# In the matter of Nakshatra Brands Limited CP No. 4062-IBC-NCLT-MB-MAH-2018

> NCLT judgment dated 2019-01-29. Citation: TCN-2019-NCLT-05127. ICICI Bank Limited, a financial creditor, filed an application under Section 7 of the…

- **Court:** NCLT
- **Order date:** 29 Jan 2019
- **Citation:** TCN-2019-NCLT-05127
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nakshatra-brands-limited-cp-no-4062-ibc-nclt-mb-mah-2018-096fa973

## Summary

### Background

ICICI Bank Limited, a financial creditor, filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016, against Nakshatra Brands Limited, the corporate debtor, due to a default in repayment of a working capital loan. The petitioner had extended various credit facilities to the corporate debtor and Asmi Jewellery India Limited, which was later amalgamated with the corporate debtor. The total amount claimed to be in default was ₹134,15,55,256.22 as of 30.09.2018. Despite a recall notice issued by the applicant, the corporate debtor failed to repay the outstanding dues, leading to the account being classified as a non-performing asset (NPA).

## Facts

ICICI Bank Limited extended working capital loan facilities to Nakshatra Brands Limited and Asmi Jewellery India Limited. Asmi was later amalgamated with Nakshatra Brands Limited. The initial facility was sanctioned via a Credit Arrangement Letter dated 02.12.2005, with a Master Facility Agreement dated 31.12.2005. The facilities were secured by various instruments, including deeds of hypothecation, personal guarantees, and undertakings for creation of permanent security. The working capital facility was subsequently reduced and then enhanced. A trust was created with 3i Infotech Trusteeship Services Limited as the Security Trustee. A Principal Working Capital Consortium Agreement was entered into on 11.01.2013, with a consortium of lenders led by Punjab National Bank.

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## Issues and analysis

### Issue 1: Whether the debt owed by Nakshatra Brands Limited to ICICI Bank Limited qualifies as a 'Financial …

**Ratio:** Section 5(8) of the Insolvency and Bankruptcy Code, 2016, defines 'financial debt' as a

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**Reasoning:** The court considered the loan agreements, credit arrangement letters, and other documents

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**Interpretation:** The interpretation of Section 5(8) requires that the debt must be disbursed

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**Application:** In this case, the court found that the debt owed by Nakshatra Brands Limited to

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** ICICI Bank…
- **Respondents:** Nakshatra Brands…
- **Advocates:** Sagar Di…; Abhim…; +2 more

## Timeline

- **2004-01-01 — Incorporation of…**: Nakshatra Brands Limited (NBL/Corporate Debtor) incorporated as a Public Limited Company…
- **2005-12-02 — Credit Arrangement…**: The Petitioner sanctioned the facility by way of a Credit Arrangement Letter dated…

## 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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