Bombay High Court
Ray Projects Pvt. Ltd vs The Board Of Directors Of Canara Bank on 7 October, 2025
Author: R.I. Chagla
Bench: R.I. Chagla
2025:BHC-OS:17850-DB
906-WPL-5781-2025.doc
jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (L) NO.5781 OF 2025
WITH
INTERIM APPLICATION (L) NO.27940 OF 2025
M/s. Ray Projects Pvt. Ltd. and Anr. ...Petitioners
Digitally
Versus
signed by
JITENDRA
JITENDRA SHANKAR
SHANKAR NIJASURE
NIJASURE Date:
2025.10.07
The Board of Directors of Canara Bank and ...Respondents
12:45:04
+0530 Ors.
----------
Mr. Mathews Nedumpara with Ms. Hemali Kurne and Mr. Satsang
Tailor i/b. Nedumpara and Nedumpara for the Applicant / Petitioner.
Ms. Vaishali Bhilare with Mr. Atharva Bhilare for Respondent Nos.1
to 3.
Ms. Vrushali Kabre, for Respondent No.7.
----------
CORAM : R.I. CHAGLA AND
FARHAN P. DUBASH, JJ.
Reserved on : 25TH SEPTEMBER, 2025
Pronounced on : 07TH OCTOBER, 2025.
J U D G M E N T:
-
1. By this Writ Petition, the Petitioners are seeking a
direction to the Central Government and Reserve Bank of India to
enforce the Notification ('MSME Notification') dated 29th May, 2015
and further ensure that the recovery action initiated against the
906-WPL-5781-2025.doc
Petitioners that is stated to be in violation of the mandate of the
MSME Notification is recalled. The Petitioners have accordingly
sought to restrain further action being taken by the Respondent
Nos.1 to 3 ("Respondent - Bank") under the Securitization and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (for short "SARFAESI Act") for enforcement of its
security interest.
2. Petitioner No.1 is stated to be a private limited, small
manufacturing company registered as a Micro, Small and Medium
Enterprise (MSME) Unit under the Micro, Small and Medium
Enterprises Development Act, 2006 (for short "MSMED Act") and is
claiming entitlement to the benefits of the MSMED Act read with the
MSME Notification dated 29th May, 2015. The Petitioners have relied
upon the Petitioner Company's MSME Udyog Aadhaar Registration
Certificate dated 6th September, 2019 annexed at Exhibit 'A' to the
Petition and Petitioner Company's Udyam Registration Certificate
No.UDYAM-MH-18-00331519 dated 30th December, 2020 annexed
at Exhibit 'B' to the Petition.
3. A brief background of the relevant facts are as under:-
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(i) Petitioner No.1 has been banking with the Respondent -
Bank since the last 14 years.
(ii) The loan account of Petitioner No.1 had slipped into a Non
Performing Asset ("NPA") on 19th May, 2015, 14th January, 2022,
18th August, 2022, 24th January, 2024 and 20th October, 2024.
On each of these dates when the loan account of Petitioner No.1
was declared as NPA, the Petitioners had either paid the
outstanding installment and / or regularized it and also requested
the Respondent - Bank to renew the limits.
(iii) On 28th March, 2024, the OCC / ODBD facility of
Petitioner No.1 was renewed by the Respondent - Bank for
Rs.176.00 lakhs. One of the sanction conditions provided for
starting a recurring deposit (RD) of Rs.5.00 lacs per month. It is
pertinent to note that the Petitioners failed to comply with the
said condition. The validity of sanction was till 27th September,
2024. The RD was credited only once on 29th April, 2024 and
hence the account of Petitioner No. 1 slipped into NPA on 20th
October, 2024.
(iv) A notice dated 21st October 2024 was issued by the
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Respondent - Bank under Section 13(2) of the SARFAESI Act but
there was no response to the same. Interestingly, the Petition does
not even disclose this demand notice but instead, refers to an
earlier demand notice issued by the Respondent - Bank on 22nd
August, 2022 being Exhibit - N at page 78 to the Petition, which
was not proceeded with by the Respondent - Bank.
(v) A possession notice dated 8th January, 2025 was then
issued by the Respondent - Bank under Section 13(4) read with
Rules 8 and 9 of the Security Interest (Enforcement) Rules, 2002.
