M/S. Fathima Cashew Industries vs The Board Of Director Of State Bank Of … on 14 July, 2026

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    Kerala High Court

    M/S. Fathima Cashew Industries vs The Board Of Director Of State Bank Of … on 14 July, 2026

                                                           2026:KER:51166
    
    
                   IN THE HIGH COURT OF KERALA AT ERNAKULAM
    
                                   PRESENT
    
                 THE HONOURABLE MR.JUSTICE P. V. BALAKRISHNAN
    
            TUESDAY, THE 14TH DAY OF JULY 2026 / 23RD ASHADHA, 1948
    
                           WP(C) NO. 23603 OF 2026
    
    PETITIONERS:
    
        1       M/S. FATHIMA CASHEW INDUSTRIES
                REPRESENTED BY MANAGING PARTNER NOUSHAD M.
                PERUMANATHODI, HAVING ADDRESS AT VALATHUNGAL P.O.,
                KOLLAM, PIN - 691011
    
        2       NOUSHAD M
                AGED 55 YEARS
                S/O. MOHAMMED SALI, NAHAS MANZIL,
                HAVING ADDRESS AT PERUMANATHODI,
                VALATHUNGAL P.O, KOLLAM, PIN - 691011
    
    
                BY ADVS.
                SMT. MARIA NEDUMPARA
                SHRI.SHAMEEM FAYIZ V.P.
                SHRI.ROY PALLIKOODAM
    
    
    RESPONDENTS:
    
        1       THE BOARD OF DIRECTOR OF STATE BANK OF INDIA
                REPRESENTED BY ITS CHAIRMAN, CORPORATE CENTER,
                16TH FLOOR, MADAM CAMA ROAD, NARIMAN POINT,
                MUMBAI, PIN - 400021
    
        2       STATE BANK OF INDIA
                REPRESENTED BY ITS CEO & MANAGING DIRECTOR,
                CORPORATE CENTER, 16TH FLOOR, MADAM CAMA ROAD,
                NARIMAN POINT, MUMBAI, PIN - 400021
    
        3       THE MANAGER
                STATE BANK OF INDIA, COMMERCIAL BRANCH,
                                                  2026:KER:51166
    W.P.(C) No.23603/2026
                                 :2:
    
               1ST FLOOR, STATE BANK BUILDING,
               RAILWAY STATION ROAD, KOLLAM H.P.O,
               KOLLAM, PIN - 691001
    
        4      THE AUTHORISED OFFICER
               STATE BANK OF INDIA, STRESSED ASSETS RECOVERY
               BRANCH, OPP. MUSEUM WEST GATE, VIKAS BHAVAN P.O,
               THIRUVANANTHAPURAM, PIN - 695033
    
        5      THE AUTHORISED OFFICER
               STATE BANK OF INDIA, COMMERCIAL BRANCH,
               1ST FLOOR, STATE BANK BUILDING,
               RAILWAY STATION ROAD, KOLLAM H.P.O,
               KOLLAM, PIN - 691001
    
        6      RESERVE BANK OF INDIA
               REPRESENTED BY ITS GOVERNOR, 18TH FLOOR,
               CENTRAL OFFICE BUILDING,
               SHAHID BHAGAT SINGH ROAD, MUMBAI, PIN - 400001
    
        7      THE CHIEF GENERAL MANAGER
               DEPARTMENT OF BANKING OPERATIONS AND
               DEVELOPMENT, RESERVE BANK OF INDIA
               SHAHID BHAGAT SINGH ROAD, MUMBAI, PIN - 400001
    
        8      UNION OF INDIA
               REPRESENTED BY SECRETARY, DEPARTMENT OF
               FINANCIAL SERVICES, MINISTRY OF FINANCE,
               JEEVAN DEEP BUILDING, PARLIAMENT STREET,
               NEW DELHI, PIN - 110001
    
        9      SECRETARY
               MINISTRY OF MICRO, SMALL & MEDIUM ENTERPRISES,
               UDYOG BHAWAN, RAFI MARG, NEW DELHI, PIN - 110001
    
        10     ADV. ANAGHA A.
               ADVOCATE COMMISSIONER APPOINTED IN MC NO.702 OF
               2024 IN THE FILES OF CJM KOLLAM, VILAKKUMTHARA,
               KARIKODE, TKMCPO, KOLLAM, PIN - 691005
    
