Kerala High Court
M/S. Irine Agro Spices vs The Board Of Directors Of Axis Bank Ltd on 10 July, 2026
WA.1192/2026
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE THE CHIEF JUSTICE MR. SOUMEN SEN
&
THE HONOURABLE MR. JUSTICE SYAM KUMAR V.M.
FRIDAY, THE 10TH DAY OF JULY 2026 / 19TH ASHADHA, 1948
WA NO. 1192 OF 2026
[AGAINST THE JUDGMENT DATED 19.03.2026 IN WP(C) NO.46397 OF 2025
OF HIGH COURT OF KERALA]
APPELLANTS/PETITIONERS:
1 M/S. IRINE AGRO SPICES,
REPRESENTED BY ITS PROPRIETOR, XII/354,
KAIPATTOOR, KALADY P.O., ERNAKULAM, PIN - 683574.
2 V.A. ROJO, AGED 49 YEARS,
S/O. VALLOORAN ANTONY, VALLOORAN HOUSE,
KAIPATTOOR, KALADY P.O., ERNAKULAM, PIN - 683574.
BY ADVS. SRI. MATHEWS J. NEDUMPARA,
SMT. MARIA NEDUMPARA
SRI. SHAMEEM FAYIZ V.P.
SRI. ROY PALLIKOODAM
RESPONDENTS/RESPONDENTS:
1 THE BOARD OF DIRECTORS OF AXIS BANK LTD.,
REPRESENTED BY ITS MANAGING DIRECTOR 'TRISHUL',
3RD FLOOR, OPP. SAMARTHESWAR TEMPLE, NEAR LAW GARDEN,
ELLISBRIDGE, AHMEDABAD, PIN - 380006.
2 AXIS BANK LTD., REPRESENTED BY ITS MANAGING DIRECTOR,
'TRISHUL', 3RD FLOOR, OPP. SAMARTHESWAR TEMPLE,
NEAR LAW GARDEN, ELLISBRIDGE, AHMEDABAD, PIN - 380006.
3 AUTHORISED OFFICER, AXIS BANK LTD.,
ASC/CPC BRANCH, 5TH FLOOR, CHICAGO PLAZA,
RAJAJI ROAD, ERNAKULAM, PIN - 682035.
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*4 [THE BOARD OF DIRECTORS OF BANK OF MAHARASHTRA,
REPRESENTED BY ITS MANAGING DIRECTOR, LOKMANGAL, 1501,
SHIVAJI NAGAR, PUNE, MAHARASHTRA, PIN - 411005.
5 BANK OF MAHARASHTRA,
REPRESENTED BY ITS MANAGING DIRECTOR, LOKMANGAL,
1501, SHIVAJI NAGAR, PUNE, MAHARASHTRA, PIN - 411005.
6 AUTHORISED OFFICER,
BANK OF MAHARASHTRA, ZONAL OFFICE-ERNAKULAM,
IIND FLOOR, G.K. ARCADE, PALARIVATTOM BYPASS JN.,
VENNALA P.O., ERNAKULAM, PIN - 682028.]
* RESPONDENT NOS.4 TO 6 ARE DELETED FROM THE
PARTY ARRAY AS PER THE ORDER DATED 08-07-2026 IN IA 1/2026 IN
WA 1192/26.
7 THE BOARD OF DIRECTORS OF THE KARUR VYSYA BANK LTD.,
REPRESENTED BY ITS MANAGING DIRECTOR, NO. 20,
ERODE ROAD, VADIVEL NAGAR, L.N.S., KARUR,
TAMIL NADU, PIN - 639002.
8 KARUR VYSYA BANK LTD.,
REPRESENTED BY ITS MANAGING DIRECTOR, NO. 20,
ERODE ROAD, VADIVEL NAGAR, L.N.S., KARUR,
TAMIL NADU, PIN - 639002.
