Tribunal denies SBI intervention, rejects additional parties, admits CIRP petition against Sovereign Developers.

The Tribunal dismissed State Bank of India's application to intervene in the main case, stating it was premature and not a necessary party. The application by Vinod Kumar V.K and others to be impleaded as respondents was also rejected based on a directive restricting additional parties at that stage. However, the Tribunal admitted the Corporate Insolvency Resolution Process (CIRP) petition filed by Phoenix ARC against Sovereign Developers, appointing an Interim Resolution Professional and declaring a moratorium on recovery actions against Sovereign Developers.

---

---

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 Rs. 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.

---