Bombay High Court
Manisha Nimish Mehta Promoter And ... vs Technology Development Board, Through ... on 7 October, 2025
2025:BHC-OS:18060 901-oswpl-14829-2025-J+F.doc
Shephali
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (ST) NO. 14829 OF 2025
WITH
INTERIM APPLICATION (L) NO. 17532 OF 2025
IN
WRIT PETITION (ST) NO. 14829 OF 2025
WITH
INTERIM APPLICATION (L) NO. 18564 OF 2025
IN
WRIT PETITION (ST) NO. 14829 OF 2025
WITH
INTERIM APPLICATION (L) NO. 21757 OF 2025
IN
SHEPHALI
SANJAY WRIT PETITION (ST) NO. 14829 OF 2025
MORMARE
Digitally signed by
SHEPHALI SANJAY
MORMARE
Date: 2025.10.07
18:59:07 +0530 Mrs Manisha Nimesh Mehta,
Promotor & Guarantor of
M/s. Perfect Infraengineers Ltd,
Plot No. R-637, T.T.C. Industrial Area,
Thane Belapur Road, MIDC, Rabale,
Navi Mumbai,
Maharashtra 400 701
...Petitioner
~ versus ~
1. Technology Development Board,
Through its Director having its
registered office at Technology Bhavan,
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Block-II, 2nd Floor, New Mehrauli Road,
New Delhi 110016
2. Shri Rajesh Pathak,
Secretary, Technology Development
Board, Department of Science &
Technology, Block-II, Second Floor, New
Mehrauli Road, New Delhi 110016
3. The Project Monitoring Committee,
Represented by its Chairman,
Technology Development Board,
Department of Science & Technology,
Block-II, Second Floor, New Mehrauli
Road, New Delhi 110016
4. Assistant Law Officer/Authorized
Officer,
Technology Development Board,
Department of Science & Technology,
Block-II, Second Floor, New Mehrauli
Road, New Delhi 110016
5. Shri Rajesh Jain,
Director of Finance,
Technology Development Board,
Department of Science & Technology,
Block-II, Second Floor, New Mehrauli
Road, New Delhi 110016
6. Smita Puthucheri,
Project Co-ordinator,
Technology Development Board,
Department of Science & Technology,
Block-II, Second Floor, New Mehrauli
Road, New Delhi 110016
7. The Board of Directors of ICICI Bank,
Represented by its Chairman &
Managing Director, ICICI Bank Ltd,
Old Padra Road, Near Chakli Circle,
Vadodara, Gujarat 390 001.
8. Shri Jignesh Shelani,
Authorized Officer,
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ICICI Bank Head Office,
ICICI Bank Towers,
Bandra Kurla Complex,
Mumbai 400 051
9. Shri Vijay Kumar,
Chief Manager,
ICICI Bank Head Office,
ICICI Bank Towers, Bandra Kurla
Complex, Mumbai 400 051
10. Shri Sandeep Bakshi,
Managing Director,
ICICI Bank Head Office,
ICICI Bank Towers, Bandra Kurla
Complex, Mumbai 400 051
11. Shri Arjun Jain,
Zonal Head, ICICI Bank,
ICICI Bank Head Office,
ICICI Bank Towers, Bandra Kurla
Complex, Mumbai 400 051
12. Ms Ritu Maheshwari,
Relationship Manager,
ICICI Bank Head Office,
ICICI Bank Towers, Bandra Kurla
Complex, Mumbai 400 051
13. Ministry of Micro Small & Medium
Enterprises,
through its Secretary, Udyog Bhawan,
Rafi Marg, New Delhi 110 011.
14. Ministry of Finance,
Through its Secretary, Department of
Banking, Jeevan Deep Building,
Parliament Street, New Delhi 110 011.
15. State of Maharashtra,
Rep. by its Chief Secretary,
C.S. Office Main Building, Mantralaya,
6t Floor, Madame Cama Road, Mumbai
400 032.
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16. Reserve Bank of India,
Represented by Its Governor,
New Central Office Building,
Shahid Bhagat Singh Road,
Fort, Mumbai 400 001.
17. National Stock Exchange of India Ltd,
Represented by its Managing Director &
CEO, Exchange Plaze, C-1, G Block,
Bandra Kurla Complex, Bandra (E),
Mumbai 400 051.
18. Gaurang Chhotalal Shah,
Resolution Professional,
Flat No. 204, A Wing, Raj Vaibhav 1
CHS, Dhankar Wadi, Mahavir Nagar,
Kandivali (W), Mumbai 400 067.
Also at:
1221, Maker Chambers V, Nariman
Point, Mumbai 400 021.
19. Ministry of Corporate Affairs,
A Wing, Shastri Bhawan, Rajendra
Prasad Road, New Delhi 110 001
20. Registrar of Companies,
100, Everest, Marine Drive,
Mumbai 400 002.
21. Bank of India,
Kanmoor House, Narshi Natha St,
Near Masjid, Bhat Bazar,
Chinchbunder, Mandvi Branch, Mandvi,
Mumbai 400 0009.
22. The Chairman,
Empowered Committee on MSMEs,
Represented by the Regional Director,
Reserve Bank of India, Mumbai
23. The Chairman,
State Level Inter Institutional
Committee, Reserve Bank of India,
Mumbai. ...Respondents
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A PPEARANCES
For the Petitioner Mr Mathews Nedumpara, with
Hemali Merva, Maria Nedumpara,
Akhilesh Nair & Mahesh Parab, i/b
Nedumpara & Nedumpara.