9 AUTHORISED OFFICER,
KARUR VYSYA BANK LTD., 40/1045C, 1ST FLOOR,
AMRITHA TOWERS, OPP. MAHARAJA'S COLLEGE GROUND,
M.G. ROAD, ERNAKULAM, KERALA, PIN - 682011.
10 MINISTRY OF MICRO SMALL AND MEDIUM ENTERPRISES,
REPRESENTED BY ITS SECRETARY, UDYOG BHAWAN,
RAFI MARG, NEW DELHI, DELHI, PIN - 110001.
11 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.
12 GENERAL MANAGER, DISTRICT INDUSTRIES CENTRE,
ERNAKULAM, KAKKANAD, PIN - 682030.
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13 CHAIRMAN, MICRO AND SMALL ENTERPRISE FACILITATION
COUNCIL (MSEFC), DIRECTORATE OF INDUSTRIES COMMERCE,
VIKAS BHAVAN P.O., THIRUVANANTHAPURAM, KERALA,
PIN - 695033.
14 CHAIRMAN, STATE LEVEL INTER-INSTITUTIONAL COMMITTEE
REGIONAL OFFICE, RESERVE BANK OF INDIA, BAKERY JUNCTION,
P.B. NO. 6507, THIRUVANANTHAPURAM, PIN - 695033.
15 STATE OF KERALA, REPRESENTED BY ITS CHIEF
SECRETARY, GOVERNMENT SECRETARIAT,
THIRUVANANTHAPURAM, PIN - 695001.
16 RESERVE BANK OF INDIA, REPRESENTED BY ITS GOVERNOR,
NEW CENTRAL OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD,
FORT, MUMBAI, MAHARASHTRA, PIN - 400001.
17 ANIL DHIRAJLAL AMBANI. SEA WIND, CUFF PARADE,
MUMBAI, MAHARASHTRA, PIN - 400005.
18 MUKESH DHIRAJLAL AMABANI, ANTILLA, ALTAMOUNT ROAD,
CUMBALLA HILL, MUMBAI, MAHARASHTRA, PIN - 400036.
19 THE ATTORNEY GENERAL OF INDIA.
OFFICE OF ATTORNEY GENERAL OF INDIA,
SUPREME COURT OF INDIA, TILAK MARG,
NEW DELHI, PIN - 400001.
20 THE CHAIRMAN, STATE BANK OF INDIA, STATE BANK BHAWAN,
NARIMAN POINT, MUMBAI, PIN - 400021.
BY ADVS. SRI. P. PAULOCHAN ANTONY
SRI. T. A. PRAKASH
SMT. ANNTREESA ANIL
SRI. MILLU DANDAPANI
THIS WRIT APPEAL HAVING COME UP FOR ADMISSION ON 08.07.2026, THE
COURT ON 10.07.2026 DELIVERED THE FOLLOWING:
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SOUMEN SEN, C.J.
&
SYAM KUMAR V. M., J.
---------------------------------------------
W.A. No.1192 of 2026
----------------------------------------------
Dated this the 10th day of July, 2026
JUDGMENT
Soumen Sen, C.J.
1. The appeal arises out of a judgment passed by the learned
Single Judge, dismissing the writ petition filed by the
appellants/writ petitioners, granting them liberty to
approach the Debts Recovery Tribunal under Section 17 of
the Securitisation and Reconstruction of Financial Assets
and Enforcement of Security Interest Act, 2002 (in short, the
“SARFAESI Act“).
2. The writ petition was dismissed in view of the existence of
an efficacious alternative remedy available under the
3. The brief undisputed facts are that the appellant No.1 is a
Micro, Small and Medium Enterprise (in short, “MSME”)
engaged in the manufacture of food products. It had availed
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credit facilities from respondent Nos. 2, 5 and 8 (the Banks).
Due to default in repayment, the respondents-Banks have
enforced their security interest and initiated recovery
proceedings under the SARFAESI Act.
