# In the matter of Starlite Builders Private Limited Company Petition No. IB-123-ND-2022

> NCLT judgment dated 2022-05-26. Citation: TCN-2022-NCLT-02585. The case involves an application under Section 7 of the Insolvency and Bankruptcy Code (IBC),…

- **Court:** NCLT
- **Order date:** 26 May 2022
- **Citation:** TCN-2022-NCLT-02585
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-division-bench-court-i-chenn/starlite-builders-private-limited-company-petition-no-ib-123-nd-2022-17f9fe28

## Summary

### Background

The case involves an application under Section 7 of the Insolvency and Bankruptcy Code (IBC), 2016, read with Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016, filed by Vision Multiplex Private Limited (Applicant/Financial Creditor) against Starlite Builders Private Limited (Respondent/Corporate Debtor). The application pertains to the initiation of Corporate Insolvency Resolution Process (CIRP) based solely on the defaulted interest amount on debentures issued by the Corporate Debtor. The applicant argues that the interest amount, without adding the principal, can be treated as a financial debt under Section 5(8) of the IBC, 2016. The respondent contends that the principal amount is not yet due, and therefore, the interest

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## Facts

Vision Multiplex Private Limited, the applicant, filed a petition to initiate CIRP against Starlite Builders Private Limited, the corporate debtor, based on the default in payment of interest on debentures. The debentures were issued by Starlite Builders Private Limited, and the date of redemption of the debenture certificate is 31.03.2026. As per the terms of the debenture certificate, the petitioner is entitled to interest at 6% per annum payable on face value plus security premium on quarterly rests. The interest and security premium due on 01.07.2021, 01.10.2021, and 01.01.2022 were not paid by the corporate debtor, leading to the application for default of interest for three quarters of the financial year 2021-22. The applicant argued that the interest amount,

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## Issues and analysis

### Issue 1: Whether CIRP can be initiated under Section 7 of the IBC solely on the defaulted interest amount, …

**Ratio:** The prime consideration for initiating CIRP under Section 7 of the IBC is the existence

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**Reasoning:** The court reasoned that the definition of 'debt' under Section 3(11) of the IBC includes

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**Interpretation:** The court interpreted Sections 3(11) and 5(8) of the IBC to mean that a

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**Application:** In this case, the applicant sought to initiate CIRP based solely on the

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## Parties

- **Judges:** ABNI RANJAN KUMAR…; L. N. G…
- **Appellants:** Vision Multiplex…
- **Respondents:** Starlite Builders…

## Timeline

- **2021-04-13 — Debenture Certificate…**: Starlite Builders Private Limited issued debenture certificate to Vision Multiplex…
- **2021-07-01 — Interest Du…**: Interest payment due on…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 3(11) — Definitions](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-3)

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