# City Union Bank Ltd. vs. Bhavanam Spinning Mills Private Limited

> NCLT judgment dated 2026-09-29. Citation: TCN-2026-NCLT-01138. City Union Bank Ltd., the Financial Creditor, filed a petition under Section 7 of the…

- **Court:** NCLT
- **Order date:** 29 Sept 2026
- **Citation:** TCN-2026-NCLT-01138
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-amaravati/bhavanam-spinning-mills-private-limited-2vy3q

## Summary

### Background

City Union Bank Ltd., the Financial Creditor, filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016 (IBC) against Bhavanam Spinning Mills Private Limited, the Corporate Debtor, seeking to initiate the Corporate Insolvency Resolution Process (CIRP). The Financial Creditor claimed a default amount of Rs.63,15,24,009/- as of 11.05.2026, arising from various credit facilities extended to the Corporate Debtor. The Corporate Debtor's loan accounts were classified as Non-Performing Assets (NPA) on 01.10.2024. The Corporate Debtor raised objections regarding the establishment of debt, discrepancies in claimed amounts across different proceedings (SARFAESI, DRT, and Section 7 petition), the clubbing of multiple facilities under a single default date, and

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## Facts

City Union Bank Ltd. (Financial Creditor) e-filed a petition under Section 7 of the IBC, 2016, on 10.06.2026 against Bhavanam Spinning Mills Private Limited (Corporate Debtor).

The petition sought initiation of Corporate Insolvency Resolution Process (CIRP) for a default amount of Rs.63,15,24,009/- as on 11.05.2026.

Bhavanam Spinning Mills Private Limited was incorporated on 15.06.2005 under the Companies Act, 1956.

The Corporate Debtor availed various credit facilities from the Financial Creditor, including ECLS, ECLGS 1.0 Extension, CUB OSL Term Loan, OSL Demand Equal, and OLCC facilities, cumulatively aggregating to Rs.64,16,00,000/-.

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## Issues and analysis

### Issue 1: Whether the present Petition is filed …

**Ratio:** The petition was filed within three years of the date of default, which was determined to

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**Reasoning:** The Financial Creditor claimed 01.10.2024 as the common date of default for all five loan

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**Interpretation:** The classification of a borrower's account as NPA, according to RBI guidelines,

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**Application:** Given that the default date was 01.10.2024 and the petition was filed on

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## Parties

- **Judges:** KISHORE VEMULAPALL…; UMESH KUMAR…
- **Appellants:** City Union Bank…
- **Respondents:** Bhavanam Spinning…
- **Other parties:** Committee of…; Directors of…; +1 more
- **Advocates:** Sreedhar Va…; Mayur M…; +2 more

## Timeline

- **2005-06-15 — Incorporation of…**: Bhavanam Spinning Mills Private Limited was…
- **2006-02-01 — Power of At…**: General Power of Attorney dated 01.02.2006 authorizing Mr. KK Srinivasa Prasad to file…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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