Union Bank Of India vs SSAgri Group Private Limited

Order pronounced and recorded vide separate sheets. The Petition bearing CP (IB)/43/7/AMR/2025 filed by the Financial Creditor under Section 7 of the IBC, 2016 is admitted, and the IRP is appointed.

The instant Petition bearing no. CP (IB)/43/7/AMR/2025 (hereinafter referred to as “CP 43/2025” or the “Petition”) has been e-filed on 12.09.2025 and physically filed vide Diary No.1868 dated 16.09.2025, and refiled in the DMS portal on 17.11.2025 by the Union Bank of India (hereinafter referred to as the “Financial Creditor”) under Section 7 the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the “IBC” or “Code”) read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016 (hereinafter referred to as the “IB Rules”) seeking initiation of Corporate Insolvency Resolution Process (hereinafter referred to as the “CIRP”) against SSAGRI Group Private Limited (hereinafter referred to as the “Corporate Debtor”) for having defaulted an amount of Rs.35,96,51,916.55.

The Corporate Debtor is a Company incorporated on 01.01.2020 under the provisions of Companies Act, 2013 bearing CIN: U15490AP2020PTC113794, and its registered office is situated at D. No. 3-29-40/1, F. No. 401, Vanamali Towers, Krishnanagar, Guntur-522006, Andhra Pradesh. Hence, the territorial jurisdiction lies with this Adjudicating Authority.

The facts of the case, as stated in the Petition filed by the Financial Creditor, are summarized below:

The Financial Creditor is a Body Corporate, constituted under the Banking Companies (Acquisition & Transfer of Undertakings) Act, 1970.

The Corporate Debtor is in the line of activity of manufacture, produce, process various food and food products in and outside India.

At the request of the Corporate Debtor, the Financial Creditor vide sanction advice dated 13.07.2023, sanctioned the credit facilities of PC/PCFC Union Scheme limit of Rs 2000 Lakhs, FBP/FUBD/FDBP/DUBD/REBA limit of Rs. 950 Lakhs, Forward Contract Facility of 0.30 USD. The Corporate Debtor has executed security documents inter alia, Demand Promissory Note, Letter of Continuity, Letter of Lien, Letter of Undertaking, Letter of Hypothecation of Bills, and Packing Credit Agreement. The Credit Facilities are duly secured by way of hypothecation of the Corporate Debtor's assets, together with the personal guarantees of the personal guarantors and the mortgage of the personal guarantors' properties by way of Memorandum of deposit of Title deeds.

The Corporate Debtor defaulted in payment of credit facilities availed from the Financial Creditor and the account of the Corporate Debtor was classified as Non-Performing Asset (hereinafter referred to as the “NPA”) on 01.01.2024 in terms of guidelines issued by the Reserve Bank of India (hereinafter referred to as the “RBI”).

Subsequently, the Financial Creditor recalled the entire credit facilities and issued a Statutory Demand Notice dated 16.01.2024 under Section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the “SARFAESI”), demanding Rs.29,75,54,161.66 as on 11.01.2024 along with further interest and charges, within sixty days. The Corporate Debtor failed to repay the outstanding dues. Consequently, the Financial Creditor filed an OA No.562/2024 before the Hon’ble Debt Recovery Tribunal, Visakhapatnam (hereinafter referred to as the “DRT”) for recovery of the said amount along with accrued interest, which is currently pending for ex-parte arguments as on 25.09.2025.

The amount of debt is more than Rupees one crore, and since the registered office of the Corporate Debtor is situated in Andhra Pradesh, this Adjudicating Authority has jurisdiction to entertain/ admit the Petition.

Shri P.V.B. Sudhakar Rao bearing Regn. No. IBBI/IPA-002/IP-N00795/2019-2020/12457) is fully qualified and 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 claimed to be in default and the date of default are stated to be Rs.35,96,51,916.55 and 16.01.2024, respectively. In Part V of Form-1, the Financial Creditor has also mentioned the details of the eight properties secured by way of mortgage.