For Respondents Nos. 1 to 6 Mr Viraj Shelatkar, with Sumedh
Ruikar, i/b Pradip Yadav.
For Respondents No. 7 Mr Anshul Anjarlekar, with Manshi
Thakkar, Sanika Athalye & Priyanka
Shanalesha, i/b Raval Shah & Co.
For Respondents No. 15- Smt Jyoti Chavan, Addl. GP.
State
For Respondents Nos. 16, 22 Mr Huzan Bhumgara, with Pradeep
& 23 Mane & Shubhi Dotya, i/b Desai &
Diwanji.
For Respondents No. 18 Mr Yahya Batatawala, with Sneha
Mishra.
CORAM : SUMAN SHYAM &
MANJUSHA DESHPANDE, JJ
RESERVED ON : 29TH SEPTEMBER 2025.
PRONOUNCED ON : 7TH OCTOBER 2025.
JUDGMENT (Per Suman Shyam, J):
-
1. Rule. Rule made returnable forthwith. By consent of the
learned counsel for the parties, the Writ Petition (St) No. 14829 of
2025 is taken up for final hearing and disposal.
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2. The Writ Petitioner herein is the promoter and guarantor of
M/s. Perfect Infraengineers Ltd, which is a company registered
under section 8 of the Micro , Small and Medium Enterprises Act
("MSME Act"). The MSME unit of the Petitioner had availed credit
facility from the ICICI Bank represented by the Respondent No. 7.
However, on account of its failure to repay the amount, the loan
account was declared as a Non Performing Asset ("NPA") on 29th
February 2020. Consequently, the Loan Recall Letter, along with
Guarantee Invocation Notice, was issued to the Petitioner, which
was followed by a Notice under Section 13(2) of the Securitization
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 ("SARFAESI") issued on 14th October
2020. In pursuance to the aforesaid Notice, Respondent No. 7-Bank
took over possession of the secured assets belonging to the
Petitioner. Thereafter, on 28th September , 2022 the Bank had
issued notice for sale of the secured assets of Petitioner. The
Respondent No. 1-Technology Development Board ("TDB") had
also extended loan assistance to the Petitioner's MSME unit to the
tune of Rs. 750 lakhs. However, according to the Writ Petitioner,
after disbursing an amount of Rs. 450 lakhs, Respondent No. 1 had
issued a communication dated 31st May 2021 conveying its
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decision not to continue with the Loan Agreement. As such, on 25 th
April 2022 a notice was issued by Respondent No. 1 to the
Petitioner seeking repayment of the outstanding dues of Rs.
5,76,25,606/-. The primary contention of the Petitioner before this
Court is that in view of the Notification dated 29 th May 2015 issued
by the Government of India providing for a mechanism for
identifying incipient stress in the MSME Unit and for referring the
matter to the Committee envisaged by clause 2 of the Notification
for implementation of a "Corrective Action Plan" it was incumbent
upon the Bank/ Financial Institution to first explore a revival plan
before initiating any action for loan recovery. It is the contention of
the petitioner that until and unless such revival proposal/
correction plan is examined by the Committee envisaged by the
Notification dated 29th May 2015 it would not be permissible
under law for the Bank/ Secured Creditor to declare the loan
accounts of an MSME as an NPA account and proceed under the
SARFAESI Act as well as IBC. The Writ Petitioner has, therefore,
approached this Court by filing the instant Writ Petition praying for
the following reliefs :-
"a) To declare that the M/s. Perfect Infraengineers Ltd
being an MSME within the meaning of Section 8 of the
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MSMED Act is entitled to the benefit of the notification
dated 29.5.2015 and that its account could not have been
classified as NPA without identification of the incipient
stress by the ICICI Bank, the largest lender, and the
constitution of a committee by it, and further that no
recovery proceedings could have been initiated or
continued except in the manner contemplated in paragraph
5(4)(iii) of the notification and further that the steps
initiated by the ICICI Bank and the TDB under the
SARFAESI, RDB Act and the IBC are illegal and void ab
initio;
b) To issue a writ in the nature of mandamus directing
the ICICI Bank to constitute a committee as mandated by
the notification dated 29.5.2015 and further to implement a
corrective action plan as contemplated by the notification,
which would cover the TDB as well, in terms of paragraph
4(7)(11) of the notification;
c) To declare that in the light of the judgment of the
Supreme Court dated 8.7.2024, M/s. Perfect Infraengineers
Ltd./the Petitioner is entitled to an adjudication at the
hands of this Court as to the claim of the Petitioner that, it
being an MSME, is entitled to the protection under the
notification and that its classification as NPA without the
constitution of a committee is illegal and rendered void ab
initio being in gross violation of the notification dated
29.5.2015."
3. This case has a chequered history. After going through the
records we find that before approaching this Court by filing the
present Petition, the Writ Petitioner had instituted multiple
proceedings before different forums agitating the same issue,
seeking more or less similar reliefs. However, apart from granting
some interim orders the final relief in those proceedings had been
declined by all the forums. As such, in order to appreciate the
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issues raised in this Writ Petition as well as the contentions of the
rival parties, we deem it necessary to briefly narrate the facts and
circumstances leading to the filing of this Writ Petition:-
(a) On 29.05.2015 the Government of India, Ministry of
MSME, had issued Notification No.1432(E) in exercise
of powers conferred under section 9 of the MSMED
Act. The said notification inter-alia contemplates a
"Framework for Revival and Rehabilitation of MSMEs"
Clause 1 of the notification contains instructions upon
the Banks or Creditor for identification of incipient
stress of an MSME unit before a loan account turns
into an NPA. As per the Scheme of Clause 1 an MSME
can voluntarily initiate proceeding under the
Framework if it reasonably apprehends failure of its
business or likelihood of inability to pay its debts
before the accumulated losses of the enterprise equals
to half or more of its entire net worth. However, such
application for initiation of proceeding must be
verified by an affidavit of an authorized person.
