Karnataka High Court

M/S. S A Steels And Hardware vs State Bank Of India on 27 June, 2025

Author: S Sunil Dutt Yadav

Bench: S Sunil Dutt Yadav

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                                                      NC: 2025:KHC:22654
                                                    WP No. 18458 of 2025


            HC-KAR




            IN THE HIGH COURT OF KARNATAKA AT BENGALURU

                     DATED THIS THE 27TH DAY OF JUNE, 2025

                                      BEFORE
                 THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV
                 WRIT PETITION NO. 18458 OF 2025 (GM-RES)
            BETWEEN:

            1.    M/S. S A STEELS AND HARDWARE
                  R/AT, NO. 1354, OPP. TAJ HOTEL,
                  SATHANUR VILLAGE, BM ROAD,
                  CHANNAPATNA-562160
                  REPRESENTED BY ITS PARTNER
                  M SYED AHMED.
                                                            ...PETITIONER
            (BY SRI. MOHAMMED TAHIR., ADVOCATE)

            AND:

            1.    STATE BANK OF INDIA
                  R/AT, BM ROAD,
                  CHANNAPATNA BRANCH,
                  PB NO. 2, NO. 2290,
Digitally         BENGALURU-MYSURU ROAD,
signed by         CHANNAPATNA- 562160
VIDYA G R
Location:
                  REPRESENTED BY ITS
HIGH              BRANCH MANAGER.
COURT OF
KARNATAKA
            2.    CHIEF MANAGER (CREDIT & NPAM)
                  STATE BANK OF INDIA
                  REGIONAL BRANCH OFFICE 4
                  CHAMARAJANAGAR 571313.
                  REP BY ITS AUTHORISED OFFICER.
                                                         ...RESPONDENTS
            (BY SRI. VIGNESH SHETTY., ADVOCATE)

                THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF
            THE CONSTITUTION OF INDIA PRAYING TO DIRECTING THE
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                                              NC: 2025:KHC:22654
                                            WP No. 18458 of 2025


HC-KAR



RESPONDENT BANK TO RESTRUCTURE THE INTEREST RATE IN
CASH CREDIT FACILITY AVAILED BY THE PETITIONER BY
REFERRING THE CASE OF PETITIONER TO STANDING
COMMITTEE TO IDENTIFY AND RESTRUCTURE THE ADVANCE
OF MSMES AS PER THE GAZETTE NOTIFICATION DATED
29/05/2015 AT ANNEXURE-E AND RBI CIRCULAR DATE
17/03/2016 AT ANNEXURE- F IN SUCH MANNER AS THE COURT
MAY DEEM FIT AND JUST.

    THIS PETITION, COMING ON FOR ORDERS, THIS DAY,
ORDER WAS MADE THEREIN AS UNDER:

CORAM:     HON'BLE MR JUSTICE S SUNIL DUTT YADAV

                         ORAL ORDER

Petitioner has sought for issuance of writ of

mandamus to direct the respondent - Bank to restructure

the interest rate and cash credit facility availed by the

petitioner by referring the case of the petitioner to

Standing Committee to identify and restructure the

advance of MSMEs as per the Gazette Notification dated

29.05.2015 at Annexure-E and RBI Circular dated

17.03.2016 at Annexure-F. Petitioner has also called in

question the impugned demand notice dated 30.12.2024

at Annexure-B and the possession notice dated

21.03.2025 at Annexure-D.

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2. Petitioner has raised various contentions

including that the classification of the loan of the petitioner

as NPA by the respondent - Bank, is impermissible as the

petitioner is an MSME.

3. Learned counsel for the respondent - Bank

submits that in terms of the judgment of the Apex Court in

the case of M/s. Pro Knits v. Board of Directors of

Canara Bank - (2024) 10 SCC 292, no doubt the MSME

would be entitled to benefits, however such contention

must be raised by the petitioner prior to classification of

the loan as NPA on 29.12.2024 as on which date, no reply

was given.

4. Insofar as such contention, learned counsel for

the petitioner submits that petitioner has brought it to the

notice of the Bank regarding the petitioner being an MSME

in terms of the notice dated 18.03.2025.

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5. In light of the contentions raised, it is relevant

to take note of the observations of the Apex Court in the

case of Union Bank of India v. Satyawati Tondon and

Others - (2010) 8 SCC 110 that the appropriate remedy

would be to relegate the petitioner to seek for substantive

remedy before the Debt Recovery Tribunal. The relevant

observations of the Apex Court are as follows:

"43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi- judicial bodies for redressal of the grievance of any

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aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute.

44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution.

45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by

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filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance.

55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the Sarfaesi Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection."

6. It is noticed that the contentions raised require

a factual determination, which may not be appropriate in

the pending proceedings taking note that substantive

remedy is available under Section 17 of the Securitisation

and Reconstruction of Financial Assets and Enforcement of

Security Interest Act.

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7. Accordingly, the petition is disposed off

relegating the petitioner to avail of the substantive remedy

as regards the impugned proceedings. All contentions of

both the sides are kept open.