4. In view of default in repayment of overdue loan amount, the
respondent No.2, Axis Bank, classified the said account as
Non-Performing Asset (NPA) and the respondent No.3 on
behalf of respondent No.2, Axis Bank, issued a demand
notice (Exhibit-P6) dated 25th June, 2025 under Section
13(2) of the SARFAESI Act, demanding payment of overdue
amounts. Since the account was not regularised and
defaults continued, symbolic possession of the secured
assets was taken under possession notices dated 12th
September, 2025 and 19th September, 2025, respectively.
5. Under similar circumstances, demand notice dated 5 th May,
2025 was issued by the original respondent No.6 on behalf
of respondent No.5, Bank of Maharashtra, to petitioner No.2
under Section 13(2) of the SARFAESI Act followed by a recall
notice dated 28th October, 2025 issued by respondent No.9.
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However, this loan was a home loan availed by the appellant
No.2/petitioner No.2. During the pendency of the appeal,
the names of respondent Nos.4 to 6 have been deleted by an
order dated 8th July, 2026.
6. Aggrieved by the initiation of such recovery proceedings, the
appellants filed the writ petition culminating in the
impugned judgment.
7. The learned counsel for the appellants has questioned the
jurisdiction and consequent decision of the respondent-
banks to initiate coercive measures notwithstanding the
perceived protection the appellant No.1 enjoyed under the
notification dated 26th June, 2020, issued under sub-section
(1) read with sub-section (9) of Section 7 and sub-section (2)
read with sub-section (3) of Section 8 of the MSME Act.
According to the learned counsel, the said notification
strictly prohibits the classification of an MSME account as a
Non-Performing Asset (NPA), and bars any recovery action
except through the mechanism of the Committee
contemplated therein, which must first conclude that the
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resolution of stress is non-feasible. It is submitted that the
Committee alone is empowered to decide the mode and
initiation of recovery. The notification dated 29 th May, 2015,
issued by the Central Government in exercise of powers
conferred under Section 9 of the Micro, Small and Medium
Enterprises Development Act, 2006 (“MSMED”, for short)
mandates the rehabilitation of MSMEs by the Committee,
rather than the automatic invocation of recovery measures.
The learned counsel further submits that the reliance placed
by the learned Single Judge upon the decisions of the
Hon’ble Supreme Court in Pro Knits v. Board of Directors
of Canara Bank and Others1 and Shri Shri Swami
Samarth Construction and Finance Solution and
Another v. Board of Directors of NKGSB Coop. Bank Ltd.
and Others2 as well as the decision of the Co-ordinate
Bench of this Court in P.K. Krishnakumar v. IndusInd
Bank3, are rendered per incuriam and sub silentio and are
not binding precedents.
1
(2024) 10 SCC 292
2
2025 SCC OnLine SC 1566
3
2024 (6) KLT 606
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8. The appellants have also challenged the constitutionality of
the vires of the notification dated 17 th March, 2016, issued
by the Reserve Bank of India concerning Framework for
Revival and Rehabilitation of Micro, Small and Medium
Enterprises (MSME). It is submitted that the
constitutionality of an Act of Parliament or statutory
instrument can only be challenged in a civil court, not even
in the High Court, except in a proceeding under Article 226
of the Constitution of India, as observed in Mafatlal
Industries Ltd. & Ors. v. Union of India & Ors. 4. The
learned counsel, therefore, contended that the learned
Single Judge has failed to address any of these issues and
failed to protect the interests of the appellants.
9. The learned counsel has submitted that the appellants
could not have made any application for revival and
rehabilitation under the MSMED Act as the respondent-
Bank has not constituted any Committee in terms of Clause
3 of the Framework. Although the respondent-Bank was
aware of the fact that the appellant No.1 is an MSME, the
4
(1997) 5 SCC 536
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Bank did not intimate to the appellants about the
constitution of the Committee. There is every reason to
believe that such Committee was never formed. It is thus
irrelevant as to whether any representation was made by the
appellants for rehabilitation. It is the duty of the Bank to act
suo motu once the loan account becomes incipient and
stressed.