Clause 2(1) of the Notification lays down that subject
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to any regulation prescribed by the RBI for this
Framework, all Banks to constitute one or more
Committees so as to provide reasonable access to all
MSME Units who have availed credit facilities from
the Bank. As per Clause 2(2) all MSME units to have
access to the Committee for deciding on a corrective
action plan and determining the terms thereof ,in
accordance with the regulations prescribed in the
Framework.
(b) As noted above, the MSME Unit of the Petitioner had
availed financial assistance from the Respondent No 1
(TDB) and Respondent No 7 (ICICI Bank). It appears from
the record that on 2nd October, 2019 the Writ Petitioner
had addressed a letter to the Managing Director of the
ICIC Bank inter-alia requesting for correction in the
interest rate as per the RBI guidelines/ policy for MSME
borrowers on the ground that the interest rate charged by
the Bank was not proper. The said letter was followed by
the communication dated 2nd November, 2019 issued by
the Writ Petitioner for renewal of limits. However, on 29 th
February, 2020 the ICICI Bank had classified Petitioner's
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loan account as NPA which fact was intimated to the
Petitioner only in the month of July,2020. According to the
Petitioner, the loan account with the ICICI bank was
declared as an NPA with retrospective effect only to deny
her the benefit of the moratorium imposed by the RBI due
to the outbreak of COVID-19 Pandemic with effect from
01.03.2020 to 31.08.2020. On 14 th October, 2020, notice
under section 13(2) of the SARFAESI was issued by the
Bank whereafter, symbolic possession of the properties
belonging to the Petitioner viz, the Guest House situated at
Lavasa, Pune and residential Flat at Garodia Nagar,
Ghatkopar East were taken over.
(c) According to the Writ Petitioner, the action initiated by
the ICICI bank had prompted the Respondent No 1 -
TDB to pull out of the loan agreement after disbursing
only Rs 450 lakhs out of the total agreed amount of
Rs 750 lakhs by taking some legally untenable stand
as a result of which, the business activities of the
Petitioner's MSME came to a grinding halt. In the
meanwhile, at the instance of the Respondent No. 1
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NCLT, Mumbai had initiated CP(IB)/322/2023 against the
Petitioner under Section 7 of the IBC.
(d) The notice issued under the SARFAESI was assailed
by the Petitioner by filing Suit (L) No. 11395/2021
before the City Civil Court, Mumbai o n 21.12.2021
seeking declaratory reliefs for implementation of MSME
Notification dated 29th May 2015 against the Respondent
No. 1-TDB and Respondent No. 7-ICICI Bank. However,
since no injunction, as prayed for by the Writ Petitioner,
was granted by the Civil Court, she had moved the Hon'ble
Supreme Court by filing an SLP (C) No 6184 /2023 which
was disposed of by the order dated 15.05.2023 asking the
Writ Petitioner to seek relief before this Court. Liberty was
granted to the Writ Petitioner to raise all pleas.
(e) During the pendency of the Civil Suit, the Petitioner had
instituted Writ Petition No. 35792 of 2022 before this
Court seeking the same relief of enforcement of her right
under the MSME Notification dated 29 th May 2015. Since
no restraint order was passed by this Court, on 6 th May
2023, an order was passed by the Jurisdictional Magistrate
in SARFAESI Case No 939/SA/2021 appointing a
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Commissioner to take over physical possession of the
secured assets, which included a residential flat and to
handover possession to the Applicant-Bank. In terms of the
order dated 6th May 2023, the Petitioner was dispossessed
from the property on 10th July 2023.
(f) It appears that on 30.09.2023, the Petitioner had
submitted an application before the ICICI Bank with a
request to refer the matter before the MSME Committee
for examining and implementing the Corrective Action
Plan for Revival and Rehabilitation of MSMEs as envisaged
by the Notification dated 29 th May 2015. However, no
action was taken by the Bank on such request made by the
Writ Petitioner.
(g) In the meantime, the Writ Petitioner, along with several
other similarly situated MSMES instituted individual Writ
Petitions (19 in total) before this Court contending that in
view of the provisions contained in the Notification dated
29th May 2015, the loan accounts of the MSME units
cannot be declared NPA prior to exhausting the protective
measures envisaged by that Notification. The Writ Petition
filed by the present Petitioner was numbered as Writ
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Petition (L) No 35792 of 2022. Alleging breach of contract
on the part of the lenders, the Petitioners had also claimed
compensation for breach of contract.
(h) After hearing the counsel for the parties, by the Judgment
dated 11th January 2024, a Division Bench of this Court
(Coram: BP Colabawalla and MM Sathaye, JJ) had
dismissed all the Writ Petitions by holding that application
of MSME Notification dated 29 th May 2015 is neither
mandatory nor automatic. However, the other issues raised
by the Petitioners were left open to be agitated before the
appropriate forum. By the Judgment and Order dated 11 th
January 2024, the Division Bench had also extended the
interim relief granted earlier to the Writ Petitioners for a
period of two weeks so as to allow them to prefer Appeal
before the Hon'ble Supreme Court.