    
         THIS WRIT PETITION (CIVIL) HAVING COME UP FOR
    ADMISSION   ON  10.07.2026, THE COURT ON  14.07.2026
    DELIVERED THE FOLLOWING:
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    W.P.(C) No.23603/2026
                                          :3:
    
    
    
    
                         P. V. BALAKRISHNAN, J.
    
              `````````````````````````````````````````````````````````````
                          W.P.(C) No.23603 of 2026
    
              `````````````````````````````````````````````````````````````
                     Dated this the 14th day of July, 2026
    
    
                                JUDGMENT
    

    ~~~~~~~~~

    This writ petition is filed by the petitioners

    SPONSORED

    aggrieved by the act of the respondent-State Bank of India,

    taking coercive steps under the provisions of the Securitisation

    and Reconstruction of Financial Assets and Enforcement of

    Security Interest Act, 2002 (hereinafter referred to as the

    SARFAESI Act‘, for short) without resorting to the mandatory

    provisions of the Micro, Small and Medium Enterprises

    Development Act, 2006 (hereinafter referred to as the

    MSMED Act‘, for short), read with the MSME Notification,

    dated 29.05.2015.

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    2. The 1st petitioner is an MSME engaged in

    import, processing and export of cashew products having

    Udyam registration. The loan sanctioned to the 1st petitioner

    is an MSME loan. On 30.09.2023, the respondent-Bank

    issued Ext.P4 notice, under Section 13(2) of the SARFAESI

    Act. The petitioners submitted Ext.P5 detailed objections to

    Ext.P4, on 28.11.2023 specifically pointing out that the

    statutory obligations cast upon the 1st respondent under the

    MSMED Act and the illegality in classifying the petitioners’ loan

    account as NPA, in violation of the notification dated

    29.05.2015 and the guidelines of the RBI. To Ext.P5, the 3 rd

    respondent issued Ext.P6 reply and it was totally silent

    regarding extending any benefits under the MSMED Act and

    the notification. Thereafter, when the 3 rd respondent issued

    Ext.P7 possession notice, the petitioners filed SA No.125/2024

    before the DRT-II, Ernakulam challenging the same. While so,

    the 3rd respondent filed Ext.P8 counter affidavit in IA

    No.4010/2024, in the SA by producing the minutes of the

    meeting of the Committee for Revival and Rehabilitation of
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    Micro, Small and Medium Enterprises. It is the case of the

    petitioners that no such Committee has been constituted by

    the respondent-Bank and that Ext.P8 is a fabricated document

    created by it. It is also their case that the alleged meeting of

    the Committee has taken place without notice to the

    petitioners and the decision taken in the said meeting is

    grossly illegal and violative of the mandatory procedure

    prescribed in the notification. It is further averred that the

    Committee has not considered relevant aspects and the

    decision reflects non application of mind. In the meantime, the

    respondent-Bank initiated proceedings under Section 14 of the

    SARFAESI Act and the Advocate Commissioner issued

    Ext.P9 notice to the petitioners. It is in such circumstance, the

    petitioners approached this Court by filing this writ petition.

    3. Heard the learned counsel for the petitioners

    and the learned counsel for respondents 1 to 5.

    4. The learned counsel for the petitioners

    submitted that the decision of the Committee for Revival and

    Rehabilitation of Micro, Small and Medium Enterprises,
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    produced along with Ext.P8 is a product of forgery and fraud

    since, no Committee has been constituted as stated therein.

    He further submitted that the constitution of the Committee, as

    reflected in Ext.P8, is also not as mandated in the notification

    and even though, the petitioners have filed Ext.P14 review

    petition, the same has not yet been considered. He

    contended that any dispute regarding MSMED Act and its

    violation has to be considered by a civil court under Section 9

    CPC and the petitioners have, thus approached the Bombay

    City Civil Court and has filed a suit seeking various remedies

    since the petitioners/MSME had to face violation of the

    notification. He also submitted that the said court has wrongly

    returned the plaint stating that it has no jurisdiction and since,

    in the meantime, there is a threat of dispossession, this writ

    petition has been filed. Hence, he prayed that an order

    restraining the respondent-State Bank of India from taking

    possession of the secured asset may be passed.