10. Although in the statement of facts, the constitutional
validity of the Tribunals constituted under the notification
dated 17th March, 2016 was challenged, no argument on
this issue has been advanced either before the learned
Single Judge or in this appeal.
11. The learned counsel for the respondents have reiterated the
submissions made before the learned Single Judge, namely,
that the writ petition is not maintainable as there is an
efficacious alternative statutory remedy available to the
appellants under Section 17 of the SARFAESI Act, against
the proceedings initiated by the Banks and financial
institutions. The learned counsel has relied upon the
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decisions of the Hon’ble Supreme Court in United Bank of
India v. Satyawati Tondon5, Authorized Officer, State
Bank of Travancore v. Mathew K.C.6 and in Phoenix ARC
(P) Limited v. Vishwa Bharati Vidya Mandir 7 wherein it
has been categorically held that the High Courts, in the
exercise of their high prerogative writ jurisdiction under
Article 226 of the Constitution of India, should refrain from
entertaining writ petitions challenging SARFAESI actions,
unless the High Court is satisfied that there are exceptional
circumstances involving a total lack of jurisdiction or
violation of the principles of natural justice or breach of
fundamental rights.
12. The learned counsel has further submitted that the
appellants only relied upon the MSME certificate of the year
2020, whereas the loan was availed in the year 2022. There
is nothing on record to show as to whether the MSME
certificate produced before the writ court was valid or
subsisting as on the date of sanction of the said loan. The
5
(2010) 8 SCC 110
6
(2018) 3 SCC 85
7
(2022) 5 SCC 345
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appellants have failed to substantiate the status of the
appellant No.1 as an MSME. The respondent-Bank was
never informed of any applicable MSME directives at the
time of availing the loan. The appellants have failed to
establish the aforesaid facts before the learned Single Judge.
Even in this appeal, no such document has been produced.
13. In the aforesaid factual background, the merits of the
judgment under appeal are to be addressed and decided.
14. The principal challenge to the measures adopted by the
respondents-Banks under the SARFAESI Act is the non-
consideration of the MSME character of the appellant No.1.
In addition to the aforesaid, the other challenge appears to
be the Reserve Bank notification dated 17th March, 2016
regarding the Framework for Revival and Rehabilitation of
MSME. The said notification was issued to give effect to the
notification dated 29th May, 2015, upon consideration of
certain changes suggested by the Government of India,
Ministry of MSME, in order to make it compatible with the
existing regulatory guidelines on income recognition, asset
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classification and provisioning pertaining to advances,
issued to banks by the RBI. A revised Framework along with
operating instructions has been issued by the RBI with the
approval of the Board. In paragraph 2, it has been clarified
that the revival and rehabilitation of MSMEs having loan
limits up to ₹25 Crores would be in terms of the operating
instructions now issued under the said circular. Thereafter,
the Framework for Revival and Rehabilitation of MSME has
been framed and duly notified under SO No. 1432E dated
29th March, 2015, in exercise of the power under Section 9
of the MSMED Act.
15. The interplay between the SARFAESI Act and the MSMED
Act has been elaborately considered by the Hon’ble Supreme
Court in the decisions in Pro Knits (supra) and Shri Shri
Swami Samarth Construction and Finance Solution
(supra) and that had been considered in the impugned
judgment.
16. The learned Single Judge has found that the appellants had
failed to demonstrate even prima facie that it is an MSME
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when it availed the credit facilities and thus had failed to
adhere to the guidelines to avail the benefit of immunity
under the MSMED Act. The learned Single Judge has relied
upon the decision of the Hon’ble Supreme Court in Pro
Knits (supra). The law in this regard has been succinctly
explained in the following words:
“18. We may hasten to add that under the “Framework
for Revival and Rehabilitation of MSMEs”, the banks or
creditors are required to identify the incipient stress in
the account of the Micro, Small and Medium Enterprises,
before their accounts turn into non-performing assets, by
creating three sub-categories under the “Special Mention
Account” category, however, while creating such sub-
categories, the banks must have some authenticated and
verifiable material with them as produced by the MSME
concerned to show that loan account is of a Micro, Small
and Medium Enterprise, classified and registered as such
under the MSMED Act.