(i) The Writ Petitioner had preferred SLP (C) No. 2112/2024
before the Supreme Court assailing the Judgment and
Order dated 11th January 2024 passed by the Bombay High
Court. By the order dated 29 th January 2024, the Hon'ble
Supreme Court had dismissed the SLP. In the meantime, by
order dated 18th March 2024, the NCLT, Mumbai had
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closed CP(IB)/322/2023 filed by Respondent No. 1 under
Section 7 of the IBC for orders.
(j) In the wake of the order dated 29 th January 2024 passed
by the Supreme Court, the Petitioner had preferred Review
Petition (L) No. 4048 of 2024 seeking review of the
Judgment and Order dated 11th January 2024 passed in
Writ Petition (L) No. 35792 of 2022 preferred by the
Petitioner. By the order dated 19 th March 2024, the Review
Petition was dismissed by holding that pursuant to the
dismissal of the SLP by order dated 29 th January 2024, it
would not be permissible for the Review Court to express a
different opinion in the matter.
(k) The order dated 19th March 2024 was assailed by the
Petitioner before the Supreme Court by filing
SLP(C)/11547/2024 (CA/7233/2024), which was
disposed of by the order dated 8th July 2024 by observing
that since no leave was granted while dismissing the SLP
by order dated 29th January 2024 merger principle would
not be attracted. It would, therefore, be open for the
Bombay High Court to entertain the Review Petition and
make a final determination of the same on merit.
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(l) On 15th July 2024, the NCLT, Mumbai had admitted CIRP
against the Petitioner (CB(1B)/322/2023). Moratorium
was imposed on the Petitioner. The Respondent No. 18 was
appointed as Resolution Professional.
(m) It appears that the Judgment and Order dated 11 th January
2024 was also assailed before Supreme Court by the six
other Petitioners, viz., (i) M/s. Pro Knits, (ii) Mr Zuhair
Mohamedai Merchant, (iii) Nilesh Shah, (iv) Sadhana
Bharat Rai, (v) M/s. A Navinchandra Steels Pvt Ltd & Anr
and (vi) M/s. Shree Shantinath Steels & Anr. By the
Judgment and Order dated 1st August 2024 passed in Pro
Knits vs The Board of Directors of Canara Bank &
Ors,1 and the batch of connected SLPs, the Hon'ble
Supreme Court has held that the process of Revival
and Rehabilitation of MSMEs is mandatory, requiring
the financial institutions to follow the structured
process before declaring the MSME loan as NPA or
initiating any action for recovery of the amounts. As
such, the Supreme Court had effectively over ruled the
Judgment and Order dated 11th January 2024 passed
1 2024 SCC OnLine SC 1864.
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by this Court in so far as the nature of applicability of
the notification dated 29.05.2015 is concerned.
Having held as above, by taking note of the fact that
the proceedings initiated against the Petitioners under
the SARFAESI Act had already been concluded and the
possession of the respective premises had already
been taken over, the Hon'ble Supreme Court had
refused to remand the matter for a fresh decision of
the Writ Petitions by the High Court. Instead, liberty
was granted to the Petitioners to take recourse to
remedy as may be legally available to them for
agitating the issues which were not decided by the
High Court by the impugned Judgment and order
dated 11th January 2024.
(n) The Writ Petitioner filed Writ Petition (L) No. 23291
of 2024, Writ Petition (L) No. 23292 of 2024 and Writ
Petition (L) No. 23295 of 2024 before this Court inter-
alia contending that in view of the law laid down by
the Supreme Court in the case of Pro Knits vs The
Board of Directors of Canara Bank & Ors (Supra), the
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matter called for a fresh consideration by the NCLT.
Therefore, a prayer was made before this Court to
direct the NCLT to consider the recall Applications No.
7226 of 2024, Applications No. 7230 of 2024 and
Applications No. 7238 of 2024, in the light of the law
laid down in the case of Pro Knits (supra ). By the
order dated 14th August, 2024 passed by a co-
ordinate Bench (K.R. Shriram, Jitendra Jain JJ) of
this Court, all the three Writ Petitions were disposed
of as withdrawn with a request to the learned NCLT to
consider the recall applications as per law.
(o) According to the Petitioner, no action was taken in the
matter by the NCLT in terms of order dated 14 th
August 2024. As such, the Petitioner had again
approached this Court by filing Writ Petition (L) No.
26313 of 2024, which was disposed of by order dated
1st October 2024 (Coram: AS Gadkari & Neela K
Gokhale, JJ) with a request to the learned NCLT to
decide the Company Petition afresh, preferably within
two weeks, by laying down certain conditions which
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included the condition to withdraw all pending
proceedings save and except the Commercial Suit (I)
No. 27512 of 2023 and A.O. No. 285 of 2023 in
Review Petition No.22 of 2023, within a period of one
week from the order or not to pursue the same.
(p) In terms of the order dated 1st October 2024, the
NCLT had considered the matter afresh but by order
dated 29th October 2024, rejected the Petitioner's plea
thus, confirming its earlier order dated 15th July 2024.
