# In the matter of Meehika Buildcon LLP vs. Citystar Infrastructures Ltd.

> NCLAT judgment dated 2024-09-09. Citation: TCN-2024-NCLAT-00212. The appeal is against an order dated 20.10.2023 passed by the Adjudicating Authority…

- **Court:** NCLAT
- **Order date:** 9 Sept 2024
- **Citation:** TCN-2024-NCLAT-00212
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclat-new-delhi/meehika-buildcon-llp-vs-citystar-infrastructures-ltd-deb83f56

## Summary

### Background

The appeal is against an order dated 20.10.2023 passed by the Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) in CP (IB) No. 1239 of 2020, which dismissed an application filed under Section 7 of the Insolvency and Bankruptcy Code, 2016, by Meehika Buildcon LLP (Appellant) against City Star Infrastructure Ltd. (Respondent) for the resolution of an amount of Rs. 2,77,98,630/-. The application was dismissed by the Tribunal, leading to the current appeal.

## Facts

Meehika Buildcon LLP (Appellant) filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against City Star Infrastructure Ltd. (Respondent) for the resolution of a debt amounting to Rs. 2,77,98,630/-. A term sheet was executed between the parties on 05.05.2024. The Appellant claimed that the amount disbursed to the Respondent was a loan, and since the term sheet was cancelled, the Appellant was entitled to a refund with 18% interest. The Respondent argued that the transaction was an investment, not a loan, and that no interest rate or time lines were fixed for the service of interest. The Respondent also stated that there were 'bargadars' (sharecroppers) on the land, affecting the title. The term sheet stipulated that after clearing the title,

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## Issues and analysis

### Issue 1: Whether the money advanced by the Appellant to the Respondent constitutes a 'financial debt' under …

**Ratio:** The definition of 'financial debt' under Section 5(8) of the Insolvency and Bankruptcy

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**Reasoning:** The court reasoned that the money was given to the Respondent for the purpose of clearing

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**Interpretation:** The court interpreted Section 5(8) of the Insolvency and Bankruptcy Code to

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**Application:** In this case, the court found that the money advanced was intended for clearing

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## Parties

- **Judges:** Rakesh Kuma…; Indevar P…
- **Appellants:** Meehika Buildcon…
- **Respondents:** City Star…

## Timeline

- **2023-10-20 — Order by Adjudicating…**: The Adjudicating Authority (National Company Law Tribunal, Kolkata Bench) passed an order…
- **2024-05-05 — Term Sheet Ex…**: A term sheet was executed between Meehika…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 7 — Initiation of corporate insolvency resolution…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-7)

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