19. The said Framework also enables the Micro, Small or
Medium Enterprise to voluntarily initiate the proceedings
under the said Framework, by filing an application along
with the affidavit of an authorised person.
20. Therefore, the stage of identification of incipient
stress in the loan account of MSMEs and categorisation
under the Special Mention Account category, before the
loan account of MSME turns into NPA is a very crucial
stage, and therefore it would be incumbent on the part of
the MSME concerned also to produce authenticated and
verifiable documents/material for substantiating its claim
of being MSME, before its account is classified as NPA. If
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that is not done, and once the account is classified as
NPA, the banks i.e. secured creditors would be entitled to
take the recourse to Chapter III of the SARFAESI Act for the
enforcement of the security interest.
21. It is also pertinent to note that sufficient safeguards
have been provided under the said Chapter for
safeguarding the interest of the defaulters-borrowers for
giving them opportunities to discharge their debt.
However, if at the stage of classification of the loan
account of the borrower as NPA, the borrower does not
bring to the notice of the bank/creditor concerned that it
is a Micro, Small or Medium Enterprise under the MSMED
Act and if such an Enterprise allows the entire process
for enforcement of security interest under the SARFAESI
Act to be over, or it having challenged such action of the
bank/creditor concerned in the court of law/tribunal and
having failed, such an Enterprise could not be permitted
to misuse the process of law for thwarting the actions
taken under the SARFAESI Act by raising the plea of being
an MSME at a belated stage. Suffice it to say, when it is
mandatory or obligatory on the part of the banks to follow
the Instructions/Directions issued by the Central
Government and the Reserve Bank of India with regard
to the Framework for Revival and Rehabilitation of
MSMEs, it would be equally incumbent on the part of the
MSMEs concerned to be vigilant enough to follow the
process laid down under the said Framework, and bring
to the notice of the Banks concerned, by producing
authenticated and verifiable documents/ material to
show its eligibility to get the benefit of the said
Framework.”
(emphasis supplied)
17. Further, in the same judgment (Pro Knits) while taking note
of the need for the financial institutions to identify the
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incipient stress in the account of the MSMEs before their
accounts turn into non-performing assets, the Hon’ble
Supreme Court had observed that the Framework of the said
Act also enables the MSME to voluntarily initiate the
proceedings under the same framework by filing an
application along with the affidavit of an authorized person.
The stage of identification of incipient stress in the loan
account of MSMEs and categorisation under the Special
Mention Account category, before the loan account of
MSMEs is identified as NPA, is a crucial point that has been
emphasised in the said judgment. Considering the
importance of the stage at which the account of an MSME
unit turns into an NPA, in respect of the loan account of an
MSME unit, it was observed that it would be incumbent on
the part of the concerned MSME also to produce
authenticated and verifiable documents as required for
substantiating its claim of being an MSME before its
account is classified as NPA. The judgment also categorically
stated that in absence of any such exercise being done and
once the account is classified as NPA, the Banks, i.e.
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secured creditors would be entitled to take recourse to
Chapter III of the SARFAESI Act for enforcement of security
interests.
18. The financial institutions in this proceeding have
categorically submitted that at the stage of classification of
the loan account of a borrower as an NPA, the appellants as
the borrowers did not bring to the notice of the financial
institutions that the appellant No.1 is an MSME under the
MSMED Act and had allowed the proceeding to continue till
symbolic possession of the secured assets has been taken by
the financial institutions.
19. The learned Single Judge, in the impugned judgment, at
paragraph 8, has also referred to the judgment in P.K.
