Ms Neccon Power And Infra Limited vs Indian Bank on 3 February, 2026

Author: Soumitra Saikia

Bench: Soumitra Saikia

                                                                   Page No.# 1/7

GAHC010017832026




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                       THE GAUHATI HIGH COURT
  (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                          Case No. : WP(C)/522/2026

         MS NECCON POWER AND INFRA LIMITED
         HAVING ITS REGD OFFICE AT KHETAN BHAWAN,
         SEUNI ALI, AT ROAD, JORHAT ASSAM, PIN-785001, CORPORATE OFFICE AT
         416, 4TH FLOOR CITY PLAZA, SPACE CINEMA COMPLEX, BANKI PARK ,
         JAIPUR, RAJASTHAN-302016, ADMINISTRATIVE OFFICE AT H.NO- 37,
         TULSIBALA ROAD, ULUBARI, KACHARI BASTI, GUWAHATI, PIN-781005,
         ASSAM, AND IS DULY REP. BY ITS CHIEF EXECUTIVE OFFICER SMTI.
         PAYAL KHADRIA .



         VERSUS

         INDIAN BANK
         HAVING ITS CORPORATE OFFICE AT PB NO-5555, 254-260, AVVAI
         SHANMUGAM SALAI, ROYAPETTAH, CHENNAI-600014 AND ONE OF ITS
         BRANCH OFFICE AT JORHAT, AT ROAD, JORHAT, ASSAM

         2:THE PUNJAB NATIONAL BANK
          HAVING ITS REGD CORPORATE OFFICE AT PLOT NO. 4
          SECTOR 10
          NEAR WELCOME HOTEL
          DWARKA
          NEW DELHI-110075. AND ONE OF ITS BRANCH OFFICE AT CBB GUWAHATI
         BRANCH
          LIC BUILDING
          SS ROAD
          FANCY BAZAR
          GUWAHATI -01
         ASSAM

         3:CANARA BANK
          HAVING ITS REGD CORPORATE OFFICE AT 112
          J C ROAD
                                                                         Page No.# 2/7

            BENGALURU-560002
            KARNATAKA
            INDIA
            AND ONE OF ITS BRANCH OFFICE AT JORHAT BRANCH
            P.O- NO-61
            117/118. GARALI
            JORHAT
            PIN-785001

            4:BANK OF BARODA
             HAVING ITS HEAD OFFICE AT BARODA HOUSE
             POST BOX NO- 506 MANDVI
            VADODARA
             GUJRAT. PIN-390001
             INDIA AND ONE OF ITS BRANCH OFFICE AT JORHAT BRANCH

             AT ROAD
             JORHAT
             ASSAM
             PIN-78500

Advocate for the Petitioner   : MR G N SAHEWALLA, A R PAL,MR H K SARMA,MR M
SAHEWALLA

Advocate for the Respondent : SC, PNB, SC, CANARA BANK,SC, BANK OF BARODA,SC,
INDIAN BANK




                                    BEFORE
                     HONOURABLE MR. JUSTICE SOUMITRA SAIKIA

                                        ORDER

03.02.2026 Heard Mr. G.N Sahewalla, learned senior counsel assisted by Mr. H.K. Sarma, learned counsel for the petitioner. Also heard Mr. Sharma, learned counsel for the respondents No. 1 & 3 and Mr. A Parvez, learned counsel for the respondent No. 2.

2. The petitioner is an MSME Enterprise and has established a business of execution of large-scale engineering, procurement and construction projects, including infrastructure, civil and allied works across states in the northeast and Page No.# 3/7

also engaged in manufacturing of electrical equipments, including electronic and electrical wires and cables. The petitioner MSME enterprise undertook a loan from a consortium of banks, of which the lead bank is the respondent No. 1, the Indian Bank, and the consortium besides the Indian Bank, Punjab National Bank, Canara Bank and Bank of Baroda, who are arrayed as respondents No. 2, 3 & 4 respectively. The petitioner's account was declared as NPA, because of default for more than 90 days and it is the claim of the petitioner that the restructuring proposal, which was submitted by the petitioner, stood rejected by the bank without any reasons. A subsequent proposal pursuant to the rejection of the proposal by the bank has also been submitted, which is yet to be considered by the bank.

3. The learned senior counsel for the petitioner has referred to the Prudential Framework of Resolution of Stressed Assets, which is the set of directions issued by the Reserve Bank of India in the year 2019. These provisions of directions are applied to schedule commercial banks besides such other entities mentioned therein and there is a special provision for restructuring of the stressed assets in cases of MSME enterprises. The learned senior counsel for the petitioner has referred to the clause 12 of the Framework, where it says that the guidelines will be applicable for loans amounting to Rs 20 billion and above. It is submitted that in so far as the loan undertaken by the petitioner is concerned, the same is covered by this Framework published by the Reserve Bank of India. The learned Senior counsel has referred to the said framework to submit the detailed steps laid down the restructured proposal that is required to be submitted by the MSME and once it is done, the banks are required to consider the same and make attempts to restructure the account of the MSME enterprise so that proceedings under SARFAESI need not be resorted to. The learned Senior Page No.# 4/7

