deferment of admission till adjudication of the disputes relating to NPA classification and other connected proceedings.

We have heard the submissions of Counsels for the Financial Creditor and Corporate Debtor and other records carefully.

The first issue that arises before this Adjudicating Authority is "Whether the present Petition is filed within the period of limitation".

The Financial Creditor has stated that the date of default in respect of the Cash Credit Account No. 122625010000002 is 25.03.2025 and the date of default in respect of the Term Loan Account No. 122626390000001 is 22.04.2025. The loan accounts were subsequently classified as Non-Performing Assets (NPA) on 23.06.2025. The present Petition was e-filed on 22.04.2026.

Since the Petition has been filed within three years of the date of default, we are of the considered view that the Petition has been filed within the period of limitation.

The next issue that arises before this Adjudicating Authority is “Whether there is a financial debt and default in repayment thereof, when it became due and payable and meets the minimum threshold limit of Rs. One crore as required under Section 4 of the IBC?”

As per Part IV of Form 1, the amount claimed to be in default is Rs.26,72,62,170.17. The relevant extracts of the Part IV of Form 1 along with interest calculation table is reproduced below:

The Financial Creditor, as evidences of default of the financial debt, has submitted the following documents:

The RoD issued by the NeSL in respect of Cash Credit Account No. 122625010000002, wherein the status of Authentication of Default in Form-D is shown as “Authenticated” and the Date of default is 23.06.2025. The relevant extracts of the RoD are reproduced below:

Certificate under Section 2A (a) & (c) of the Bankers’ Book Evidence Act, 1981 along with the Statement of Accounts of Account Nos. 122625010000002, and 122626390000001, the relevant extracts of the same are reproduced below:

The CD vide hypothecation agreement dated 27.05.2025 has acknowledged the debt. The relevant extracts of the hypothecation agreement are reproduced below:

The CD in its balance sheet as on 31.03.2024 acknowledged the outstanding amount of the Loan Amount & Cash Credit facility at Note Nos.5 & 6 respectively. The relevant extracts of the balance sheet is reproduced below;

The Financial Creditor issued a statutory demand notice on 24.06.2025, under Section 13(2) of the SARFAESI calling upon the Corporate Debtor to pay a sum of Rs.24,90,13,407.37 as on 23.06.2025 (Rs.24,79,38,054.49 plus unapplied interest as on 23.06.2025 of Rs.10,75,352.58) plus future interest and charges at the contractual rate as per the executed loan documents, within a period of 60 days from the date of receipt of the notice. The extract of the demand notice issued by the Financial Creditor is reproduced below:

The Corporate Debtor has raised various disputes which squarely revolves around the classification of the NPA, where the Corporate Debtor is relying based on the renewal letter dated 17.05.2025 between the management of the Corporate Debtor and Financial Creditor. The main contention raised by the CD is that after issue of the renewal letter dated 17.05.2025, the classification of the NPA treating the default on the part of the CD is not correct.

The FC submitted that one of the terms and conditions that the renewal letter was that the CD will pay the overdue amount in CC & TL account immediately. Since, the aforesaid condition was not met by the CD, the FC declared the loan accounts as NPA on 23.06.2025 and issued the SARFAESI Notice dated 24.06.2025 recalling loan amounts. The relevant extracts of the above renewal letter is reproduced below:

We are not inclined to consider the contention raised by the Corporate Debtor as it failed to fulfil the terms and conditions mentioned in the renewal letter. Moreover, such disputed questions cannot be adjudicated in summary proceedings under Section 7 of the Code. Further, the contentions of the Corporate Debtor are not sustainable in view of the Hon’ble NCLAT Principal Bench judgement dated 25.04.2024 in the matter of Milind Kashiram Jadhav Vs. State Bank of India & Ors [Company Appeal (AT) (Insolvency) No. 1589 of 2023]

In view of the aforesaid discussions, and upon consideration of the material available on record, we are of the considered view that there is a financial debt extended by the Financial Creditor to the Corporate Debtor and there is a default in repayment thereof, when it became due and payable. It is further observed that the amount in default exceeds the minimum threshold limit of Rs. one crore prescribed under the Code. Accordingly, the present Petition filed under Section 7 of the IBC is maintainable.

