# 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-05122. 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-05122
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/nakshatra-brands-limited-cp-no-4062-ibc-nclt-mb-mah-2018-aceebd63

## 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 its amalgamated entity, Asmi Jewellery India Limited, over several years. The corporate debtor failed to honor its obligations despite a recall notice issued by the applicant, leading to the account being classified as a non-performing asset.

## 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 total amount claimed to be in default was ₹134,15,55,256.22 as of 30.09.2018. The facilities were secured by various instruments, including deeds of hypothecation, personal guarantees, and undertakings. The petitioner sanctioned the initial facility by way of a Credit Arrangement Letter dated 02.12.2005, with an overall limit of ₹10.60 Crores. The working capital facility was later reduced and then enhanced at the request of the Corporate Debtor. A Principal Working Capital Consortium Agreement was entered into on 11.01.2013, with a working capital facility aggregating to ₹285.00 Crores.

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## Issues and analysis

### Issue 1: Whether the debt owed by the Corporate Debtor to the Financial Creditor qualifies as a 'Financial …

**Ratio:** A 'Financial Debt' is defined under Section 5(8) of the Insolvency and Bankruptcy Code,

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**Reasoning:** The court considered the various credit facilities extended by the Financial Creditor to

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

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**Application:** The court applied the definition of 'Financial Debt' to the facts of the case

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## Parties

- **Judges:** M.K. Sh…
- **Appellants:** ICICI Bank…
- **Respondents:** Nakshatra Brands…

## Timeline

- **2004-01-01 — Incorporation of…**: Nakshatra Brands Limited incorporated as a Public Limited Company in the name of…
- **2005-12-02 — Credit Arrangement…**: Petitioner sanctioned facility by way of a Credit Arrangement Letter with an overall…

## 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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