Stephin K. George vs Board Of Directors Of South Indian Bank ...
2026 Latest Caselaw 2274 Ker

Kerala High Court

Stephin K. George vs Board Of Directors Of South Indian Bank ... on 26 March, 2026

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W.P.(C) No. 48171/25




                                                                    2026:KER:27338

                       IN THE HIGH COURT OF KERALA AT ERNAKULAM

                                       PRESENT

                       THE HONOURABLE MR.JUSTICE BASANT BALAJI

             THURSDAY, THE 26TH DAY OF MARCH 2026 / 5TH CHAITHRA, 1948

                               WP(C) NO. 48171 OF 2025


PETITIONERS:

      1        STEPHIN K. GEORGE, AGED 43 YEARS, S/O. GEORGE ANTONY, KUREECKAL
               HOUSE, KIZHAKKAMBALAM, ERNAKULAM, PIN - 683562

      2        MARY JOSE, AGED 70 YEARS, AN USA CITIZEN, 3416, STONE RIVER CT,
               PEARLAND, TEXAS, USA, PIN - 77581

               BY SMT. MARIA NEDUMPARA
               SHRI.SHAMEEM FAYIZ V.P., SHRI.ROY PALLIKOODAM


RESPONDENTS:

      1        BOARD OF DIRECTORS OF SOUTH INDIAN BANK LTD
               REPRESENTED BY ITS MANAGING DIRECTOR, T.B ROAD, MISSION QUARTERS,
               THRISSUR, PIN - 680001

      2        AUTHORISED OFFICER, SOUTH INDIAN BANK LTD, REGIONAL OFFICE, CHRIST
               NAGAR, AKP JUNCTION, IRINJALAKUDA, THRISSUR, PIN - 680215

      3        MINISTRY OF MICRO SMALL AND MEDIUM ENTERPRISES,
               REPRESENTED BY ITS SECRETARY, UDYOG BHAWAN, RAFI MARG, NEW DELHI,
               PIN - 110001

      4        UNION OF INDIA, REPRESENTED BY ITS SECRETARY, DEPARTMENT OF
               FINANCIAL SERVICES, MINISTRY OF FINANCE, 3RD FLOOR, JEEVAN DEEP
               BUILDING, SANSAD MARG, NEW DELHI, PIN - 110001

      5        GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE, ERNAKULAM. KAKKANAD,
               PIN - 682030

      6        CHAIRMAN, MICRO AND SMALL ENTERPRISE FACILITATION COUNCIL (MSEFC)
               DIRECTORATE OF INDUSTRIES COMMERCE, VIKAS BHAVAN P.O,
               THIRUVANANTHAPURAM, KERALA, PIN - 695033

      7        CHAIRMAN, STATE LEVEL INTER-INSTITUTIONAL COMMITTEE REGIONAL
               OFFICE, RESERVE BANK OF INDIA, BAKERY JUNCTION, P.B. NO. 6507,
               THIRUVANANTHAPURAM, PIN - 695033

      8        STATE OF KERALA, REPRESENTED BY ITS CHIEF SECRETARY, GOVERNMENT
               SECRETARIAT, THIRUVANANTHAPURAM, PIN - 695001
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W.P.(C) No. 48171/25




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      9        RESERVE BANK OF INDIA, REPRESENTED BY ITS GOVERNOR, NEW CENTRAL
               OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD, FORT, MUMBAI,
               MAHARASHTRA, PIN - 400001

      10       FASIL THAMBIKUDY ABBAS, DIRECTOR, EXODIA PROFESSIONALS PVT. LTD,
               22/239 A. MANAKKATT HMT ROAD KALAMASSERY, ERNAKULAM, PIN - 683503

      11       BASIL MATHAI, RECOVERY OFFICER, SOUTH INDIAN BANK LTD,
               IRINJALAKUDA, XVIII/343, BLAZE COURT, MAIN ROAD, IRIJALAKUDA,
               THRISSUR, PIN - 680121

      12       BIBY AUGUSTIAN, JOINT GENERAL MANAGER, RECOVERY HEAD, SOUTH INDIAN
               BANK LTD, RAJAGIRI VALLY, ERNAKULAM, PIN - 682039

      13       REMYA MARY JOHN, SENIOR MANAGER, SOUTH INDIAN BANK, ANGAMALY
               NORTH, PIN - 683572

      14       M/S. G.K. GRANITES, REPRESENTED BY ITS MANAGING PARTNER, GEORGE
               ANTONY, AGED 71 YEARS, S/O. ANTONY, KUREEKKAL, KIZHAKKAMBALAM
               P.O., KIZHAKKAMBALAM, ERNAKULAM DISTRICT, PIN - 683562

      15       CENTRAL REGISTRY OF SECURITISATION ASSET RECONSTRUCTION AND
               SECURITY INTEREST OF INDIA (CERSAI), TOWER 1, OFFICE BLOCK, 4TH
               FLOOR, PLATE-A, NBCC, KIDWAI NAGAR (EAST), REPRESENTED BY ITS
               CENTRAL REGISTRAR NEW DELHI, PIN - 110023