To substantiate the existence of financial debt and the default thereto, the Financial Creditor enclosed the copies of the following documents:

The Corporate Debtor vide Diary No.581 dated 01.04.2026, filed its reply, which has been summarised as under:

This Petition has been filed with the mala fide intention of putting undue pressure on the Corporate Debtor to force a distressed settlement rather than for the genuine purpose of insolvency resolution. The IBC is not a recovery mechanism for banks, and the application fails to satisfy the essential preconditions of a 'financial debt' and 'default' as defined under Section 3(11) and Section 3(12) of the Code.

The NPA classification of the Corporate Debtors’ loan accounts is illegal, arbitrary, and in gross violation of Reserve Bank of India (herein after referred to as the “RBI”) prudential norms and the agreed terms between the parties. The entire cause of action is built upon an unlawful NPA classification made 45 days prior to a mutually agreed date of crystallization and resolution. Such illegality goes to the very root of the claim and vitiates the present Petition.

The Corporate Debtor has already challenged the demand notice dated 16.01.2024, possession notice and all consequential actions of the Financial Creditor inter alia NPA classification through S.A. No. 196/2024 before the DRT, and this Petition is an attempt to circumvent those proceedings and the rightful defense of the Corporate Debtor.

Hon'ble Supreme Court in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. (2022) 8 SCC 32 held that this Adjudicating Authority has discretion under Section 7(5)(a) and is not bound to mechanically admit every Petition.

The Corporate Debtor is a company engaged in the export of agricultural and food products and was a long-standing and valued client of the Financial Creditor, having a strong track record.

In July 2023, the Corporate Debtor availed credit facilities from the Financial Creditor comprising:

The Corporate Debtor also created a mortgage over the properties detailed in the Schedule to the Petition. The aforesaid credit facilities were availed for the purpose of exporting food products.

The principal export market of the Corporate Debtor was Russia and after the commencement of the Russia-Ukraine conflict in February 2022, the Corporate Debtor faced extraordinary disruptions. In April 2022, the Financial Creditor instructed the Corporate Debtor to stop discounting bills for Russian buyers by treating Russia as a “risk market,” despite there being no restriction by the RBI or the Government of India (herein after referred to as the “GoI”) on exports to Russia, thereby disrupting the operations and business continuity of the Corporate Debtor.

Post Russia-Ukraine conflict, Russian customers could settle bills only in Indian Rupees under the alternative settlement mechanism permitted by RBI. As per RBI guidelines and Rule 7.20.14 of Financial Creditor’s post-shipment guidelines, the Financial Creditor was required to close overdue bills on First-In-First-Out (hereinafter referred to as “FIFO”) basis and crystallize bills within the prescribed timelines, but the Financial Creditor failed to implement the FIFO closure and failed to crystallize bills within time, resulting in overdue entries.

After September 2022, inward remittances of approximately Rs.90 crores in Rupees and USD were credited by overseas customers to the account of the Corporate Debtor, but the Financial Creditor failed to implement cross-currency transactions on the said inflows and failed to close bills on FIFO basis, while continuing to reflect overdue entries, thereby manufacturing the very default now relied upon.

On 17.11.2023, the management of the Corporate Debtor met with the then DGM of the Financial Creditor, Mr Kundanlal, and a mutual oral agreement was reached whereby:

Relying upon the said agreement, the Corporate Debtor infused funds and paid an amount of Rs.1.2 crores in two tranches of Rs.60 lakhs each towards closure of bills. Despite this agreed arrangement, the Financial Creditor classified the account as NPA on 01.01.2024, before the agreed crystallization date of 18.02.2024, which was 45 days premature and in breach of the mutual agreement and RBI own prudential norms.

Despite meetings, pleadings, and representations by the Corporate Debtor after the NPA classification, the Financial Creditor issued a demand notice dated 16.01.2024 under Section 13(2) of the SARFAESI and thereafter, published a newspaper advertisement in Eenadu dated 21.01.2024 i.e. within two working days of receipt of demand notices by guarantors and before one guarantor, Mrs. Dasari Annapurna, who was in USA, had received the notice, which is arbitrary and calculated to cause maximum damage to the Corporate Debtor.