    5. Per contra, the learned counsel for

    respondents 1 to 5 submitted that the petitioners have
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    challenged the proceedings initiated under the SARFAESI Act,

    by filing SA No.125/2024 before the DRT. In that SA, the

    petitioners have initially filed IA No.4010/2024, seeking stay of

    the notice issued by the Advocate Commissioner and the

    Tribunal has, after taking note of the offer made by the

    petitioners to deposit 10% of the outstanding in the loan

    account, deferred taking physical possession subject to

    deposit of ₹50 lakhs. She submitted that at that time, the

    Tribunal, after going through the minutes of the Committee,

    had also found that the petitioners have no prima facie case.

    She contended that thereafter, the petitioners have

    approached this Court by filing W.P.(C) No.922/2025, taking a

    contention that the benefit of the MSMED Act and notification

    has not been given to them and this Court, as per Ext.P11

    judgment, has relegated the petitioners to the DRT. She also

    referred to the exhibits in Ext.P11 judgment and submitted that

    even at that time, the Bank has produced the notice issued by

    the Committee to the petitioners. She further submitted that

    thereafter, the petitioners had again filed IA No.1632/2026
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    W.P.(C) No.23603/2026
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    seeking stay of notice issued by the Advocate Commissioner

    and that the same was also dismissed by Ext.P13. She added

    that Ext.P14 review petition filed by the petitioners is nearly

    three years after the decision of the Committee and that the

    attempt of the petitioners in all these proceedings is to protract

    the matter.

    6. On an anxious consideration of the rival

    submissions and materials on record, I find considerable force

    in the submissions made by the learned counsel for

    respondents 1 to 5. Going by the case of the petitioners itself,

    it can be seen that they have approached the City Civil Court

    in Bombay challenging the decision of the Committee for

    Revival and Rehabilitation of Micro, Small and Medium

    Enterprises dated 27.09.2023 and that the plaint has been

    returned stating that the court has no jurisdiction. It is the

    case of the petitioners that in the meantime, since there is a

    threat of dispossession, they have approached this Court by

    filing this writ petition. It is a settled law, as held by the

    Hon’ble Apex Court in the decisions in Phoenix ARC Pvt.

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    :9:

    Ltd. v. Vishwa Bharati Vidya Mandir and others [2022

    KHC OnLine 6040], South Indian Bank Ltd. (M/s.) v.

    Naveen Mathew Philip [2023 KHC OnLine 6435] and PHR

    Invent Educational Society v. UCO Bank [2024 KHC

    OnLine 6208], that writ petitions against SARFAESI

    proceedings must not be entertained by the High Court since,

    the aggrieved persons have an alternative and efficacious

    remedy before the DRT. It is also the law, as held by the Apex

    Court in the decisions in United Bank of India v. Satyawati

    Tondon and others [(2010) 8 SCC 110] and Authorised

    Officer, Indian Overseas Bank and another v. M/s. Ashok

    Saw Mill [2009 KHC 4883] that even the measures under

    Section 14, which are post Section 13(4) actions will fall within

    the ambit of Section 17 of the SARFAESI Act and the High

    Courts must not exercise the extraordinary power under Article

    226/227 in such cases since, the aggrieved persons can

    approach the DRT by filing an application under Section 17 of

    the SARFAESI Act.

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    7. Be that as it may, the proceedings in the

    instant case would also show that the petitioners have

    approached the DRT in 2024 itself seeking stay of the notice

    issued by the Advocate Commissioner and that even though

    the Tribunal has passed a conditional order of stay, they have

    not complied with the conditions. It is further to be seen from

    Ext.P13 that the petitioners have again filed IA No.1632/2026

    seeking stay of the notice issued by the Advocate

    Commissioner and that the same has been dismissed on

    12.06.2026, on merits by finding that the petitioners have

    failed to establish any prima facie illegality or irregularity in the

    securitisation proceedings. It is to be taken note that the

    petitioners have not challenged the orders passed in IA

    No.4010/2024 and IA No.1632/2026 in SA No.125/2024 as per

    law.

