Thank you everyone for suggestions and recommendations -
ASM is accessible using asmcmd and I can see all the DB files incuding spfile, they were created by DBCA, alert log showed same information I posted
After extensive troubleshooting and testing the issue was idedntified and fixed - 'dba' group needs to be the primary group for 'oracle' user, not the secondary one. I suspected that something was not right with 'oracle' user access to asm based on that strange password error. There is more I need to check as the issue and fix with swapping groups seems strange. Secondary group is not enough ti have proper rights ??? my first reaction was - seriously ? wtf ?
Anyway - I need to move one now ...
Thank you again !