(q) Embolden by the order of the NCLT the ICICI Bank
had issued auction sale notice dated 12th December
2024 for sale of Petitioner's residence. Aggrieved
thereby, the Petitioner had once again approached this
Court by filing Writ Petition (L) No. 33593 of 2024
inter alia contending that the NCLT, Mumbai was a
coram non-judice. In that Writ Petition, the Petitioner
had arrayed the Learned Members of the NCLT -1
Mumbai besides several other Officials, thus making
certain allegations against them. The said Writ
Petition was heard and disposed on by a coordinate
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Bench of this Court (Coram: RV Ghuge & AD Bhobe,
JJ) by the Judgment and Order dated 20 th December,
2024 rejecting the plea raised in the Petition. By
observing that the Petitioner was guilty of filing
repetitive Petitions duplicating her prayers, the
Division Bench, while, confirming the order of NCLT,
had dismissed the Writ Petition by imposing cost of Rs.
5 Lakhs upon the Petitioner for abusing the process of
the Court.
(r) The Petitioner had challenged the Judgement and
Order dated 20.12.2024 passed by this Court by fling
W.P.(C) No 08 of 2025 before the Supreme Court
which was dismissed by the order dated 20.01.2025
by granting leave to the Petitioner to take recourse to
any other remedy available under the law.
(s) In the meantime, the Petitioner has filed another Writ
Petition being Writ Petition (L) No. 2295 of 2025
before this Court seeking constitution of an MSME
Committee for implementation of revival scheme
which Writ Petition is pending before this Court.
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4. From a scrutiny of the materials placed before us, we find
that the Writ Petitioner has instituted more than 15 proceedings
before, different forums, seeking more or less the same relief, the
list whereof is provided hereunder in tabular form:-
Sr. Proceedings Court before which the
No. proceeding is pending
1. Suit (L) No. 11395 of 2022 City Civil Court, Mumbai
2. Appeal From Order No. 552 of 2022 High Court, Bombay
3. Criminal Writ Petition No. 3317 of 2022 High Court, Bombay
4. Criminal Writ Petition No. 2570 of 2022 High Court, Delhi
5. Writ Petition No. 4901 of 2022 High Court, Bombay
6. Appeal From Order No. 285 of 2023 High Court, Bombay
7. Commercial Suit (L) No. 27512 of 2023 High Court, Bombay
8. Writ Petition No. 2614 of 2024 High Court, Bombay
9. Writ Petition (L) No. 4667 of 2024 High Court, Bombay
10. Writ Petition No. (L) No. 16964 of 2024 High Court, Bombay
11. Writ Petition (L) No. 26313 of 2024 High Court, Bombay
12. SLP (C) No. 21367 of 2024 Supreme Court of India
13. Review Petition (L) No. 28352 of 2024 High Court, Bombay
in Writ Petition (L) No. 4667 of 2024
14. Writ Petition (C) No. 46 of 2025 Supreme Court of India
15. Writ Petition (L) No. 2295 of 2025 High Court, Bombay
5. During the course of his arguments, Mr. Nedumpara, learned
counsel appearing for the Petitioner, by placing heavy reliance on
the decision of the Supreme Court rendered in Pro Knits vs The
Board of Directors of Canara Bank & Ors (Supra), has submitted
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that the Petitioner being a registered MSME Unit, action on the
part of the Respondents Nos. 1 and 7 in declaring the Petitioner's
loan account as NPA without referring the matter to the MSME
Committee for implementation of a Revival Scheme as per
notification dated 29th May,2015 and Consequential actions taken
thereunder by the ICICI Bank and the TDB are illegal, without the
authority of law and hence, liable to be set aside. It is also the
submission of Mr. Nedumpara that since the Bank had not
constituted any Committee hence, the petitioner could not avail
the benefits under the MSME notification despite the same being
available to her under the law. He therefore, seeks a direction from
this Court upon the Respondents to constitute a Committee of
MSME and refer the mater to the said Committee for consideration
of the an "Action Plan" for Revival of the MSME and till then, all
further action for loan recovery by the Respondent Nos 1 and 7 be
kept in abeyance.
6. It is also the submission of Mr. Nedumpara that the issue
raised in the Writ Petition is a pure question of law which calls for
determination by this Court. However, no such determination has
taken place qua the Writ Petitioner in any of the proceedings so far
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instituted by his client. According to Mr. Nedumpara, the TDB is
liable for legal action for illegally withholding an amount of Rs.
300 Lakhs from the financial assistance promised to the Petitioner
under the loan agreement. As a result of breach of the conditions
of the Loan Agreement by the Respondent No1 the running
business of the Petitioner's MSME had collapsed. He, therefore,
submits that the claim of the petitioner deserves adjudication in
accordance with law. However, in view of the provisions contained
in SARFAESI and IBC, the Petitioner has been deprived of any
forum to agitate the said issues.
7. We are in agreement with the submissions of Mr Nedumpara
that the core issue raised in this Writ Petition is a pure question of
law of great significance and in view of the decision of the Hon'ble
Supreme Court in the case of Pro Knits vs The Board of Directors
of Canara Bank & Ors (Supra), the matter calls for proper
consideration and decision by the Court on merit. However, after
going through the materials on record with the assistance of the
learned counsel for the Respondents (particularly Respondent No
6), we find that the core issue raised in this Writ Petition has been
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conclusively dealt with and adjudicated upon by a co-ordinate
bench of this Court.