(vi) The present Writ Petition has thereafter been filed on 22nd
February, 2025 without filing any Securitization Application as
provided under Section 17 of the SARFAESI Act.
(vii) An Interim Application has also been preferred in the
above Petition to restrain the Respondent - Bank from taking
further measures pursuant to the measures taken under Section
13(2), 13(4) and 14 and in particular the e-auction sale notice
dated 26th August, 2025 issued by the Respondent - Bank to
auction the property on 26th September, 2025.
906-WPL-5781-2025.doc
4. Mr. Nedumpara the learned Counsel appearing for the
Petitioners has submitted that a bare perusal of the MSME
Notification S.O. 1432 (E) dated 29th May, 2015, would establish
that before a loan account of an MSME Borrower turns stressed, the
bank or creditor is required to identify incipient stress in the account
by creating three sub-categories, as laid down under the Special
Mention Account (SMA) pursuant to which, the bank or the creditor
is required to inform the MSME Borrower about the mechanism of
availing the 'Corrective Action Plan' as may be formulated by the
Composition of Committee for Stressed MSMEs. He has referred to
Clause 3 of the said MSME Notification which provides a framework
for the constitution of an impartial and an Expert Committee
representing the interests of all stakeholders such as the Creditor,
State Government as also an Independent External Expert with
expertise in MSME related matters. He has further submitted that
Clauses 4 and 5 of the framework provides for robust mechanism to
revive and restructure the stressed account of the borrower which
includes (a) Rectification (provides for additional need base
financing if considered necessary), (b) Restructuring, (c) Recovery -
i.e. availing the legal recourse and recovery options, if and only if,
the first two options are not feasible.
906-WPL-5781-2025.doc
5. Mr Nedumpara has submitted that in the instant case,
the Respondent - Bank instead of nurturing and providing support,
has literally arm-twisted the Petitioner - MSME and has brought its
business to peril. Thus, the Respondent - Bank has willfully violated
the MSME Notification which provides an opportunity to restructure
advances extended to the MSME sector. The Respondent - Bank
without providing any opportunity for rectification and restructuring,
straightway proceeded with the recovery proceedings in sheer
disregard to the provisions of law.
6. Mr. Nedumpara has submitted that the Petitioners'
account should not be classified as NPA, except in accordance with
the mechanism provided under the MSME Notification dated 29th
May, 2015 issued under the MSMED Act, wherein the recovery
measures can be initiated only after the mechanism for rectification
and restructuring have failed. He has submitted that the Notice under
Section 13(2) of the SARFAESI Act and all proceedings in furtherance
thereof, including the impugned sale notice are thus rendered void ab
initio.
7. Mr. Nedumpara has referred to Section 34 of Recovery of
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Debts and Bankruptcy Act, 1993; Section 34 of the SARFAESI Act and
Section 231 of the Insolvency and Bankruptcy Code (IBC) which
provide a bar to the jurisdiction of the Civil Court to adjudicate the
controversies which fall into the realm of the said Acts. He has
submitted that a legal system need not confer such a right on a
borrower for the enforcement of his rights before the DRT and the
NCLT, for the doors of the Civil Court are open as a Court of record of
plenary jurisdiction, empowered and competent to adjudicate any
controversy of a civil nature under the sun, to any person aggrieved.
He has submitted that the problem arises by virtue of the aforesaid
provisions of the respective Acts by which the jurisdiction of the Civil
Court is barred.
8. Mr. Nedumpara has submitted that the MSME
Notification under the MSMED Act provides for the constitution of a
stressed MSME Committee of all creditors that is able, adept and
legally empowered to undertake the task of revival and rehabilitation
of the stressed MSMEs. He has submitted that the Banks / Financial
Institutions are duty bound to first put the MSME Borrower through
the mechanism prescribed under the MSME Notification before the
MSME Company can be admitted to insolvency resolution under the
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IBC, 2016.
9. Mr. Nedumpara has accordingly submitted that the
prayers in the above Petition be granted, particularly since the
MSMED Act has not ousted the jurisdiction of the Civil Court
providing for an alternative forum to adjudicate the inter-sé disputes
between parties which are governed by the MSMED Act. As a
corollary thereof, he has submitted that the DRTs created under the
RDB Act, 1993 and the NCLTs created under the IBC, 2016 are
invested with no jurisdiction to adjudicate a dispute arising out of /
involving the provisions of the MSMED Act, 2006.
