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Informist, Monday, Apr. 6, 2026

 

--NCLT admits Union Bank of India's insolvency plea against Kallam Textiles

 

By Surya Tripathi

 

NEW DELHI – The Amaravati bench of the National Company Law Tribunal Monday admitted Union Bank of India's plea to start insolvency proceedings against Kallam Textiles Ltd. for a debt of INR 2.10 billion. The tribunal appointed Rajesh Chillale as the interim resolution professional of Kallam Textiles to carry out the functions of the company as per the Insolvency and Bankruptcy Code, 2016.

 

There is no bar under the 2016 Code for initiation of insolvency proceedings when Union Bank of India has already invoked proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, the tribunal said. The material on record clearly establishes default by Kallam Textiles and there is nothing to indicate that the present proceedings have been initiated by the bank merely as a recovery mechanism, it said.

 

The case has its genesis from Kallam Textiles availing financial facilities from the erstwhile Andhra Bank, which was merged with Union Bank of India in 2020. However, Kallam Textiles failed to repay the debt on the due date and ultimately its loan accounts were declared a non-performing asset in 2023. On the company's continued failure to repay the loan, Union Bank of India moved the tribunal to start insolvency proceedings.

 

Kallam Textiles was incorporated in 1992. The company is engaged in the business of manufacturing and processing textile products, including spinning, dyeing, and allied operations. The company provides employment to around 400 direct employees and over 2,000 contract and daily wage workers.

 

Kallam Textiles disputed Union Bank of India's statement on the outstanding amount and denied that any legally recoverable debt claimed in the insolvency petition was due and payable. It said that when the issue of recovery of the debt was already the subject matter of proceedings before the Debts Recovery Tribunal, the simultaneous invocation of the 2016 Code amounts to multiplicity of proceedings and constitutes misuse of the insolvency framework.

 

Monday, shares of Union Bank of India ended 1.2% higher at INR 174.12 on the National Stock Exchange. Shares of Kallam Textiles ended 1.5% higher at INR 2.70 on BSE.  End

 

Edited by Rajeev Pai

 

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