Krishnakumar (supra) wherein it has also observed that an
MSME cannot later assert benefits, if they did not notify the
Banks before classification as an NPA, thereby emphasising
the duty incumbent upon the concerned MSMEs to notify
the Banks regarding the MSME status in order to avail the
benefits attached thereto before the NPA classification is
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effected. The relevant observation in P.K. Krishnakumar
(supra) in this regard is as follows:
“19. xxx xxxx xxxx xxxx xxxxx xxxxx In cases where a
borrower who qualifies as MSME does not initially raise its
status to challenge a bank’s recovery proceedings under the
SARFAESI Act but instead participates fully in the process
without objection, cannot later use their MSME status to
argue that the proceedings were without jurisdiction. The
power of the High Court under Article 226 of the
Constitution of India is discretionary based on the
principles of fairness and justice, which include examining
the conduct of the parties involved. When the Appellants, by
their actions, accepted the bank’s authority without
objection, the High Court will refuse to exercise its writ
jurisdiction to assist such Appellants, even if there are
questions about the jurisdiction of the bank. This is because
the Appellants’ own conduct disqualifies them from
claiming such relief. When the High Court declines to
interfere in such circumstances, it does not mean that the
Appellants’ waiver vested the bank with jurisdiction,
assuming it is inherently lacking; it means that the
borrower is not entitled to invoke writ jurisdiction
irrespective of whether the bank’s actions are without
jurisdiction or not. These two concepts are distinct, and the
distinction is emphasized by the Hon’ble Supreme Court in
the case of M/s. Pro Knits.”
(emphasis supplied)
20. The learned Single Judge has further referred to a recent
decision of the Hon’ble Supreme Court in Shri Shri Swami
Samarth Construction and Finance Solution (supra)
wherein the interplay between the MSMED Act and the
SARFAESI Act has been explained in the following words:
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“”6. xxxx xxxx We would read and interpret the
seemingly confusing terms of the Framework
harmoniously to ensure that a right under the MSME
Act is not destroyed by the SARFAESI Act or vice
versa. In our reading, the terms of the Framework do
not prohibit the lending bank / secured creditor
(assuming that it has no conscious knowledge that
the defaulting borrower is an MSME) to classify the
account of the defaulting MSME as NPA and to even
issue the demand notice under S.13(2) of the
SARFAESI Act without such identification of incipient
stress in the account of the defaulting borrower
(MSME); however, upon receipt of the demand notice,
if such borrower in its response under S.13(3A) of the
SARFAESI Act asserts that it an MSME and claims
the benefit of the Framework citing reasons
supported by an affidavit, the lending bank/secured
creditor would then be mandatorily bound to look into
such claim keeping further action under the
SARFAESI Act in abeyance; and, should the claim be
found to be worthy of acceptance within the
framework of the Framework, to act in terms thereof
for securing revival and rehabilitation of the
defaulting borrower.
7. As has been noted above, the petitioning
enterprise does not seem to have ever claimed the
benefit of the terms of the Framework after the
demand notice under s.13(2) of the SARFAESI Act
was issued. It is at the stage of compliance with an
order passed by the relevant Magistrate under s.14
of the SARFAESI Act that this writ petition has been
presented before this Court claiming benefits of the
Framework to restrain the respondent no.2 and its
officers from proceeding further under the SARFAESI
Act and other enactments except in the manner
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contemplated under the said Notification. We find the
bona fides of the petitioning enterprise to be suspect.
8. Pro Knits is a decision of a coordinate Bench of
this Court holding inter alia, that the Notification is
binding on the lending banks / secured creditors.
Finding to the contrary by the High Court of Bombay
in the judgment and order under challenge in the
appeal was, thus, quashed. Though while stressing
that the terms of the Framework need to be followed
by the lending banks / secured creditors before the
account of an MSME is classified as NPA, this
decision also lays stress on the obligation of the
MSMEs by holding that “it would be equally
incumbent on the part of the MSMEs concerned to be
vigilant enough to follow the process laid down under
the said Framework, and bring to the notice of the
banks concerned, by producing authenticated and
verifiable documents / material to show its eligibility
to get the benefit of the said Framework”. It was
cautioned that “if such an Enterprise allows the
entire process for enforcement of security interest
under the SARFAESI Act to be over, or it having
challenged such action of the bank / creditor
concerned in the court of law/tribunal and having
failed, such an Enterprise could not be permitted to
misuse the process of law for thwarting the actions
taken under the SARFAESI Act by raising the plea of
being an MSME at a belated stage”. This decision,
however, left unsaid something which we have
explained hereinabove while construing the terms
consistently to prevent undermining the rights that
one central enactment confers on by another.”