8. The core issue raised in this Writ Petition was also the
subject matter of consideration in another Writ Petition being Writ
Petition (L) No. 4667 of 2024 earlier instituted by the present
Petitioner. The question arising for determination by this Court in
that proceeding was as to whether, the Petitioner would be entitled
to the benefit of the MSME notification dated 29.05.2015 before
the Loan Account could be declared as an NPA by the Bank/
Financial Institution. By the Judgment and Order dated 1 st July
2024 passed by a Coordinate Bench of this Court (Coram: AS
Chandurkar and Rajesh S Patil, JJ) in Writ Petition (L) No. 4667 of
2024, the above issue was decided against the Writ Petitioner by
taking note of the applicable law as well as the peculiar facts and
circumstances of the case. The Writ Petition was dismissed by the
Court by making the following observations on merit :-
"7. We have heard the learned counsel for the parties
at considerable length and with their assistance, we have
also perused the documents on record. Having given due
consideration to the rival submissions, in our view, we
find that the petitioners on facts are not entitled for the
reliefs sought by them in the Writ Petition. It is to be
noted that the petitioners' account insofar as ICICI Bank is
concerned was declared as NPA on 29 th May 2020. Under
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the Notification dated 29th May 2015, it is necessary for
Banks or creditors to identify incipient stress before a loan
account of a MSME turns into NPA. On such
identification, the account has to be categorized under the
special mention account, after which further steps are
required to be taken for resolution of the stress. As noted
above, after the petitioners' account was declared as NPA,
proceedings under the Act of 2002 came to be initiated by
ICICI Bank that have thereafter culminated into notice of
sale / auction in view of various subsequent events taking
place. ICICI Bank after declaring the account as NPA on
29th May 2020 has taken various further steps to recover
its dues under the Act of 2002. The petitioners
approached the DRT and thereafter the DRAT challenging
the action taken by the Bank. We find in the facts of the
present case that with passage of time, the steps taken by
ICICI Bank have crystallized into a right in its favour,
which at this point of time have become irreversible and
do not deserve to be set aside in equity jurisdiction. The
challenge as regards non-initiation of any action by the
ICICI Bank in accordance with the Notification dated 29th
May 2015 ought to have been taken immediately on the
petitioners' account being declared as NPA on 29th May
2020 or shortly thereafter. Any rights claimed under the
Notification ought to have been pursued within
reasonable time of the petitioners' account being declared
as NPA. The same not having been done in the present
case coupled with the resultant initiation of action by the
Bank under the Act of 2002 dis-entitles consideration of
the petitioners' prayers based on the Notification dated
29th May 2015 on the ground of unreasonable delay in
seeking such relief.
8. It is true that in the earlier round of litigation, the
petitioners had sought relief based on the said
Notification. By the judgment dated 11 th January 2024
delivered in the petitioners' earlier Writ Petition, it was
held that in absence of any steps being taken by the
petitioners to seek benefit under the Notification, it was
not obligatory for the Bank to have categorized the
account of the petitioners for benefit under the said
Notification. The liberty granted in the aforesaid
judgment was with regard to raising other issues than the
one decided. In the earlier Writ Petition, the issue with
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regard to action of the ICICI Bank not acting as per the
Notification dated 29th May 2015 was under
consideration. This issue cannot be re-agitated in this Writ
Petition afresh.
. It is true that the doctrine of merger would not
apply when a Special Leave Petition is dismissed by the
Supreme Court without grant of leave, as held in the
decision in Kunhayammed and Ors. (supra). Despite this
position, in our view the principle of issue estoppel would
arise in the light of the fact that the petitioners had
sought similar reliefs in the earlier Writ Petition based on
the Notification dated 29th May 2015 and were
unsuccessful. Since we find that the petitioners' earlier
Writ Petition came to be decided on 11th January 2024,
followed by dismissal of the Review Application, the ratio
of the decision in Nivrutti G. Ahire Vs. State of
Maharashtra and Ors., (2007) 5 MhLJ 284 would be
attracted precluding the Court from having a re-look at
the matter. We therefore find that on the principle of issue
estoppel coupled with the challenge being raised by the
petitioners beyond reasonable period of time as a result of
which rights have crystallized in favour of the Bank, the
petitioners are not entitled for the reliefs sought against
ICICI Bank. In these facts therefore the ratio of the
decisions relied upon by the learned counsel for the
petitioners cannot be applied to present case.
9. Insofar as TDB is concerned, we find that it is a
Statutory Board constituted under the Act of 1995. It's
learned counsel is justified in referring to the Circulars
issued by the Reserve Bank of India which have been
addressed to Commercial Banks alone and hence the
same are not applicable to TDB. In any event, we find that
the aspect of approaching the Court after considerable
period of time also precludes grant of any relief to the
petitioners. The TDB has also initiated proceedings under
Section 7 of the Code, which are stated to have now been
concluded with the judgment therein being awaited. The
TDB took steps to recall the amounts advanced to the
petitioners on 26th April 2022, after which it had
approached the National Company Law Tribunal by filing
proceedings under the Code. Hence, on this count, we do
not find that this is a fit case to exercise discretion under
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Article 226 of the Constitution of India as regards the
prayers made against the TDB.
10. For aforesaid reasons, we do not find any case
made out to grant any relief to the petitioners in the
Writ Petition. It is accordingly dismissed with no
order as to costs."