The alleged “default” is stated to be found entirely upon the NPA classification dated 01.01.2024, which is alleged to be illegal, arbitrary, and contrary to:

Hon’ble Supreme Court held that NPA classification must comply with RBI prudential norms, the present NPA classification is alleged to be not in conformity with RBI prudential norms, since the overdue bills from October 2023 onwards arose due to failure to implement FIFO closure and crystallization within the agreed timelines.

NPA classification on 01.01.2024 was premature by 48 days based on the agreed crystallization timeline of 18.02.2024, rendering it not a valid basis for default under the IBC. The very existence of “default” is genuinely disputed and is already the subject matter of pending proceedings before the Hon’ble DRT in S.A. No. 196/2024. The alleged default is stated to have arisen due to:

The question of “default” under Section 3(12) of the IBC is stated to have arisen due to the conduct of the Financial Creditor and breach of agreement, and not due to any financial inability of the Corporate Debtor. Further, the Corporate Debtor was ready to repay the amounts in terms of the agreed crystallization schedule.

The Hon’ble Supreme Court in Vidarbha Industries Power Ltd. v. Axis Bank Ltd. held that this Adjudicating Authority has discretion under Section 7(5)(a) of the IBC to decline admission, even where debt and default are established, if the circumstances warrant it. Section 7(5)(a) uses the expression ‘may’ and not ‘shall’, conferring the discretion jurisdiction on this Adjudicating Authority. In the present case, the following circumstances militate strongly against admission:

The outstanding amount of Rs.35,96,51,916.55 claimed as on 18.06.2025 is disputed on the ground that it includes disputed interest, penal interest, and other charges; inward remittances of approximately Rs.90 crores were not properly adjusted on FIFO basis; the amount of Rs.29,75,54,161.66 claimed under the SARFAESI demand notice dated 16.01.2024 differs from the claim in the present Petition; and proper statements of account showing adjustment of credits have not been furnished.

O.A. No. 562/2024 filed by the Financial Creditor and S.A. No. 196/2024 filed by the Corporate Debtor are pending before the Hon’ble DRT in respect of the same debt and issues. It is a settled law that pendency of SARFAESI/ DRT proceedings is not a bar to filing under Section 7 of the Code, but the present proceedings under Section 7 of the Code have been initiated for collateral purposes rather than genuine insolvency resolution.

The Financial Creditor is alleged to have acted in undue haste, without following due process and in violation of the principles of natural justice, by classifying the account as NPA without prior notice, issuing the notice under Section 13(2) within a few days of such classification, and publishing newspaper notices even before effecting service upon all the guarantors. Further, the newspaper publication was strategically placed alongside news relating to anti-farmer protests, with the deliberate intention of targeting the Corporate Debtor’s suppliers and buyer network. The intention of the Financial Creditor is to cause reputational damage and exert pressure upon the Corporate Debtor, rather than to facilitate resolution.

The IBC is not a substitute for recovery proceedings to pressurize borrowers into paying disputed dues. The Hon’ble Supreme Court in Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17 held that the primary purpose of the IBC is resolution and rehabilitation of distressed companies, and not a mere recovery of money. The Financial Creditor already possesses adequate security and has initiated SARFAESI and DRT proceedings, and therefore the present Petition amounts to parallel recovery proceedings for the same and is liable to be dismissed.

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".

In Part IV of Form-1 of the Petition, the date of default is stated as 16.01.2024.

The present Petition has been e-filed on 12.09.2025, refiled on 17.11.2025 and physically filed on 16.09.2025 vide Diary No. 1868 and 25.11.2025 vide Diary No. 2356 after curing the defects raised by the Registry.