(emphasis supplied)
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21. Although it is argued that the dicta in Pro Knits (supra) and
Shri Shri Swami Samarth Construction and Finance
Solution (supra) are per incuriam, this argument was not
advanced before the learned Single Judge, as is evident from
the relevant paragraph of the impugned judgment, which
reads thus:
“Although counsel for the petitioners chose not to
press the prayer seeking a declaration that the
dicta in Pro Knits and Shri Shri Swami Samarth are
per incuriam, this Court is bound to adhere to those
decisions. ..”
(emphasis supplied)
22. The principle laid down by Salmond in the famous treatise
on jurisprudence is very pertinent. In paragraph 28, page
158 of the treatise, the learned Author opined as under:
“The general rule is that a Court is bound by the
decisions of all Courts higher than itself. A High
Court Judge cannot question a decision of the Court
of Appeal, nor can the Court of Appeal refuse to
follow judgments of the House of Lords.”
23. A decision should be treated as given per incuriam when it is
given in ignorance of the terms of a statute or of a rule
having the force of a statute. A decision passes sub silentio,
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in the technical sense that has come to be attached to that
phrase, when the particular point of law involved in the
decision is not perceived by the court or present to its mind.
(Salmond on Jurisprudence 12th Edn., P. 153).
24. ‘Incuria’ literally means ‘carelessness’. In practice, per
incuriam appears to mean per ignoratium. English courts
have developed this principle in relaxation of the rule of
stare decisis. The ‘quotable in law’ is avoided and ignored if
it is rendered ‘in ignoratium of a statute or other binding
authority’. (Young v. Bristol Aeroplane Co. Ltd.) (See Shanti
Conductors Pvt. Ltd. v. Assam State Electricity Board 8)
25. The aforesaid decisions were rendered not in ignorance of
any statute or other binding authority. The interpretation of
the highest Court of the land is binding upon all courts
under Article 141 of the Constitution of India. It is also trite
that the binding precedents which are authoritative in
nature and are made to be applied should not be ignored on
the application of the doctrine of sub silentio or per incuriam
without applying specific reasons thereof.
8
(2016) 15 SCC 37 at paragraph 47
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26. Neither of the decisions of the Hon’ble Supreme Court can
be said to be a mere casual expression or a passive
expression of the Hon’ble Bench deciding the said issue. In
the instant case, the essence of the decisions in Pro Knits
(supra) and Shri Shri Swami Samarth Construction and
Finance Solution (supra) is that the proper remedy is to
approach the DRT.
27. The core issues raised in the writ petition were considered in
comprehensive detail by the Hon’ble Supreme Court in that
very decisions and the law laid down therein is strictly
binding on this Court by reason of Article 141 of the
Constitution of India.