      16       KERALA GRAMIN BANK, KGB TOWERS, AK ROAD, UPHILL, PB NO. 10,
               MALAPPURAM, KERALA REPRESENTED BY ITS CHAIRMAN
      17       DIRECTOR GENERAL OF POLICE, POLICE HEADQUARTERS, THIRUVANATHAPURAM

      18       STATION HOUSE OFFICER CHENGAMMANADU POLICE STATION, ERNAKULAM
               DISTRICT.
               (ADDL.R16-R18 ARE IMPLEADED AS PER ORDER IN IA.2/26 IN W.P.(C) No.
               48171/25 DT.5.3.26)

               BY SRI.C.AJITH KUMAR
               SMT.VARSHA S.S.
               SHRI JAWAHAR JOSE



OTHER PRESENT:

               MATHEW J. NEDUMPARA SR


       THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 5.3.2026, THE

COURT ON 26.3.2026 DELIVERED THE FOLLOWING:
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                                 JUDGMENT

(Dated this the 26th day of March 2026)

The petitioners are guarantors for the loan facilities

extended by the respondent bank to the 14th respondent,

M/S.G.K. Granites. They contend that the respondent bank

initiated proceedings under the SARFAESI Act in violation of

the notification dated 29.05.2015 and failed to comply with

Section 26D, which mandates the registration of the property

with the Central Registry. Following the classification of the

petitioners' account as NPA on 26.06.2024, the 3rd respondent

issued Ext P2 notice under Section 13(2) on 02.08.2024, which

was followed by the taking of symbolic possession via notices

dated 12.09.2025 and 19.09.2025. Subsequently, the respondent

bank issued Ext P3 notice on 17.10.2025 for sale of the

petitioner's property by e-auction. In the above scenario,

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petitioners approached this Court seeking the following reliefs:-

a) To declare that the notification dated 29-05-2015, in unmistakable terms, declares that the MSME-borrower has no obligation to make an application for resolution of stress and, on the contrary, that banks and financial institutions are duty-bound to identify incipient stress based on the illustrative signs indicated in Annexure-I to the RBI Circular dated 17-03-2016;

and further, that in any case where the bank has failed to identify incipient stress, it is duty-bound to classify the account as SMA- 1 if the default is more than 31 days and as SMA-2 if the default is more than 61 days, and thereafter shall constitute a Committee and make a reference to that Committee for resolution of stress; and further, that the Committee is empowered to permit recovery in terms of Para 5(3)(iv) if the resolution of stress is not feasible; and

b) In furtherance of prayer (a) above, to declare that the judgments of the Supreme Court in Pro Knits v. Canara Bank &Ors. (2024) 10 SCC 292 and Sri Sri Swami Samarth Construction & Anr v. The Board of Directors of NKGSB Co- op Bank & Ors. were rendered per incuriam and sub silentio and will not bind the courts and tribunals in this country under Article 141 of the Constitution, inasmuch as (i) in Pro Knits, the Court had, contrary to the letter and spirit of the notification, observed that if the MSME had allowed its account to be classified as NPA and for recovery action to be initiated, having failed to bring to the notice of the bank that it is an MSME supported by identifiable and verifiable documents, it cannot be allowed to "thwart" the SARFAESI action at a later stage; and

(ii) in Sri Sri Swami Samarth, the Court observed that if the MSME had not even replied to the notice under Section 13(2)

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and claimed protection as an MSME supported by an affidavit, the recovery action cannot thereafter be challenged-which, to repeat, are contrary to the very letter as well as the spirit of the notification and have created a scenario where the said judgments have been instrumental in denying the benefit of the notification to MSMEs across the country.

c) To declare that the entire proceedings initiated by the Respondent against the MSME Borrower and Petitioners under Sections 13(2), 13(4) and 14 of the SARFAESI Act, are unconstitutional, illegal and void, being in violation of Paragraph 5(4)(iii) of the notification dated 29.5.2015 under the MSMED Act and without jurisdiction for more than one reason;

d) To issue a writ in the nature of certiorari or any other appropriate writ, order or direction, calling for the entire records and proceedings leading to the classification of the Borrowers' account as a Non-Performing Asset (NPA), the issuance of notices under Sections 13(2) and 13(4), and the order passed under Section 14 of the SARFAESI Act, 2002 as well as the records pertaining to the purported auctions conducted by the Respondent Bank.

e) to declare that insofar as the MSMED Act and the notification dated 29.5.2015 creates certain obligations and burden as against the Bank and certain rights and protection in favour of the MSME borrower in furtherance of larger public interest, and has not provided for any forum for the enforcement of the said inter se rights/adjudication of disputes, the Civil Court jurisdiction is not ousted;

f) To issue an order or direction, calling for the entire records and proceedings leading to the classification of the Borrower's account as a Non-Performing Asset (NPA), the issuance of notices under Sections 13(2) and 13(4), and the order passed under Section 14 of the SARFAESI Act, 2002 as well as the

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records pertaining to the purported auctions conducted by the Respondent Bank.

g) to declare that while the Respondent Bank is entitled to enforce all remedies available in law as against the Petitioner, common law, equitable or declaratory, it can only have one forum, and that it having instituted a suit in the DRT, the SARFAESI action is without jurisdiction and void;

h) To declare that the secured asset in question not having been registered with the Central Registry, the Respondent Bank is disentitled to enforce the same by invoking the SARFAESI Act and to quash and set aside the said action for the same reason;

i) To direct the Respondent bank to state on oath, the entire sequence of events since the issuance of sale notice till date, and also to produce the entire records and proceedings concerning the sale till date, in particular the name and particulars of the Auction Purchaser, the date and time when the balance bid amount was received;

j) pass such further and other orders as the nature and circumstances of the case may require.