10. Mr. Nedumpara has submitted that the Respondent -
Bank is not entitled to take recourse to the provisions of the
SARFAESI Act for recovery of the amounts claimed to be due to it,
especially since the MSMED Act, provides a mechanism whereby the
Committee having corrective action plan is contemplated under the
MSME Notification and which mechanism is required to be exhausted
first.
11. Mr. Nedumpara has accordingly sought for direction to
the Respondent - Bank to constitute a Committee for the resolution
906-WPL-5781-2025.doc
of stress of MSMEs, as contemplated in paragraph 2 of the MSME
Notification issued under MSMED Act and to resolve the stress in
accordance with the MSME Notification and such other relevant
Notifications / guidelines framed by the RBI.
12. Mr. Nedumpara has placed reliance upon the judgment
of the Supreme Court in M/s. Pro Knits Vs. The Board of Directors of
Canara Bank and Ors.1 in support of his contention that the MSME
Notification issued under the MSMED Act has statutory force, and is
binding on all scheduled commercial banks. In this judgment, it has
been held by the Supreme Court that it is mandatory or obligatory on
the part of the Banks to follow the instructions / directions issued by
the Central Government and the RBI with regard to the framework
for revival and rehabilitation of MSMEs.
13. Mr. Nedumpara has further submitted that this judgment
has been interpreted by the Madras High Court in A.K. Karthikeyan
Vs. The Authorized Officer & Anr. 2. The Madras High Court has held
that without exhausting the benefits granted under the MSME
Notification, the attitude of the bank to proceed for sale of the
1 (2024) 8 S.C.r. 140.
2 Writ Petition (MD)23328 of 2024 uploaded on 12th June, 2025.
906-WPL-5781-2025.doc
property is as good as killing the business units. The Madras High
Court, relying upon M/s. Pro Knits (Supra) which held that the
MSME Notification has statutory force, directed the Bank to
formulate a revival and rehabilitation scheme for the unit of the
Petitioner in that case under the MSME Notification and had allowed
the Writ Petition by setting aside the sale notices. Thus, it was held
that the Bank was not empowered to take any proceedings under the
SARFAESI Act for recovery of the loan amount before referring the
loan account to the Committee, as per RBI guidelines for framework
for revival and rehabilitation under the MSMED Act.
14. Mr. Nedumpara has also relied upon the judgment of the
High Court of Kerala in M/s. PDMC Industries & Ors. Vs. Ministry of
Micro Small and Medium Enterprises & Anr .3, which holds that the
Bank is bound to comply with the MSME Notification which
mandates that before classifying an MSME Account as NPA, Banks
must identify stress in the account by categorizing it as SMA - 0,
SMA - 1 or SMA - 2 and thereafter constitute a Committee to
formulate a Corrective Action Plan.
15. Per contra, Ms. Vaishali Bhilare, the learned Counsel
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appearing for the Respondent - Bank has submitted that the
Respondent Bank has over a period of time granted credit facility,
renewed the limits and granted further credit limits such as OCC /
OBD, Demand Promissory Note Facility, Guaranteed Emergency
Credit Line Facility (GECL), Credit Guarantee Scheme for
Subordinate Debt (CGSSD) to Petitioner No.1 who has been banking
with the Respondent - Bank since the last 14 years and availed all
such facilities. She has submitted that the loan account of Petitioner
No.1 had slipped into NPA on the aforesaid dates when, the
Respondent - Bank, on the request of Petitioner No.1 had renewed
the limits and supported Petitioner No.1 to come out of NPA. She has
referred to a tabular form at paragraph 4 (c) of the Affidavit in Reply
of Respondent Nos.1 to 3 which provides details of the facilities and
amounts sanctioned by the Respondent - Bank along with the dates
of each sanction.
