NCLT Ahmedabad’s Ruling on Union Bank of India Vs SE Transstadia Private Limited: Scope of Section 7 Enquiry, Limitation and Evidentiary Issues

Overview of the Proceedings

The National Company Law Tribunal, Ahmedabad Bench, entertained a Section 7 application under the Insolvency and Bankruptcy Code, 2016 (IBC) filed by Union Bank of India against SE Transstadia Private Limited. The bank, acting as a financial creditor under a consortium lending arrangement, alleged that the corporate debtor had defaulted on term loan facilities extended for its Kankaria project in Ahmedabad.

As on 24.07.2026, the financial creditor asserted that the amount in default stood at Rs.223,82,01,046, comprising principal, normal interest and penal interest. The corporate debtor contested the maintainability of the petition on several grounds, including limitation, lack of proper authorisation of the bank’s signatory, alleged defects in the documentary evidence, and the impact of earlier CIRP withdrawal and restructuring/OTS discussions.

The NCLT ultimately admitted the petition, initiated the Corporate Insolvency Resolution Process (CIRP), imposed a moratorium under Section 14, and appointed Mr. Dinesh Kumar Aggarwal as Interim Resolution Professional (IRP).

Parties, Facilities and Security Structure

Financial Creditor and Corporate Debtor

  • Financial Creditor: Union Bank of India, a banking company governed by the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970, acting through its authorised signatory.
  • Corporate Debtor: SE Transstadia Private Limited, incorporated on 17.12.2008, with substantial authorised and paid-up share capital and a registered office at “The Arena”, near Kankaria Lake, Ahmedabad.

Consortium Lending and Term Loan Facilities

The financial debt emerged from consortium lending extended by:

  • Bank of Baroda (Lead Bank);
  • Bank of India; and
  • Union Bank of India.

Key sanction details included:

  • Term Loan-I of Rs.75,00,00,000 sanctioned on 28.01.2014;
  • Subsequent renewal of Term Loan-I on 11.09.2015;
  • Term Loan-II of Rs.10,76,00,000 sanctioned on 02.12.2016;
  • Renewal of these facilities on 02.06.2018, with revised limits mentioned in the record.

Separate loan accounts were maintained for each term loan, with statements evidencing disbursements and interest entries. The debt was secured by mortgage over leasehold land admeasuring 37,388 sq. metres, the building known as “The Arena” and associated plant and machinery. Charges were created on 23.07.2014.

Default, NPA Classification and Demand Notices

The financial creditor asserted that the corporate debtor failed to adhere to the repayment schedule following disbursement of the facilities. The loan accounts were categorised as Non-Performing Assets (NPAs) on 31.12.2018, which the bank treated as the date of default for purposes of Section 7.

In support, the bank relied on:

  • Demand Letter dated 04.01.2019, calling upon the corporate debtor to pay Rs.76,02,91,686.27 within three days;
  • Guarantee invocation and enforcement notice dated 08.02.2021, once again demanding the consortium dues;
  • The corporate debtor’s reply dated 12.02.2021, seeking withdrawal of the invocation notice while referring to TEV study-related issues;
  • SARFAESI demand notice dated 15.04.2023 issued by Bank of Baroda under Section 13(2) of the SARFAESI Act, 2002, reflecting total consortium dues of Rs.5,06,28,11,937 and separately indicating the dues pertaining to Union Bank of India.

The corporate debtor disputed the exact date of default, contending that the contractual cure periods under the Consortium Loan Agreement dated 28.07.2014 and the First Supplemental Consortium Loan Agreement dated 03.06.2017 meant that the NPA classification date could not automatically be equated to the statutory “default” under Section 3(12) of the IBC.

Information Utility Records and Bank Statements

NeSL Record of Default

The financial creditor relied upon the Information Utility (NeSL):

  • The Form D (Record of Default) showed the debt as financial in nature, with a sanctioned debt of Rs.75,00,00,000 in respect of one of the term loans, the same amount being recorded as outstanding and overdue.
  • The date of default was recorded as 31.12.2018.
  • Status of authentication was marked as “AUTHENTICATED”, with authentication by the corporate debtor also indicated.
  • The authentication process was completed on 21.06.2026.

The corporate debtor questioned the probative value of the NeSL record, pointing out that authentication was noted as having been carried out through a system-generated user ID and disputing the manner of filing and verification of the IU documents.

Relying on Milind Kashiram Jadhav v. State Bank of India & Anr., the NCLT held that an authenticated Information Utility record is a significant corroborative piece of evidence on the aspect of debt and default. On the facts, the Tribunal accepted the NeSL Form D as supporting the financial creditor’s case.

Bankers’ Books Certificates and Evidence Law

The corporate debtor attacked the admissibility of the loan statements on the ground that the original certificate referenced Section 65B of the Indian Evidence Act, 1872, whereas the applicable framework after legislative changes requires reliance on Section 2A of the **Bankers’ Books Evidence Act, 1891andSection 63 of the **Bharatiya Sakshya Adhiniyam, 2023.

In response, the bank produced an additional certification dated 08.09.2026 (Annexure DD1), which specifically complied with Section 63 of the Bharatiya Sakshya Adhiniyam, 2023 and detailed the extraction of electronic records from the banking system (Finacle).

The NCLT held that, when read together with the updated certification, the loan statements could not be discarded on technical grounds.