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, 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.35,96,51,916.55. The relevant extracts of the Part IV of Form 1 is reproduced below:

The Financial Creditor at Page 65 of the Petition have enclosed the interest calculation sheet, which depicts the above default amount of Rs.35,96,51,916.55, which is reproduced below:

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

Record of default created with the NeSL

The RoD issued by the NeSL in respect of Account Nos. 015019030000002, 015019030000003, 167029030000005, 167029030000008, and 01501722000001, wherein the status of Authentication of Default in Form-D is shown as “Authenticated” and the Date of default is 01.01.2024. The relevant extracts of the RoD are reproduced below:

The default amount as on the default date (01.01.2024) as per the RoD is summarised in the table below:

Copy of the CIBIL report:

The copy of the CIBIL report dated 28.05.2025, which shows the outstanding debt amount of Rs.29,46,38,743/- of the Corporate debtor, which is the same figure as mentioned in Part-IV of Form 1 excluding interest and expenses. The relevant extracts of the CIBIL report are reproduced below:

Certificate under Section 2A of the Bankers’ Book Evidence Act, 1981 along with the Statement of Accounts of Account Nos. 015019030000002, 015019030000003, 167029030000005, 167029030000008, 015019020000009, 015017220000001, the relevant extracts of the same are reproduced below:

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?”

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 Mr. PVB Sudhakara Rao, having Registration No. IBBI/IPA-002/IP-N00795/2019-2020/12547 as IRP in this matter. The written consent of the proposed IRP in Form-2 dated 27.03.2025 is annexed at Page 51 the Petition, wherein, the proposed IRP affirmed that he 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 him with the Board or the Insolvency Professional Agency of ICAI. The copy of the AFA in Form B is annexed at Page 50 of the Petition, which shows that his Authorisation is valid till 31.12.2025. 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 31.12.2026. 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)/43/7/AMR/2025 filed by the Financial Creditor under section 7 of the IBC for initiating CIRP against the Corporate Debtor SSAgri Group Private Limited, is hereby admitted and accordingly, the moratorium is declared in terms of Section 14 of the Code:

The order of moratorium shall have effect from the date of this order till the completion of the CIRP or until this Adjudicating Authority approves the resolution plan under sub-section (1) of Section 31 or passes an order for liquidation of the Corporate Debtor under Section 33 as the case may be.

We also appoint Mr. PVB Sudhakara Rao, bearing Registration No.IBBI/IPA-002/IP-N00795/2019-2020/12547, Email: [email protected] having Address at 8-3-677/8, Divya Collections, 2^nd Floor, Near Ganapathi Complex, SKD Nagar, Yellareddyguda, Hyderabad-500073, Telangana, as IRP in the instant matter, with the following directions:

The term of appointment of the aforesaid IRP shall be in accordance with the provisions of Section 16(5) of the Code;

The aforesaid IRP shall submit an affidavit to this Adjudicating Authority within 7 days of this Order that his existing assignments including the present assignment are within the permissible limit of clause 22 of Code of Conduct specified in First Schedule to IBBI (Insolvency Professionals) Regulations, 2016.

The aforesaid IRP shall also submit an affidavit to this Adjudicating Authority within 7 days of this Order that he is eligible to be appointed as IRP under Regulation 3 of IBBI (Insolvency Resolution Process for Corporate Persons), Regulations, 2016;

The IRP shall make all requisite disclosures as per First Schedule under Regulation 7(2)(h) of the IBBI (Insolvency Professionals) Regulations, 2016 in the first meeting of the CoC;

In terms of Section 17 of the Code, from the date of this appointment, the powers of the Board of Directors shall stand suspended and the management of the affairs shall vest with the IRP and the officers and the managers of the Corporate Debtor shall report to the IRP, who shall be enjoined to exercise all the powers, as are vested with the IRP and strictly perform all the duties, as are enjoined on the IRP under Section 18 and other relevant provisions of the Code, including taking control and custody of the assets, over which the Corporate Debtor has ownership rights recorded in the balance sheet of the Corporate Debtor, etc. as provided in Section 18(1)(f) of the Code. The IRP is directed to prepare a complete list of the inventory of assets of the Corporate Debtor;

The IRP shall strictly act in accordance with the Code, all the rules framed thereunder by the Board or the Central Government and in accordance with the Code of Conduct governing his profession and as an Insolvency Professional with high standards of ethics and moral;

The IRP shall cause a public announcement within three days as contemplated under Regulation 6 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 of the initiation of the CIRP in terms of Section 13(1)(b) read with Section 15 of the Code calling for the submission of claims against Corporate Debtor;

The IRP/RP shall prepare the Audited Financial Statements as on date of the CIRP and shall submit before the CoC for consideration.