    8. Further, a perusal of Ext.P11 judgment

    passed by this Court would go to show that when the

    petitioners have approached this Court alleging non

    compliance of the MSMED Act and the notification dated
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    : 11 :

    29.05.2015, this Court has relegated the petitioners to the

    DRT. A perusal of Ext.P8 would go to show that even before

    issuing Ext.P4 notice, the Committee for Revival and

    Rehabilitation of Micro, Small and Medium Enterprises has

    considered the case of the petitioners. It also shows that even

    though the borrower was issued with a notice to attend the

    Committee, by submitting a detailed project report, he has not

    turned up. At this juncture, I will also take note of the fact that

    the petitioners were fully aware about the decision of the

    Committee for Revival and Rehabilitation of MSMEs as early

    as in 2024 when orders in IA No.4010/2024 was passed by

    the DRT and that even then they have kept quiet till 2026. It

    is also pertinent to note that the petitioners have not raised

    any challenge to Ext.P8 in this writ petition. As held by the

    Division Bench of this Court in South Indian Bank v.

    M/s.PDMC Industries [2025 KHC Online 1307] and in

    Ext.P11 judgment, it is for the DRT to consider the question

    whether there is any violation of statutory provisions, while

    considering the challenge to SARFAESI proceedings pending
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    W.P.(C) No.23603/2026
    : 12 :

    before it.

    In the light of the afore discussions, I am not

    inclined to exercise the extraordinary jurisdiction under Article

    226 of the Constitution of India in this case. Ergo, this writ

    petition is dismissed.

    Sd/-

    P. V. BALAKRISHNAN, JUDGE
    aks/10.07.2026
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    W.P.(C) No.23603/2026
    : 13 :

    APPENDIX OF WP(C) NO. 23603 OF 2026

    PETITIONER’S EXHIBITS

    Exhibit P1 A TRUE COPY OF NOTIFICATION NO.

    S.O.1432 (E) DATED 29.05.2015, ISSUED
    BY THE MSME MINISTRY, GOVERNMENT OF
    INDIA
    Exhibit P2 A TRUE COPY OF THE RBI NOTIFICATION
    NO. RBI NOTIFICATION NO. FIDD.MSME &
    NFS.BC.NO. 21/06.02.31/2015-16, DATED
    17.03.2016
    Exhibit P3 A COPY OF THE UDYAM REGISTRATION
    CERTIFICATE (CERTIFICATE NO. UDYAM KL
    06-0002354) DATED 10.12.2020 ISSUED BY
    THE MINISTRY OF MSME, GOVT. OF INDIA
    Exhibit P4 A TRUE COPY OF THE DEMAND NOTICE DATED
    30.09.2023
    Exhibit P5 A TRUE COPY OF THE OBJECTION DATED
    28.11.2023 SUBMITTED BY THE
    PETITIONERS THROUGH THEIR ADVOCATE TO
    THE 3RD RESPONDENT
    Exhibit P6 A TRUE COPY OF THE REPLY DATED
    12.12.2023 ISSUED BY THE 3RD
    RESPONDENT
    Exhibit P7 A TRUE COPY OF THE POSSESSION NOTICE
    DATED 18.12.2023 ISSUED BY THE 3RD
    RESPONDENT TO THE PETITIONERS,
    Exhibit P8 A TRUE COPY OF THE COUNTER AFFIDAVIT
    FILED BY THE RESPONDENT NO.3 IN I.A.
    NO.4010 OF 2024 IN S.A. NO.125 OF
    2024, TOGETHER WITH THE MINUTES OF THE
    MEETING OF THE COMMITTEE FOR REVIVAL
    AND REHABILITATION OF MSMES DATED
    27.09.2023,
    Exhibit P9 A TRUE COPY OF THE ADVOCATE COURT
    COMMISSIONER’S NOTICE DATED 30.06.2026
    ISSUED TO THE PETITIONERS
    Exhibit P10 A COPY OF THE RBI NOTIFICATION
    RBI/2012-13/156 DATED 01.08.2012
    Exhibit P11 TRUE COPY OF THE JUDGMENT IN W.P.(C)
    NO. 922 OF 2025 DATED 21/07/2025
    Exhibit P12 TRUE COPY OF THE JUDGMENT IN W.P.(C)
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    W.P.(C) No.23603/2026
    : 14 :

    NO. 15853 OF 2026 DATED 18/05/2026
    Exhibit P13 A TRUE COPY OF THE INTERIM ORDER DATED
    12.06.2026 PASSED IN IA 1632/ 2026 IN
    S.A. NO.125 OF 2024 BY THE DEBTS
    RECOVERY TRIBUNAL-II, ERNAKULAM
    Exhibit P14 A COPY OF THE REVIEW APPLICATION DATED
    26/06/2026 SUBMITTED BY THE PETITIONER



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