16. Ms. Bhilare has submitted that the stage of identification
of incipient stress in the loan account of MSMEs and categorization
under the Special Mention Account (SMA) Category has been
clarified by the Supreme Court in M/s. Pro Knits (Supra). She has, in
particular, referred to paragraph 16 of the said judgment where the
906-WPL-5781-2025.doc
Supreme Court has held that the period before the loan account of an
MSME turns into NPA is a very crucial stage, and therefore, it would
be incumbent on the part of the concerned MSME to produce
authenticated and verifiable documents / material for substantiating
its claim of being MSME, before its account is classified as NPA. If this
is not done and once the account is so classified as NPA, the banks
i.e. secured creditors would be entitled to take recourse to Chapter III
of the SARFAESI Act for the enforcement of its security interest. She
has submitted that the account of the Petitioner No.1 turned into NPA
and thereafter measures were initiated by the Respondent - Bank for
enforcement of its security interest under Chapter III of the SARFAESI
Act. She is at pains to point out that Petitioner No.1 had not even
objected to the Demand Notice issued by the Respondent - Bank and
has instead allowed the process of enforcement of the security
interest under the SARFAESI Act to proceed to the stage of auction
sale and hence at this belated stage, the Petitioners cannot be
permitted to thwart the actions taken by the Respondent - Bank
under the SARFAESI Act by raising the plea of being an MSME. This,
without first approaching the Respondent - Bank, prior to Petitioner
No.1 being declared as NPA, with authenticated and verifiable
documents / material to substantiate its claim of being an MSME
906-WPL-5781-2025.doc
disentitles the Petitioners to any reliefs sought in the Petition.
17. Ms. Bhilare has referred to the judgment of the Division
Bench of this Court in A. Navinchandra Steels Pvt. Ltd. & Anr. Vs.
Union of India & Ors.4, wherein it has been held that although the
MSME Notification provides that banks and/or creditors are required
to identify the beginning of the stress felt by the MSME in their
financial capacity to repay; considering the fact that there are
thousands of MSMEs who have raised loans from Banks or NBFCs,
such identification is impossible unless the same is brought to the
notice of the Bank by the MSME itself.
18. Ms. Bhilare has also relied upon the judgment of the
Division Bench of this Court in Perfect Infraengineers Ltd. and Anr.
Vs. Board of Directors of ICICI Bank & Ors. 5 wherein this Court has
held that in the absence of any steps being taken by the Borrower to
seek benefit under the MSME Notification, it was not obligatory for
the Bank to have categorized the account of the Borrower for benefit
under the MSME Notification.
19. Ms. Bhilare has further submitted that the Supreme
4 (2024) 1 High Court Cases (Bom.) 290.
5 Writ Petition (L) No.4667 of 2024 decided on 1st July, 2024.
906-WPL-5781-2025.doc
Court in Shri Shri Swami Samarth Construction & Finance Solution
and Anr. Vs. The Board of Directors of NKGSB Co-Op. Bank Ltd. &
Ors.6 has reiterated its earlier decision in M/s. Pro Knits (Supra). In
that case, the Borrower Enterprise did not claim any benefit of the
terms of the framework under the MSME Notification, and in the
meantime, the Bank had raised a demand notice under Section 13(2)
and thereafter, also taken measures under Section 14 of the
SARFAESI Act and sought compliance of such Order passed by the
relevant Magistrate. The Supreme Court, upon examining such
events, held that a Petition filed by the Borrower Enterprise at such
belated stage to restrain the Bank from proceeding further under the
SARFAESI Act exposed (the lack of) its bonafides..
20. Applying the ratio of this judgment to the facts of the
present case, Ms. Bhilare has submitted that the Petitioners' account
was declared as NPA on 20th October 2024, SMA - 1 on 4th
September 2024 and SMA-2 on 23rd September 2024. Despite such
classification, she has submitted that no application for initiation of
proceedings under the framework of the MSME Notification with a
supporting affidavit verified by an authorized person was filed by the
6 Writ Petition (Civil) No.684 of 2025 decided on 28th July, 2025.
906-WPL-5781-2025.doc
Petitioner under Clause 1 (3) of the MSME Notification. She has
submitted that only if such application (supported by a suitable
affidavit), would its account be processed as SMA - 0 and the
Committee under this framework would be formed immediately.
However, this was admittedly not done by the Petitioners. She has
submitted that the account of Petitioner No.1 having slipped into NPA
and measures having already been taken under the SARFAESI Act,
which have since reached the stage of auction of the secured assets,
at this belated stage, the Petitioners cannot now seek any protection
under the said MSME Notification. Accordingly, she submits that no
reliefs ought to be granted in favour of the Petitioners and the
present Writ Petition should instead, be dismissed.