The IRP/RP shall also ensure that all the assets appearing in the Financial Statements on the CIRP date have been considered in the valuation report. The IRP/ RP shall send individual communication through post or electronic means along with a copy of public announcement to all the creditors as per last available books of accounts / financial statements on the CIRP date of Corporate Debtor as prescribed under Regulation 6A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016.

The Corporate Debtor, its Directors, personnel and the persons associated with the management shall extend all cooperation to the IRP in managing the affairs of the Corporate Debtor as a going concern and extend all cooperation in accessing books and records as well as assets of the Corporate Debtor;

The suspended Board of Directors is directed to give complete access to the books of accounts of the Corporate Debtor maintained under Section 128 of the Companies Act, 2013. In case, the books are maintained in the electronic mode, the suspended Board of Directors are to share with the IRP/ RP all the information regarding maintaining the backup and regarding service provider kept under Rule 3(5) and Rule 3(6) of the Companies (Accounts) Rules, 2014 respectively as effective from 11.08.2022, especially the name of the service provider, the internet protocol of the service provider and its location, and also address of the location of the books of accounts maintained in the cloud. In case accounting software for maintaining the books of accounts is used by the Corporate Debtor, then IRP/RP is to check that the audit trail in the same is not disabled as required under the notification dated 24.03.2021 of the Ministry of Corporate Affairs. A reference is made to the provisions of Section 128(5) of the Companies Act, 2013, whereby every company should maintain its books of accounts for not less than eight financial years immediately preceding a financial year. Minutes and statutory records are the principal documents of the company that should be maintained and preserved since inception.

In view of the above mandatory provisions, the suspended directors of the board will ensure that the books of accounts for the eight previous financial years preceding the date of this order be made available to the IRP/RP within 15 days of the initiation of the CIRP order. The statutory auditor is also directed to share the records maintained by him in the course of the audit of the accounts of the Corporate Debtor for the period of three years prior to the date of initiation of this CIRP order within the same period of 15 days.

In case of any non-cooperation by the suspended Board of Directors or the statutory auditors, the IRP/RP may take the help of the police authorities to enforce this order. The concerned police authorities are directed to extend help to the IRP/RP in implementing this order for retrieval of relevant information from the systems of the Corporate Debtor. The suspended Board of Directors is also directed to hand over all user IDs and passwords relating to the Corporate Debtor, particularly for government portals, for various compliances. The IRP is also directed to make a specific mention of non-compliance, if any, in this regard in his status report filed before this Adjudicating Authority immediately after a month of the initiation of the CIRP.

The IRP/RP is directed to approach the government departments, banks, corporate bodies and other entities with request for information/documents available with those authorities/ institutions/ others pertaining to the Corporate Debtor, which would be relevant in the CIRP. The government departments, banks, corporate bodies and other entities are directed to render the necessary information and cooperation to the IRP/RP to enable him to conduct the CIRP as per law.

The IRP shall, after collation of all the claims received against the Corporate Debtor and the determination of the operational position of the Corporate Debtor constitute a Committee of Creditors and shall file a report, certifying constitution of the Committee to this Adjudicating Authority on or before the expiry of thirty days from the date of his appointment, and shall convene first meeting of the Committee within seven days of filing the report of constitution of the Committee;

The IRP shall also serve a copy of this order to all relevant statutory departments such as Income Tax, GST (Centre and State), Provident Fund, ESI etc. and also to trade unions, and employee associations to inform them about the commencement of CIRP.

The IRP is directed to file a progress report every month to this Adjudicating Authority.

The Financial Creditor is directed to deposit Rs.4,00,000/- (Rupees Four 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)/43/7/AMR/2025 stands admitted.