9. From a careful reading of the Judgment and Order dated 1 st
July 2024, it is apparent that the core issue raised by the Petitioner
in the present Writ Petition which is pertaining to the question of
applicability of the Notification dated 29th May 2015 to the MSME
Unit of the Petitioner and the need for identification of incipient
stress of the MSME, has been dealt with in great details and
conclusively decided against the Petitioner. But the said fact has
not been mentioned in the Writ Petition. Not only that, being
aggrieved by the Judgment and Order dated 1 st July 2024, the
Petitioner had approached the Hon'ble Supreme Court by filing an
SLP(C) No. 21367 of 2024 and had also preferred Review Petition
(L) No. 28352 of 2024 before this Court, which is pending
disposal. The Special Leave Petition was withdrawn by the
Petitioner so as to pursue the Review Petition (L) No. 28352 of
2024. What would be significant to note herein that there is not
even a whisper in the Writ Petition about the Judgment and Order
dated 1st July 2024, the filing and withdrawal of Special Leave
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Petition (C) No. 21367 of 2024, as well as pendency of the Review
Petition (L) No. 28352 of 2024 before this Court, wherein the same
issue had earlier been agitated by the Petitioner. It was only when
the learned counsel appearing for Respondent No. 6 had pointed
the said fact during the course of hearing that this Court had
become aware of the aforesaid development. It is thus apparent
that the Writ Petitioner has approached this Court by suppressing
material facts and particulars only to avail favourable order.
10. On being confronted with the plea of non-disclosure of
material facts in the Writ Petition, Mr. Nedumpara, by referring to
the Judgment and Order dated 1st July 2024, has addressed
elaborate arguments so as to contend that the decision rendered by
the coordinate Bench on 1st July 2024 is erroneous on several
counts and, therefore, would not be binding on this Court.
Contending that an order which suffers from error in law as well as
jurisdiction would not lay down a binding precedent to be followed
by a coordinate Bench, Mr Nedumpara has argued that the issues
decided by the Judgment and Order dated 1 st July 2024 would not
constitute a res-judicata preventing this Court from adjudicating
the issues raised in the present Writ Petition on merits. In support
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of his above arguments Mr Nedumpara has placed reliance on the
decision of the Supreme Court in the case of AR Antulay vs RS
Nayak & Anr2 as well as in the case of Canara Bank VS NG
Subbaraya Setty & Anr.3
11. However, on a careful reading of the Judgment and Order
dated 1st July 2024 we do not find any basis to accept the above
arguments advanced by Mr. Nedumpara. It is clear on the face of
the record that by the judgement and order dated 1 st July 2024
rendered inter se the parties to this proceeding, the same issue
raised in the present Writ Petition had been considered on merit
and rejected by furnishing proper reasons. Therefore, the issue
cannot be re-agitated in the present proceeding . Although Mr.
Nedumpara has submitted that the Judgment dated 1 st July,2024 is
erroneous, yet, such a plea cannot be accepted by this Court as it is
not for this Court to sit in Appeal over a Judgment passed by a
coordinate Bench. Even assuming for arguments sake that the plea
raised by the learned counsel for the Writ Petitioner is tenable in
law, even in that event, the said plea can only be entertained by a
superior Court exercising Appellate Jurisdiction in the matter and
2 (1988) 2 SCC 602.
3 (2018) 16 SCC 228.
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not by this Court. Unless the Judgment and Order dated 1 st July
2024 is interfered with by a superior court or recalled in exercise
of review jurisdiction, the earlier decision of the court must be
accepted as correct, thus promoting finality in the matter.
12. Having held as above, we are conscious of the fact that the
Hon'ble Supreme Court had held in the case of Pro Knits vs The
Board of Directors of Canara Bank & Ors (Supra) that the MSME
Notification dated 29th May 2015 is mandatory in nature and to
that extent, the decision and conclusion of this Court , as recorded
in the Judgment and Order dated 11th January 2024 has been
overruled. However, we find that the Judgment and Order dated
11th January 2024 qua the Writ Petitioner has attained finality in
the eyes of law after the dismissal of the connected Review
Petition. Moreover, in the case of Pro Knits vs The Board of
Directors of Canara Bank & Ors (Supra), the Hon'ble Supreme
Court has declined to remand the matter back to the High Court
for deciding the Writ Petition afresh although liberty was given to
the respective Petitioners to take recourse to any remedy as may be
legally available for them for agitating the issues not decided by
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the High Court by the Judgment and Order dated 11th January
2024.
13. In Pro Knits vs The Board of Directors of Canara Bank & Ors
(Supra),the Supreme Court has emphasized on the importance on
identification of incipient stress in the loan account of MSME and
categorization under the special mentioned account category
before the same turns into an NPA. The observations made in
paragraphs 20 and 21 of the said Judgment are relevant for the
purpose of this case and, therefore, are being reproduced
hereinbelow:-
"16. Therefore, the stage of identification of incipient
stress in the loan account of MSMEs and categorization
under the Special Mention Account category, before the
loan account of MSME turns into NPA is a very crucial
stage, and therefore it would be incumbent on the part of
the concerned MSME also to produce authenticated and
verifiable documents/material for substantiating its claim
of being MSME, before its account is classified as NPA. If
that is not done, and once the account is classified as NPA,
the banks i.e. secured creditors would be entitled to take
the recourse to Chapter III of the SARFAESI Act for the
enforcement of the security interest.
17. It is also pertinent to note that sufficient safeguards
have been provided under the said Chapter for
safeguarding the interest of the Defaulters-Borrowers for
giving them opportunities to discharge their debt.
