AP High Court Dismisses Plea Against NPA Classification; Says It Seeks To “Bypass” SARFAESI, IBC Proceedings

The Andhra Pradesh High Court has dismissed a writ petition filed by businessman Omkaram Venkata Ramana challenging the Bank of India's decision to classify his group companies' loan accounts as Non-Performing Assets (NPA).

The court held that the petition sought to bypass proceedings already pending under the SARFAESI Act and Insolvency and Bankruptcy Code (IBC).

"In our considered opinion there cannot be any blanket orders passed as is prayed in this writ petition, which itself is not entertainable as such. Petitioner seeks to bypass all pending proceedings under SARFAESI Act as well as IBC and also seeks that this Court should ignore passing of order, dated 16.12.2025 in Crl.P.No.8044 of 2023 whereby criminal proceedings initiated by him against Bank officials have been quashed,” the court observed.

A Division Bench of Justice Lisa Gill and Justice Ninala Jayasurya passed the order on April 23, 2026.

Ramana, director of the Nithin and Ramanasree group companies, stated that the companies have had banking relations with Bank of India since 1993. Between 2013 and 2014, the companies availed term loans and working capital facilities for expansion, including setting up a manufacturing unit in Faridabad.

He claimed the bank facilitated selection of machinery suppliers by sending its engineers to inspect the supplier's factory. Acting on the bank's recommendation, the companies purchased machinery from Flour Tech Engineers Pvt. Ltd. According to the petition, the machinery was delivered late and was defective, used and second-hand.

The petitioner further argued that the bifurcation of Andhra Pradesh adversely affected business operations between 2015 and 2016. He said the bank later agreed to reschedule repayments and directed payment of ₹1.30 crore towards arrears. Despite this, the accounts were declared NPAs and SARFAESI proceedings were initiated.

Ramana also alleged mishandling of title deeds. He claimed documents deposited as security were wrongly registered in the name of Bank of Baroda instead of Bank of India, forcing fresh documentation and re-registration.

The petitioner relied on earlier litigation involving the group companies. In 2016, Ramanasree Consumer Product Pvt. Ltd. approached the High Court challenging SARFAESI action. The court had then observed prima facie that the bank was not justified in continuing the account as NPA and restrained coercive measures, subject to servicing of interest dues.

Ramana alleged that when the bank disregarded that order, contempt proceedings were initiated. He claimed the bank later assured an OTS if the contempt case was withdrawn. Several OTS proposals followed.

One proposal was allegedly increased from ₹10 crore to ₹24 crore. The petitioner deposited ₹1 crore as upfront money in a no-lien account. He alleged that the bank later rejected the proposals and wrongfully appropriated the deposit.

The petitioner also lodged criminal complaints against the machinery supplier and bank officials. He relied on an engineer's valuation report allegedly showing that machinery valued at about ₹3.31 crore had been supplied against payments exceeding ₹9 crore.

The dispute later spread across multiple forums. The companies initiated insolvency proceedings before the NCLT Amaravati Bench under Section 10 of the IBC. The petitions were admitted in November 2019 and Corporate Insolvency Resolution Process (CIRP) commenced. Around the same time, Bank of India obtained recovery decrees before the DRT in multiple proceedings.

Ramana also approached the Supreme Court in 2025. The Supreme Court declined to entertain the writ but granted liberty to pursue remedies available in law.

Before the High Court, Ramana argued that the bank's actions violated Articles 14 and 21 of the Constitution. He sought declarations that the NPA classification and dispossession of properties were illegal. He also sought restoration of assets, compensation for financial loss and reputational harm, and penal action against bank officials.

The High Court held that the writ petition involved seriously disputed questions of fact. These included the validity of the NPA classification, the conduct of the bank during OTS negotiations, and the allegation that deposits had been wrongly appropriated. The Bench held that such issues could not be adjudicated in writ jurisdiction.

The Court also rejected the plea seeking a direction to compel the bank to enter into an OTS with the petitioner.

“It is a settled position that such a direction is not to be issued though it is always open to parties to come to a mutually acceptable settlement,” the Court said while referring to Bijnor Urban Cooperative Bank Ltd. v. Meenal Agarwal.

Dismissing the writ petition, the court clarified that Ramana remains free to pursue remedies before appropriate forums and negotiate a settlement with the bank in accordance with law.