Bombay High Court

Elite Enterprises, Represented By Its ... vs The Board Of Directors Of M/S Religare ... on 28 October, 2025

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         vai
                                IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                   ORDINARY ORIGINAL CIVIL JURISDICTION
VASANT
ANANDRAO
IDHOL                                WRIT PETITION (L) NO.34554 OF 2025
Digitally signed by
VASANT
ANANDRAO
IDHOL                 M/s. Elite Enterprises & Anr.                         ... Petitioners
Date: 2025.10.29
13:57:48 +0530                    V/s.
                      Board of Directors of M/s. Religare Finvest
                      Limited & Ors.                                        ...Respondents


                      Mr. Mathew J. Nedumpara with Ms. Hemali Kurne i/b Nedumpara &
                      Nedumpara for the Petitioners.

                      Mr. Archit Virmani with Mr. Atul Gupta for the Respondent Nos.1 to
                      3.

                                         CORAM : SANDESH D. PATIL, J.

DATE : 28TH OCTOBER, 2025 (VACATION COURT)

P.C. :-

1. The Petitioners had sought production of this matter in

lieu of the notice dated 22/09/2025 received by the Petitioners

whereby auction sale of the property in question was to take place

on 29/10/2025.The Petitioners sought stay of the auction which is

to be held on 29/10/2025. The Petitioners had filed the notice

dated 22/09/2025 along with the praecipe.

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2. Mr. Nedumpara, the learned counsel appearing for the

Petitioners relied upon the provisions of the Micro, Small and

Medium Enterprises Development Act, 2006 (hereinafter referred

to as "MSMED Act") in order to buttress his contention.

Mr.Nedumpara also referred to "the Framework for Revival and

Rehabilitation of Micro, Small and Medium Enterprises". He

relied upon clause 1(4) of the said Framework. He also placed

reliance upon clause 4(14) of the said Framework.

3. Mr. Nedumpara submitted that the judgment in the

matter of M/s. Pro Knits vs. Board of Directors of Canara Bank

& Ors. (2024 INSC 565) , which is annexed by the Petitioners at

Exhibit- I to the Petition is per incuriam and that it is not binding

on the Courts and Tribunals in this country. He has specifically

referred to prayer clause (b) where he has sought declaration to

that effect.

4. Mr. Nedumpara further submitted that it is the duty of

the banks to identify the accounts of MSME. He submitted that

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before a loan account of MSME turns into non-performing asset

(NPA), banks or creditors are required to identify incipient stress,

in the account by creating three sub-categories under special

account. He submitted that the observation of the Apex Court in

the judgment of M/s. Pro Knits (supra), more particularly in

paragraph 17 is contrary to the MSMED Act, 2006. He states that

the notification dated 29/05/2015 unmistakeably declares that

MSME borrower has no obligation to make an application for

resolution of stress and on the contrary, Banks and Financial

Institutions are duty bound to identify incipient stress based on

the circular of the Reserve Bank of India dated 17/03/2016.

5. Mr. Nedumpara states that the notice which was issued

by the Respondent Nos.1 to 3 itself indicates the knowledge of

the Respondent Nos.1 to 3 that the Petitioner No.1 is a MSME.

He further relies upon the judgment of the Kerala High Court in

Writ Petition (C) No. 5466 of 2025 to buttress his contention. He

also relies upon the judgment in the matter of A. K. Karthikeyan

vs. The Authorised Officer (2025) SCC OnLine Mad 3785 passed

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by the Madurai Bench of Madras High Court. He submits that

both the judgments of the Apex Court in the matters of ' M/s. Pro

Knits' (supra) and 'Shri Shri Swami Samartha Construction and

Finance Solution & Anr. vs. Board of Directors of NKGSB Co-op.

Bank Ltd. & Ors. (2025) SCC OnLine SC 1566 are considered

by these Courts. He submits that both the High Courts have

directed constitution of a committee. He therefore states that the

entire exercise conducted by the Respondent No.1 is bad in law

and deserves to be quashed.

6. Mr. Archit Virmani, learned counsel appearing for the

Respondent Nos.1 to 3 states that the proceedings under Section

13 of the Securitisation and Reconstruction of Financial Assets

and Enforcement of Security Interest Act, 2002 (hereinafter

referred to as 'SARFAESI Act') are already over. He states that

the possession of the assets was already taken on 15/05/2025.

That action on the part of the Respondent Nos.1 to 3 was never

challenged by the Petitioners. He states that the notice dated

22/09/2025 of which urgency is sought to be created was also not

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challenged for more than 30 days and it is only at the fag end of

the expiry of the period contemplated in the notice that the

present Petition is filed. He states that the judgment in the matter

of M/s. Pro Knits (supra) and Shri Shri Swami Samartha

Construction and Finance Solution (supra) clearly covers the

issue. He relied on paragraph Nos.6 to 8 of the judgment of Shri

Shri Swami Samartha Construction and Finance Solution (supra)

and contended that it is at the stage of issuance of auction notice

that the present Petition is circulated before the Court.

7. I have heard the parties appearing for the Petitioners as

well as the contesting Respondent Nos.1 to 3. The Apex Court in

the matter of M/s. Pro Knits (supra) has in paragraph No.17 held

as under :-

"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 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

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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."

8. The Apex Court in the matter of Shri Shri Swami

Samarth Construction & Finance Solution & Anr. (supra) has

considered the judgment of M/s. Pro Knits (supra) and has

observed as under :-

"7. As has been noted above, the petitioning enterprise does not seem to have ever claimed the benefit of the terms of the FRAMEWORK after the demand notice under Section 13(2) of the SARFAESI Act was issued. It is at the stage of compliance with an order passed by the relevant Magistrate under Section 14 of the SARFAESI Act that this writ petition has been presented before this Court claiming benefits of the FRAMEWORK to restrain the respondent no.2 and its officers from proceeding further under the SARFAESI Act and other enactments except in the manner contemplated under the said Notification. We find the bona fides of the petitioning enterprise to be

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suspect.

8. Pro-Knits (supra) is a decision of a coordinate Bench of this Court holding, inter alia, that the Notification is binding on the lending banks/secured creditors. Finding to the contrary by the High Court of Bombay in the judgment and order under challenge in the appeal was, thus, quashed. Though while stressing that the terms of the FRAMEWORK need to be followed by the lending banks/secured creditors before the account of an MSME is classified as NPA, this decision also lays stress on the obligation of the MSMEs by holding that "it would be equally incumbent on the part of the MSMEs concerned to be vigilant enough to follow the process laid down under the said Framework, and bring to the notice of the Banks concerned, by producing authenticated and verifiable documents/material to show its eligibility to get the benefit of the said Framework". It was cautioned that "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 bank/creditor concerned 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". This decision, however, left unsaid something which we have explained hereinabove while construing the terms consistently to prevent undermining of rights that one central enactment confers by another."

9. In my respectful submission, the physical possession of

the asset was taken on 15/05/2025. There was no challenge to this

proceedings till 28/10/2025 i.e. nearly for more than 5 months.

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The notice dated 22/09/2025 which was issued nearly more than

30 days ago was also not challenged. The auction sale is to be

conducted on 29/10/2025 and the present Petition is produced

today i.e. on 28/10/2025. The prayers in the Petition also do not

indicate any challenge to the notice dated 22/09/2025, although a

vague challenge appears to be made in the interim prayers on

page 20.

10. The Petitioners have approached this Court at a fag