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

> NCLT judgment dated 2026-09-29. Citation: TCN-2026-NCLT-01088. City Union Bank Ltd. (Financial Creditor) filed a petition under Section 7 of the IBC, 2016, to…

- **Court:** NCLT
- **Order date:** 29 Sept 2026
- **Citation:** TCN-2026-NCLT-01088
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-amaravati/bhavanam-spinning-mills-private-limited-lqnan

## Summary

### Background

City Union Bank Ltd. (Financial Creditor) filed a petition under Section 7 of the IBC, 2016, to initiate Corporate Insolvency Resolution Process (CIRP) against Bhavanam Spinning Mills Private Limited (Corporate Debtor) for a default of Rs.63,15,24,009/- as on 11.05.2026. The Corporate Debtor had availed multiple credit facilities, acknowledged its liability through various documents, but failed to meet repayment obligations, leading to the classification of its accounts as Non-Performing Assets (NPA) on 01.10.2024. The Financial Creditor also invoked SARFAESI provisions and initiated recovery proceedings before the Debt Recovery Tribunal (DRT). The Corporate Debtor raised objections regarding the reconciliation of debt amounts across different facilities, the

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## Facts

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

The Corporate Debtor defaulted on an 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 Registry raised defects on 18.06.2026 regarding illegible loan documents, which the Financial Creditor rectified by filing neat copies on 08.07.2026.

The Financial Creditor also filed Audited Balance Sheet of the Corporate Debtor for FY 2022-23 and the Pan Card of the Financial Creditor.

The physical copy of the Petition was filed on 08.07.2026, and the matter was first listed on 15.07.2026.

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## Issues and analysis

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

**Ratio:** A petition under Section 7 of the IBC is filed within the period of limitation if it is

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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 NCLT interpreted the RBI guidelines to establish a common date of default

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**Application:** Since the petition was filed on 10.06.2026, which falls within three years from

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## Parties

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

## Timeline

- **2005-06-15 — Incorporation of…**: Bhavanam Spinning Mills Private Limited was incorporated under the provisions of…
- **2006-02-01 — Power of At…**: Mr. KK Srinivasa Prasad was authorized by Power of Attorney to file the petition on…

## 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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