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2019 (7) TMI 1886 - Tri - Insolvency and BankruptcySeeking to permit the Objector herein to intervene in the main case and place their objections to the admission of the main Company Petition - notification dated 21.06.1972 R/ w Regulations 76 and 77 of the State Bank of India General Regulations, 1956. HELD THAT - By reading the terms and conditions of the agreement in question and the letter of Karnataka Bank dated 2nd June 2011, the State bank of India cannot claim on the plots unless the concerned plots are registered in the name of the concerned parties. Moreover, as per one of the terms of Tripartite Agreement, the Bank is entitled to recall the loan from the Borrowers in case the completion of the construction of the Building in question is delayed beyond 6 months from the completion date indicated by the Vendor/ Developers'. As per legal notice dated 02.05.2018 (enclosed to the application as document No. 4) issued to the Borrowers as well as Petitioner and Respondent, the construction of the Apartment should have been completed on or before 30th November, 2012 with additional grace time of the three months. However, the applicant stated to have not taken any action till date except filing the instant application. It is also clearly mentioned by the Bank in the No Objection letter cited supra, that they will issue NOC only after receipt of all the proceeds as per the above referred Agreement to sell . The claim of Bank on the plots in question is premature and they are only entitled for deposit of sale title deeds of Borrowers, only in case they are registered in their name and otherwise they can proceed on Borrowers to recover their loan amount given to them. Hence, they are not proper and necessary party to be impleaded to the main Company Petition and it same is misconceived - the instant application lacks merits and thus it is liable to be dismissed. As Per Rajesw ara Rao Vittanala, Member (J) - M/s. Phoenix ARC Pvt. Ltd. Versus M/s. Sovereign Developers and Infrastructure Pvt. Ltd. HELD THAT - The assignment of the loan by the Bank to petitioner is not only accepted by the Respondent but it also obtained additional funding for ₹ 5,00,00,000/-. Accordingly new loan agreement dated 09.06.2016 was executed by the parties and also furnished personal guarantees for the loan. The Corporate debtor failed to pay the outstanding amount even after repeated demands made to the Corporate Debtor for total amount of ₹ 35,33,34,286/- towards the dues of the Assigned Debt as well as the New Loan as on 16th August, 2017, which became ₹ 42,80,92,640/- along with interest as on 02.09.2018. The assigned debt and additional loan in question and subsequent debt and default are not in dispute. The Petitioner has also given a sufficient opportunity to the Respondent to pay the outstanding amount and also issued a Legal Notice dated 26th June, 2017, by inter alia stating that they have sanctioned additional loan of ₹ 5,00,00,000/- in the larger interest of the purchasers of the apartments to complete Phase-I works - The amount due was not paid, and they have also denied the allegations that they have charged interest at 42% p.a by clarifying that they have charged interest at 14% p.a compounded monthly. The Respondent also addressed letters to the Prime Minister's office, Finance Minister and Reserve Bank of India. The Instant Petition is filed in accordance with extant provisions of Code and the rules made thereunder, and debt and default in question are not in dispute, and qualified Resolution Professional namely, Shri Guruprasad Makam with Registration No.IBBI/IPA-001/IPP00932/2017-18/11550, is suggested to appoint him as IRP, who has declared that he is qualified Resolution Professional not undergoing any disciplinary proceedings and also filed Written Communication dated 03.09.2018 - it is a fit case to admit and appoint said Insolvency Professional as IRP. Application admitted.
Issues Involved:
1. Whether State Bank of India (SBI) should be allowed to intervene in the main case. 2. Whether the application by Vinod Kumar V.K and others to be impleaded as respondents should be allowed. 3. Whether the Corporate Insolvency Resolution Process (CIRP) should be initiated against Sovereign Developers and Infrastructure Ltd. Detailed Analysis: 1. Intervention by State Bank of India (SBI): - Application Filed: SBI filed I.A No.438/2018 to intervene in the main case and place objections to the admission of the main Company Petition filed by Phoenix ARC Pvt. Ltd. - Arguments by SBI: SBI argued that it should be allowed to intervene as it had sanctioned home loans to around 260 home-buyers based on a No Objection Certificate (NOC) from Karnataka Bank. SBI claimed that it faced severe prejudice and hardship due to the assignment of the loan and classification of the account as NPA by Phoenix ARC and Karnataka Bank. - Opposition by Phoenix ARC: Phoenix ARC contended that the application was not maintainable, citing an NCLAT order which directed that no other person should be given liberty to intervene at this stage. - Tribunal's Decision: The Tribunal rejected SBI’s application, stating that SBI's claim on the plots was premature and it was not a proper and necessary party to be impleaded in the main Company Petition. The Tribunal noted that SBI could only claim the deposit of sale title deeds if they were registered in the borrowers' names. 2. Impleadment of Vinod Kumar V.K and Others: - Application Filed: Vinod Kumar V.K and 15 others filed I.A No.295 of 2019 seeking to be impleaded as additional respondents. - Arguments by Applicants: The applicants, who were agreement holders of flats in the Sovereign Unnathi Project, argued that they were necessary parties as they had invested substantial amounts in the project. - Opposition by Phoenix ARC: Phoenix ARC opposed the application, citing the same NCLAT order that restricted the impleadment of additional parties at this stage. - Tribunal's Decision: The Tribunal rejected the application, following the ratio decided by the NCLAT, which directed that no other person should be given liberty to intervene at this stage. 3. Initiation of CIRP Against Sovereign Developers: - Application Filed: Phoenix ARC Pvt. Ltd. filed C.P.(IB) No.167/BB/2018 under Section 7 of the IBC, 2016, seeking to initiate CIRP against Sovereign Developers for a default amounting to ?42,80,92,640. - Arguments by Phoenix ARC: Phoenix ARC argued that Sovereign Developers had defaulted on the repayment of loans assigned to Phoenix ARC by Karnataka Bank. Despite additional funding and restructuring, Sovereign Developers failed to repay the outstanding amount. - Defense by Sovereign Developers: Sovereign Developers contended that the default was due to non-cooperation by Phoenix ARC, which failed to release funds from the escrow account for statutory dues. They argued that the project was nearing completion and requested Phoenix ARC to issue NOCs to facilitate the registration of flats and recovery of dues. - Tribunal's Decision: The Tribunal admitted the petition, initiating CIRP against Sovereign Developers. The Tribunal appointed Shri Guruprasad Makam as the Interim Resolution Professional (IRP) and declared a moratorium prohibiting suits, asset transfers, and recovery actions against Sovereign Developers. The Tribunal directed the IRP to follow all extant provisions of the IBC and report progress to the Tribunal. Conclusion: The Tribunal dismissed the applications by SBI and Vinod Kumar V.K and others for intervention and impleadment, respectively. It admitted the CIRP petition filed by Phoenix ARC against Sovereign Developers, appointing an IRP and declaring a moratorium to facilitate the resolution process.
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