2. Respondents No.1 and 2 filed a counter challenging the

maintainability of the writ petition, contending that the

petitioners have an effective statutory remedy against the

SARFAESI proceedings before the appropriate forum. They

argue that no extraordinary circumstances exist to warrant this

Court's interference, placing reliance on the dicta established in

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Phoenix Arc Pvt. Ltd. v. Vishwa Bharati Vidya Mandir and

Others (2022 (5) SCC 345), State Bank of India v. Arvindra

Electronics (2022 KHC 7165), Varimadugu OBI Reddy v.

Sreenivasulu (2023 (2) SCC 168) etc. Furthermore, the

respondents noted that the 14th respondent had previously filed

W.P.(C) No. 41807/2025 seeking MSME framework benefits

against the same respondents, which was dismissed via Ext

R1(a) on 11.12.2025; consequently, the petitioners are

precluded from claiming further MSME benefits. Regarding the

alleged non-registration under Section 26D, the respondents

clarified that the challenge is meritless as the secured asset was

validly registered on the CERSAI portal as early as 26.07.2016.

3. As far as the challenge to Ext P3 is concerned, the

respondents contend that the 14th respondent had already filed

S.A.577/2025 before the DRT, Ernakulam, on 21.08.2025,

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challenging proceedings under SARFAESI as well as the notice

dated 16.08.2025, which is pending consideration. They argue

that since the statutory authority is in consideration of the

matter, no interference by this Court is warranted. Furthermore,

while the initial e-auction under Ext P3 failed for want of

bidders, a subsequent auction notice was issued on 18.11.2025,

scheduling the sale on 08.12.2025. This sale successfully

materialized, and upon the successful bidder remitting the full

amount, a sale certificate was issued and possession was handed

over. Notably, the petitioner has raised no challenge regarding

this sale in the present Writ Petition. Given the above instances,

the respondents maintain that the petitioners cannot invoke the

writ jurisdiction of this Court.

4. It is pertinent to note that W.P.(C) No. 46770/2025,

filed by the 14th respondent (M/s. G.K. Granites), stands

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dismissed by this Court on the ground that the enterprise failed

to provide authenticated materials or respond to the Section

13(2) notice issued by the respondent bank to assert its MSME

status. Consequently, the petitioner herein stands estopped from

seeking relief or protection under the revival framework of the

MSMED Act. As the contentions and reliefs sought in the

present writ petition are identical to those already adjudicated

in W.P.(C) No. 46770/2025, this petition is also dismissed

considering the aforementioned observations.

sd/-

BASANT BALAJI JUDGE dl/

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APPENDIX OF WP(C) NO. 48171 OF 2025

PETITIONER EXHIBITS

Exhibit P1 A COPY OF THE UDYAM CERTIFICATE NO. UDYAM-KL-02- 0014662 DATED 24-03-2021, ISSUED TO THE PETITIONER BY THE MSME MINISTRY, GOVERNMENT OF INDIA Exhibit P2 A TRUE COPY OF THE DEMAND-NOTICE DATED 02-08-2024 U/S. 13(2), ISSUED BY THE 2ND RESPONDENT TO THE PETITIONER Exhibit P3 A TRUE COPY OF THE SALE-NOTICE DATED 17-10-2025 ISSUED BY THE RESPONDENT-BANK RESPONDENT EXHIBITS

Exhibit-R1 (a) True copy of the judgment dated 11-12-2025 in W.P (C) 41807 of 2025 of the High Court of Kerala. Exhibit-R1(b) TRUE COPY OF THE COMMISSION REPORT DATED 12/01/2026 FILED BY THE ADVOCATE COMMISSIONER IN M.C. 627/2025 ON THE FILES OF ACJM COURT, ERNAKULAM.

PETITIONER EXHIBITS

Exhibit P4 A TRUE COPY OF THE LETTER ADDRESSED TO THE CHIEF JUSTICE DATED 01-02-2026 Exhibit P5 TRUE COPY OF THE AFFIDAVIT DATED 07.02.2026, OF THE PETITIONER'S EMPLOYEES SHRI ANI ASHOK Exhibit P6 TRUE COPY OF THE AFFIDAVIT DATED 07.02.2026, OF THE PETITIONER'S EMPLOYEES SHRI RANGA SWAMY Exhibit P7 A copy of the letter dated 1.2.2026 which was send to the Chief Justice Exhibit P8 A copy of the letter dated 1.2.2026 which was send to the Registrar Judicial