Punjab National Bank's Insolvency Petition Against Bhagwati Rice Mills Admitted by NCLT

Allahabad Bench initiates Corporate Insolvency Resolution Process citing established default and debt exceeding Rs. 1 crore.

In a significant development, the Allahabad Bench of the National Company Law Tribunal (NCLT) has admitted an insolvency petition filed by Punjab National Bank (PNB) against Bhagwati Rice Mills Private Limited. The judgment, delivered on December 3, 2025, marks the commencement of the Corporate Insolvency Resolution Process (CIRP) against the rice milling company, which has been embroiled in financial disputes with its creditor, PNB.

The petition was filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by PNB, which asserted that Bhagwati Rice Mills defaulted on a financial debt amounting to Rs. 74,35,42,374. The date of default was established as June 8, 2023, and the application was deemed to be within the limitation period, satisfying all conditions for admission under the code.

The NCLT bench, comprising Member (Judicial) Sh. Praveen Gupta and Member (Technical) Sh. Ashish Verma, examined the financial creditor's claims and the corporate debtor's objections. The tribunal found the corporate debtor's arguments regarding procedural irregularities, purported set-offs, and claims of damages unsubstantiated. The tribunal concluded that the existence of a financial debt and the occurrence of default were sufficiently demonstrated by PNB.

During the proceedings, Bhagwati Rice Mills raised several objections, including allegations of unauthorized filings, improper classification of its account as Non-Performing Asset (NPA), and procedural violations by PNB. However, the tribunal noted that the financial creditor had appropriately stated the date of default and supported it with evidence, dismissing the debtor's claims of procedural misconduct.

The tribunal further addressed the debtor's claims of set-offs and damages, noting that these were unsubstantiated and required extensive evidence, which were already the subject of adjudication before the Debt Recovery Tribunal. As such, these claims were deemed insufficient to prevent the admission of the insolvency petition.

With the admission of the application, the tribunal declared a moratorium under Sections 13 and 14 of the Insolvency and Bankruptcy Code, 2016, prohibiting the institution of suits or continuation of pending suits against the corporate debtor. Public announcements were ordered, and Ms. Babita Jain was appointed as the Interim Resolution Professional to oversee the resolution process.

This decision underscores the tribunal's adherence to the principles of the Insolvency and Bankruptcy Code, focusing on the existence of debt and occurrence of default as the primary criteria for admitting insolvency petitions. The resolution process will now proceed, aiming to address the financial distress of Bhagwati Rice Mills and facilitate a viable resolution plan.

Bottom Line:

Insolvency and Bankruptcy Code, 2016 - Application under Section 7 for initiating Corporate Insolvency Resolution Process (CIRP) - Date of default established as 08.06.2023 - Application held to be within limitation and fulfilling all conditions for admission under the Code.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 7, 13, 14, 15.

Punjab National Bank v. Bhagwati Rice Mills Private Limited, (NCLT)(Allahabad Bench) : Law Finder Doc Id # 2819494