21. We have considered the submissions made by both the
parties and have also gone through the record available before this
Court. The Supreme Court in M/s. Pro Knits (Supra) has held that an
MSME has to be vigilant enough to follow the process laid down
under the framework provided in the MSME Notification dated 29th
May, 2015 and is required to bring to the notice of the concerned
bank, by producing authenticated and verifiable documents /
material to show its eligibility to get the benefit of the said
906-WPL-5781-2025.doc
framework. Paragraphs 16 and 17 of the said judgment which
contains such findings read as under:-
16. We may hasten to add that under the "Framework
for Revival and Rehabilitation of MSMEs", the banks or
creditors are required to identify the incipient stress in
the account of the Micro, Small and Medium
Enterprises, before their accounts turn into non-
performing assets, by creating three sub-categories
under the "Special Mention Account" Category,
however, while creating such sub-categories, the Banks
must have some authenticated and verifiable material
with them as produced by the concerned MSME to show
that loan account is of a Micro, Small and Medium
Enterprise, classified and registered as such under the
MSMED Act. The said Framework also enables the
Micro, Small or Medium Enterprise to voluntarily
initiate the proceedings under the said Framework, by
filing an application along with the affidavit of an
authorized person. 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
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
906-WPL-5781-2025.doc
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 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 documents / material to show its
eligibility to get the benefit of the said Framework.
22. Thus, the Supreme Court has expressly held that the
stage of identification of incipient stress in the loan account of
MSMEs and the subsequent categorization, under the Special
Mention Account (SMA), is required to be done, before the loan
account of the MSME turns into NPA, which is the crucial stage.
Thus, the Supreme Court has held that it is 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 of the borrower is classified as NPA, the Banks i.e.
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secured creditors would be entitled to take recourse to Chapter III of
the SARFAESI Act for enforcement of their security interest.
23. In the present case, admittedly, Petitioner No. 1 has
failed to produce any authenticated and/or verifiable material before
the Respondent - Bank for identification of incipient stress in its loan
account and categorization under the SMA, before its loan account
turned into NPA. There is also no application by Petitioner No.1 -
MSME submitted to the Respondent - Bank (duly verified by an
Affidavit of an authorized person)for processing the account of
Petitioner No.1 as SMA - 0 and upon which, a Committee under the
framework of the MSME Notification is to be formed immediately.
Hence, the Petitioners have failed to meet the mandatory
requirement of the framework of the MSME Notification, as has been
laid down by the Supreme Court in M/s. Pro Knits (Supra).
24. Moreover, it has been held by the Division Bench of this
Court in Perfect Infraengineer Ltd. (Supra) which judgment has been
tendered by the Respondent - Bank and not by the Petitioners whose
duty it was to produce it, being a judgment of a co-ordinate bench of
this Court and moreso considering that the Petitioner's Advocate, Mr.
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Nedumpara himself who had appeared in the said matter that, in the
absence of any steps being taken by the Borrower in seeking the
benefit under the MSME Notification, it was not obligatory for the
Bank to have categorized the account of the Borrower for availing the
benefit under the MSME Notification.
25. It is pertinent to note that the account of Petitioner No.1
has turned NPA on 20th October, 2024 and Demand Notice dated 21 st
October 2024 has also been issued by the Respondent - Bank under
Section 13(2) of the SARFAESI Act. The Petitioners appear to have
deliberately not mentioned or disclosed this Demand Notice and have
instead, annexed a prior Demand Notice issued by the Respondent -
Bank on 22nd August, 2022 at Exhibit 'N' to the Petition, which
notice had not even been proceeded with by them. The said Demand
Notice dated 21st October 2024 issued under Section 13(2) of the
SARFAESI Act has since, been followed up by the Possession Notice
dated 8th January, 2025 by the Respondent - Bank under Section
13(4) read with Rules 8 and 9 of the Security Interest (Enforcement)
Rules, 2002. The Petitioners have, at the belated stage of the auction
notice for sale of the secured assets, pursuant to the issuance of
Demand Notice and Possession Notice, chosen to file the present
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Petition by raising the plea of MSME and non-compliance of the
MSME Notification. This is nothing but an attempt to thwart the
legitimate actions of the Respondent - Bank under the SARFAESI Act.
