# In the matter of Citystar Infrastructures Limited CP (IB) No. 1239-KB-2020]

> NCLT judgment dated 2023-10-20. Citation: TCN-2023-NCLT-01063. Meehika Buildcon LLP filed a petition under Section 7 of the Insolvency and Bankruptcy Code,…

- **Court:** NCLT
- **Order date:** 20 Oct 2023
- **Citation:** TCN-2023-NCLT-01063
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/citystar-infrastructures-limited-cp-ib-no-1239-kb-2020-f7edf19e

## Summary

### Background

Meehika Buildcon LLP filed a petition under Section 7 of the Insolvency and Bankruptcy Code, 2016, against City Star Infrastructures Limited, seeking to initiate Corporate Insolvency Resolution Process (CIRP). The petition was based on an alleged default in repayment of a financial debt arising from a Term Sheet agreement where Meehika Buildcon LLP advanced money to City Star Infrastructures Limited for a joint venture development project. The Corporate Debtor was to obtain necessary mutations and conversions for the land, but the Financial Creditor terminated the Term Sheet due to alleged defective title and demanded a refund.

## Facts

Meehika Buildcon LLP (Financial Creditor) and City Star Infrastructures Limited (Corporate Debtor) entered into a Term Sheet agreement for a joint venture to develop land owned by the Corporate Debtor. Meehika Buildcon LLP advanced Rs. 2,77,98,630/- to City Star Infrastructures Limited as a security deposit. The Corporate Debtor was responsible for obtaining necessary mutations and conversions for the land. The Financial Creditor paid an amount of Rs. 2.5 crores to the Corporate Debtor in May 2014. The Corporate Debtor performed mutation with Block Land Reforms Office, Sonarpur on 28.11.2016 and conversion of the land was done on 15.09.2017. The Corporate Debtor failed to obtain mutation with Rajpur, Sonarpur Municipality till 2020. The Financial Creditor terminated

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## Issues and analysis

### Issue 1: Whether the amount advanced by Meehika Buildcon LLP to City Star Infrastructures Limited …

**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 advanced was intended for a joint venture development

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**Interpretation:** The interpretation of 'financial debt' requires a clear understanding of the

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**Application:** In this case, the court applied the ratio by determining that the advance was

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## Parties

- **Judges:** RohitKa…; Balraj…
- **Appellants:** Meehika Buildcon…
- **Respondents:** City Star…
- **Advocates:** NPS Ch…; Swapna Ch…; +5 more

## Timeline

- **1991-07-09 — Incorporation of…**: City Star Infrastructures…
- **2014-05-01 — Term Sheet Ag…**: Meehika Buildcon LLP and City Star Infrastructures Limited entered into a Term Sheet…

## 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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