counsel has referred to a judgment of the Apex Court rendered in Pro Knits Vs. Board of Directors of Canara Bank and Ors, reported in (2024) 10 SCC 292. Referring to Paragraphs 15 to 22 of the said Judgment, the learned Senior counsel submits that the judgment of the Apex Court dealt with the same set of directions issued by the Reserve Bank in respect of MSME enterprises and the judgment of the Bombay High Court against which the SLP was preferred, whereby the Bombay High Court had rejected the petition of a similar enterprise on the ground that the resolution framework published by the Reserve Bank of India is not binding, has been interfered with and set aside. The Apex Court held that once the proposal is forwarded by the MSME enterprise, the banks are required to examine the same and explore ways to restructure the loan offered to the MSME and whose account has been declared to be NPA. He therefore submits that the rejection by the Bank of the restructured proposal forwarded by the petitioner MSME enterprise is contrary to the resolution and should therefore be interfered with and set aside and the direction be issued to the banks to reconsider the same to ensure that the MSME enterprise proposal is accepted and the loan is restructured in terms of the resolution framework published by the Reserve Bank of India. He further submits that this rejection of the proposal was by an email without any explanation or without any reasons although pursuant to the said rejection, another proposal has also been forwarded which has not yet been considered by the bank.

4. Mr. M. Sarma, learned counsel for the respondents No. 1 & 3 submits that the Judgment of Pro Knits (Supra) has been subsequently explained by the apex Court in another Judgment rendered in Shri Shri Swami Samarth Constructions & Finance Solution & Anr Vs. The Board of Directors of NKGSB Co.op Bank Ltd & Ors, [W.P(Civil) No. 684/2025] reported in 2025 INSC 908. He submits that Page No.# 5/7

the bona fides of the borrower is to be examined and if the bank finds that the bona fides are not genuine or are doubtful that the Resolution Framework published by the Reserve Bank cannot be considered to be binding on the banks and notwithstanding the bona fides of a MSME enterprise, the benefits under the Resolution Framework published by the Reserve Bank of India would still be available to the MSME enterprise.

5. Mr. Parvez, learned counsel, appearing for Respondent No. 2, also submits that an account to be declared to be an NPA, the default must be for a minimum period of 90 days and the account was declared NPA in June 2025, whereas the restructuring proposal was submitted in January 2026. Therefore, the MSME enterprise was not vigilant enough to avail the benefits of the restructuring resolution and therefore there was no default on the part of the bank in the rejection of the proposal submitted by the Petitioner, MSME Enterprise,

6. Having heard the learned counsel for parties and upon careful consideration of the facts urged before the Court and also upon due consideration of the judgments pressed into service at the Bar, this Court is of the view that the Resolution Framework published by the Reserve Bank of India is a set of directions which are required to be followed by the bank in respect of the borrowers, more particularly the MSME enterprises where their accounts have been declared to be NPA and the procedure for restructuring has been clearly delineated in the same Resolution Framework. The judgment of the Apex Court in Pro Knits (Supra) had categorically held that these guidelines are not directory but are binding on the banks and any proposal which is furnished by the borrower is required to be considered in terms of the guidelines to make an attempt to restructure the account which has been declared NPA. The Page No.# 6/7

subsequent judgment rendered by the Apex Court has further explained the judgment rendered in Pro Knits(Supra) and has stressed the necessity to balance the equities under the MSME Act as also under the SARFAESI Act. The subsequent judgment in Shri Shri Swami Samarth Construction (Supra) has held that where the bona fides of the borrower are in doubt and there are reasons to show that the restructuring policy or the attempts made to restructure the loan as submitted by the MSME enterprise are not bona fide, the banks are not restrained from rejecting such proposals.

7. Coming to the facts of the case, during the course of the argument, it has been submitted at the bar that the loan by the petitioner was for a period of about 22 years and it was declared as an NPA in June 2025. It was further submitted before the court by the respondent bank that after the account has been declared NPA, the bank has initiated the SARFAESI proceedings under SARFAESI Act and has issued a notice under Section 13(2) of the SARFAESI Act to which no reply was submitted by the petitioner. It was incumbent on the petitioner to immediately bring to the notice of the bank that it is an MSME enterprise and they seek to undertake the benefits prescribed under the resolution framework published by the RBI. However, no such opportunities were undertaken and after six months, the proposal was submitted to the bank. Such submissions however are countered by the learned counsel for the petitioner to submit that applications were duly submitted by the borrower to the bank on 15-12-2025 and 26-12-2025 that the proposals are under consideration and will be submitted shortly. Therefore, the bona fides of the borrower petitioner should not be doubted.

8. Having heard the counsel for the parties and upon due consideration of the facts and circumstances as urged before the court and also the judgments Page No.# 7/7

pressed into service, this court has permitted the respondents counsel to complete their instructions as to the stand of the bank in respect of the proposal submitted on 01.01.2026 and subsequently on 23.01.2026.

9. Be that as it may, the respondents will obtain their instructions as to whether the proposals submitted by the petitioner enterprise are workable and the benefits available to the petitioner MSME enterprise under the resolution framework published by the Reserve Bank of India ought to be available to the petitioner can be examined by the bank and to that effect the counsel shall furnish the instructions on 06.02.2026.

10. As it is submitted by the counsel for the bank before the court pursuant to the Initiation of Proceedings under SARFASAI Act, symbolic possession of the properties of the petitioner has been taken over, till the next date fixed, i.e on 06.02.2026, we direct the bank authorities not to proceed any further in respect of auction of the said properties for recovery of loan.

11. Further orders as deemed necessary, would be re-considered on 06.02.2026.

12. Although notices are not issued at this stage, the advocate on record for the petitioner will ensure service of extra copies on both the counsel representing the respondent bank within the course of the day. Petitioner is also permitted to serve advance copy of the writ petition.

13. List again on 06.02.2026.

JUDGE

Comparing Assistant