The Corporate Debtor, relying on the Vidarbha Judgment (supra) in its Counter has contended that the Financial Creditor cannot utilize this Adjudicating Authority as a recovery forum. Therefore, the next issue for consideration before us is “Whether the Financial Creditor has invoked the provisions of the IBC merely as a recovery mechanism and not for resolution of insolvency?”

We note the settled legal position that for admission of a Petition under Section 7 of the Code, the Adjudicating Authority is only required to examine and satisfy itself that a financial debt exists and there is default in relation thereto.

In this regard, we also rely on the judgement dated 24.02.2026 of the Hon’ble Supreme court in the matter of Catalyst Trusteeship Ltd. vs. Ecstasy Realty Pvt. Ltd., 2026 INSC 186 (Civil Appeal No. 7424 of 2025), wherein the Hon’ble Supreme Court has observed as below:

In the present case, the material on record clearly establishes default, and there is nothing to indicate that the present proceedings have been initiated merely as a recovery mechanism. Hence, the contention of the Corporate Debtor is not sustainable.

However, before admission, this Adjudicating Authority has to satisfy that the Petition is complete and there are no disciplinary proceedings pending against the proposed Interim Resolution Professional (hereinafter referred to as the “IRP”). We have gone through the contents of the Petition filed by the Financial Creditor and found that the same is complete. The Financial Creditor has proposed the name of Ms. Neha Jain Nemani, having Registration No. IBBI/IPA-001/IP-P-02465/2021-2022/13927 as IRP in this matter. The written consent of the proposed IRP in Form-2 dated 12.03.2026 is annexed at Page 360 the Petition, wherein, the proposed IRP affirmed that she is eligible to be appointed as a resolution professional in respect of the Corporate Debtor herein and certified that there are no disciplinary proceedings pending against her with the Board or the Insolvency Professional Agency of ICAI. The copy of the AFA in Form B is annexed at Page 363 of the Petition, which shows that her Authorisation is valid till 30.06.2027. The credentials of the proposed IRP was verified on the IBBI website, which shows that the proposed IRP holds the valid Authorisation for Assignment (AFA) up to 30.06.2027. The relevant extract of the IBBI website is given below:

As a sequel to the discussion above, the present section 7 Petition bearing CP (IB)/13/7/AMR/2026 filed by the Financial Creditor under section 7 of the IBC for initiating CIRP against the Corporate Debtor, Omkara Vijayalakshmi Strips Private Limited, is hereby admitted and accordingly, the moratorium is declared in terms of Section 14 of the Code.

We also appoint Ms.Neha Jain Nemani, bearing Registration No. IBBI/IPA-001/IP-P-02465/2021-2022/13927, Email: [email protected], having Address at: 2404B, Parthenon Building, JP Road, 4 Bungalows, Andheri West, Mumbai, Maharashtra -400053, as IRP in the instant matter, who shall perform the duties in accordance with the Code, IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (hereinafter referred to as the ‘CIRP Regulations’) and other applicable laws, as amended from time to time.

The Financial Creditor is directed to deposit Rs.5,00,000/- (Rupees Five Lakhs Only) with the IRP to meet out the expense to perform the functions assigned to him in accordance with Regulation 6 of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The amount, however, will be subject to adjustment by the Committee of Creditors as to be duly accounted for by IRP and shall be paid back to the Financial Creditor.

A copy of this Order shall immediately be communicated to the Financial Creditor, the Corporate Debtor, IBBI, and the IRP named above by the Court Officer/ Registry of this Adjudicating Authority.

Accordingly, CP (IB)/13/7/AMR/2026 stands admitted.