However, if at the stage of classification of the loan
account of the borrower as NPA, the borrower does not
bring to the notice of the concerned bank/creditor that it
is a Micro, Small or Medium Enterprise under the MSMED
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Act and if such an Enterprise allows the entire process for
enforcement of security interest under the SARFAESI Act
to be over, or it having challenged such action of the
concerned bank/creditor in the court of law/tribunal and
having failed, such an Enterprise could not be permitted
to misuse the process of law for thwarting the actions
taken under the SARFAESI Act by raising the plea of being
an MSME at a belated stage. Suffice it to say, when it is
mandatory or obligatory on the part of the Banks to
follow the Instructions/Directions issued by the Central
Government and the Reserve Bank of India with regard to
the Framework for Revival and Rehabilitation of MSMEs,
it would be equally incumbent on the part of the
concerned MSMEs to be vigilant enough to follow the
process laid down under the said Framework, and bring
to the notice of the concerned Banks, by producing
authenticated and verifiable documents/material to show
its eligibility to get the benefit of the said Framework."
14. The law laid down in the case of Pro Knits vs The Board of
Directors of Canara Bank & Ors (Supra), has been further
explained in a subsequent decision in Shri Shri Swami Samarth
Construction & Finance Solution & Anr vs The Board of Directors
of NKGSB Coop Bank Ltd & Ors ,4 wherein it has been held that the
terms of the frame work do not prohibit the lending bank/ secured
creditor to classify the account of the defaulting MSME as NPA or
even to issue notice under section 13(2) of the SARFAESI Act
without identification of incipient stress in the account of the
defaulting borrower. However, upon receipt of the demand notice,
if the borrower in its response under section 13(3A) of the
4 2025 SCC OnLine SC 1566.
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SARFAESI Act, asserts that it is a Micro , Small and Medium
Enterprises and claims the benefit of the scheme stating reasons
supported by affidavit, the lending bank would than be
mandatorily bound to look into such claim by keeping the action
initiated under the SARFAESI Act in abeyance.
15. What follows from the above decisions recorded in the case
of Pro Knits vs The Board of Directors of Canara Bank & Ors
(Supra) and Shri Shri Swami Samarth Construction & Finance
Solution & Anr vs The Board of Directors of NKGSB Coop Bank Ltd
& Ors (Supra) is that although it would be mandatory for the
Banks to adopt the restructuring process under the Notification
dated 29th May 2015 by identifying incipient stress in its MSME
Unit, yet, the same would apply only if the borrower brings to the
notice of the Bank, the incipient stress of the MSME unit by citing
reason supported by an Affidavit , at the earliest opportunity, but
not later than submitting its response under Section 13 (3A) of the
SARFAESI Act. After going through the materials on record, we
find that although the notice under Section 13(2) of the SARFAESI
Act was received by the Petitioner way back in the year 2020, yet,
the MSME Notification dated 29th May 2015 was invoked by her
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only in the month of September 2023, by which time, the
SARFAESI proceedings and proceedings under IBC were in very
advance stage and/or had virtually been concluded. There was also
no application, furnishing reasons, submitted by the Petitioner,
supported by Affidavit as per prescription of law requiring the
lender to initiate action under the Notification dated 29 th May
2015.
16. We are conscious of the fact that the Judgment and Order
dated 1st July 2024 was passed by the Division Bench of this Court
without considering the law laid down in the case of Pro Knits vs
The Board of Directors of Canara Bank & Ors (Supra) and Shri Shri
Swami Samarth Construction & Finance Solution & Anr vs The
Board of Directors of NKGSB Coop Bank Ltd & Ors (Supra).
However, we are also of the opinion that the Judgment and Order
dated 1st July 2024 is wholly consistent with the law laid down by
the Hon'ble Supreme Court in the above two decisions. Viewed
from that angle also, we are of the considered opinion that there is
no scope for this Court to take a different view in the matter on the
same set of facts.
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17. It would further be pertinent to note here-in that although
there was a categorical order from this Court passed on 1 st October
2024 requiring the Petitioner to withdraw all pending proceedings
within a week, yet, the Petitioner has admittedly not done so.
Therefore, she is evidently in contempt of this Court. That apart, as
noted above, the Petitioner is also guilty of suppression of material
facts. Under these circumstances, it would ordinarily be wholly
justified for this Court to dismiss the Writ Petition by imposing
heavy costs upon the Petitioner. However, considering the fact that
by the earlier order date 20 th December 2024 passed by this Court
in Writ Petition (L) No. 33593 of 2024 cost of Rs. 5 Lakhs has
already been imposed upon the Petitioner, we are impelled to take
a lenient view in the matter. We, therefore, refrain from imposing
further cost upon the Petitioner in the present proceeding.
18. For the reasons stated hereinabove, we are of the view that
there is no scope for this Court to entertain the Writ Petition. The
Writ Petition, therefore, stands dismissed. Interim order passed
earlier also stands vacated. Liberty is, however, granted to the
Writ Petitioner to avail appropriate legal remedy, in accordance
with law and in terms of the leave granted by the Judgment dated
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11th January ,2024 as well as in the decision of Pro Knits vs The
Board of Directors of Canara Bank & Ors (Supra) to similarly
situated MSME Units, if so advised.
19. In view of dismissal of the Writ Petition, the Interim
Applications would also stand disposed of.
(MANJUSHA DESHPANDE, J.) (SUMAN SHYAM, J.)
{
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