Kerala High Court
M/S. Fathima Cashew Industries vs The Board Of Director Of State Bank Of … on 14 July, 2026
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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,
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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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P. V. BALAKRISHNAN, J.
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W.P.(C) No.23603 of 2026
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Dated this the 14th day of July, 2026
JUDGMENT
~~~~~~~~~
This writ petition is filed by the petitioners
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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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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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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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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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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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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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