We are of the considered view that at this stage, when the account of
Petitioner No.1 has already been classified as NPA, the Petitioners'
cannot restrain the Respondent - Bank from taking recourse to
Chapter III of the SARFAESI Act to enforce its security interest. The
judgment of the Supreme Court in M/s. Pro Knits (Supra) is apposite.
26. Further, the Supreme Court in Shri Shri Swami Samarth
Construction & Finance Solution & Anr. (Supra) has considered a
similar case where the Petitioning MSME had not claimed benefit of
the directions of the framework under the MSME Notification and it
was only at the stage of compliance of an Order passed by the
relevant Magistrate under Section 14 of the SARFAESI Act that the
said Writ Petition came to be presented before the Court to restrain
the bank officers from proceeding further under the SARFAESI Act
and other enactments. The Supreme Court has, in such
circumstances, found the bonafides of the Petitioning MSME to be
suspect. The prior judgment of the Supreme Court in M/s. Pro Knits
(Supra) has been relied upon and the Supreme Court, in the said
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decision, was disinclined to exercise its discretionary jurisdiction
under Article 32 of the Constitution to interfere, by finding no merit
in the said Petition, which came to be dismissed. The Supreme Court
has instead observed that the Petitioning MSME is at liberty to pursue
its remedy under Section 17 of the SARFAESI Act and in accordance
with law.
27. The judgment of the Madras High Court in A.K.
Karthikeyan (Supra) as well as the judgment of the Kerala High
Court in M/s PDMC Industries (Supra) relied upon by Mr.
Nedumpara does not support the Petitioners' case. The Madras High
Court has infact, relied on the decision of the Supreme Court in M/s
Pro Knits (Supra) which holds that the MSME ought to be vigilant to
follow the process laid down under the frame work and bring to the
notice of the bank by producing authenticated and verifiable
documents to show its eligibility to get the benefits of the framework
under the MSME Notification and if the MSME failed to produce such
documents then it was not open to the said MSME to claim benefit
under the MSME Notification. We find that the mere reference in this
judgment to the duty of banks to constitute a committee and / or
formulate a scheme for revival which is directed to be incorporated in
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the clause for repayment of the loan, cannot detract from the said
observations of the Supreme Court in M/s. Pro Knits (Supra).
28. Further, the Division Bench of this Court in A.
Navinchandra Steel Pvt. Ltd. & Anr. (Supra) has considered the fact
that since there are thousands and thousands of MSMEs who have
raised loans from the banks or NBFCs, such identification of the
beginning of stress felt by the MSME, is impossible unless the same is
brought to the notice of the bank by the MSME itself. After all, how a
particular borrower is performing in its business and whether any
such business is undergoing or beginning to feel stress on its financial
capacity, is within the knowledge of the said borrower running its
business.
29. We have considered that the present Writ Petition seeks
directions to the Central Government and Reserve Bank of India to
enforce the MSME Notification dated 29th May 2015 against
Respondent - Bank by restraining it from taking recourse to Chapter
III of the SARFAESI Act for enforcement of its security interest at the
stage when the account of Petitioner No.1 - MSME has already
turned NPA. We are constrained to note that it has become habitual
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for Advocate Mr. Mathews Nedumpara appearing for Petitioners -
MSMEs to raise this issue in repeated matters and seek the same
relief, time and again. Concurrently with the present Petition, it has
come to our notice that Mr. Nedumpara is urging the same issue
before another Division Bench of this Court in Ms. Manisha Nimesh
Mehta Vs. Technology Development Board & Ors .7. Given the settled
law as laid down by the Supreme Court in M/s. Pro Knits (Supra)
and followed in the subsequent decisions of the Supreme Court and
this Court, the bonafides of the present Petitioners are suspect.
30. Accordingly, we find no merit in the present Petition
which calls for any interference under Article 226 of the Constitution
of India.
31. The present Writ Petition is accordingly dismissed. There
shall be no order as to costs.
32. The Interim Application filed therein does not survive
and is accordingly disposed of.
[ FARHAN P. DUBASH, J. ] [ R.I. CHAGLA J. ]
7 Writ Petition (St.)No.14829 of 2025