28. The duties and obligations of an MSME to voluntarily
initiate the proceedings under the Framework of the MSMED
Act have been discussed in Pro Knits (supra) elaborately, as
well as in the subsequent decision in Shri Shri Swami
Samarth Construction and Finance Solution (supra). It
has also been clearly stated that even in a case where the
secured creditor may, in absence of any conscious
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knowledge that the defaulting borrower is an MSME, issue a
notice under Section 13(2) of the SARFAESI Act, still the
borrower, in its response under Section 13(3A) of the
SARFAESI Act, can assert that it is an MSME and claim the
benefit of the Framework citing reasons supported by an
affidavit, and in such a situation, the lending bank/secured
creditor would then be mandatorily bound to look into such
claim, keeping further action under the SARFAESI Act in
abeyance; and, should the claim be found to be worthy of
acceptance within the framework of the Framework, to act in
terms thereof for securing revival and rehabilitation of the
defaulting borrower. In the instant case, we do not find from
the record that the appellants have ever approached the
financial creditors to avail the benefit of the terms of the
Framework after the demand notice under Section 13(2) of
the SARFAESI Act was issued. In fact, under Clause 4 of the
Framework for Revival and Rehabilitation of Micro, Small
and Medium Enterprises, any eligible stressed MSME is
entitled to file an application to the Committee, in the
manner specified by the Bank, for a decision on a corrective
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plan. It was only at the stage of implementation of an order
passed by the learned Magistrate under Section 14 of the
SARFAESI Act that the writ petition was filed questioning
the jurisdiction of the secured creditors to proceed under the
SARFAESI Act. Both the aforesaid decisions in the facts and
circumstances of the case cannot be either accepted as
judgment sub silentio or per incuriam.
29. In any event, we are of the view that a careful reading of
both the decisions of the Hon’ble Supreme Court would
clearly show that it cannot be contended and held that the
said decisions were rendered without any argument or
without reference to the crucial words and phrases of the
SARFAESI Act and the MSMED Act. Hence, it cannot be said
that, in the instant case, we should apply the principle that
“precedents sub silentio and without argument are of no
moment” and accept the submission of the learned counsel
for the appellants that, notwithstanding the clear
enunciation of law, which is binding on us, we should set
aside the measures already taken by the secured creditors
under the SARFAESI Act.
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30. The challenge to the constitutional validity of the notification
dated 17th March, 2016, has not been argued.
31. The said challenge appears to be a desperate attempt by the
appellants-borrowers to thwart the proceedings initiated
under the SARFAESI Act for realisation of the dues. In fact,
during the hearing of the writ appeal on 22nd June, 2026,
we, inter alia, passed the following order:-
“2. The matter is adjourned by one week to enable
the learned counsel for the appellants to obtain
instructions as to whether the appellants are willing
to deposit a sum of ₹10/- crores with the
respondent financial institutions.”
32. The learned counsel for the respondent Nos. 1 to 3 had
agreed to consider the proposal for revival and rehabilitation
in the event the appellants are willing to deposit the said
amount. However, subsequently, the learned counsel for the
appellants, on instructions, has submitted that the
appellants are not willing to deposit the said amount. In
order to ascertain the principal sum due on the date the
account was classified as NPA, the Bank has filed a detailed
statement verified on 7th April, 2026, upon prior service on
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the learned counsel for the appellants. In the said affidavit,
the following facts have been disclosed:
“2. The Appellant was initially sanctioned a
Working Capital Credit Facility of Rs.6.50 Crores
vide Sanction Letter dated 04.05.2022 by way of
takeover from Bank of Maharashtra. The
corresponding Loan Agreement was executed on
01.06.2022. Upon execution of the loan documents
and fulfilment of the terms and conditions of
sanction, the sanctioned credit facility was
disbursed from time to time in stages, depending
upon the operational requirements of the borrower
and in accordance with the terms and conditions
of the sanction. The Appellant ultimately availed
the entire sanctioned facility.
3. Thereafter, the Working Capital Credit Facility
was enhanced to Rs.10.00 Crores vide Sanction
Letter dated 14.06.2023. The Loan Agreement in
respect of the enhanced facility was executed on
17.06.2023. The enhanced credit facility was also
disbursed from time to time in stages in
accordance with the sanction terms and the
operational requirements of the borrower. The
Appellant availed the entire enhanced sanctioned
facility.
4. Subsequently, the aggregate credit facilities
were enhanced to Rs.25.00 Crores by sanctioning
an additional Export Packing Credit Foreign
Currency Scheme (EPCFS) facility of Rs.15.00
Crores, pursuant to the Sanction Letter dated
30.03.2024 and the Loan Agreement was
executed on 30.03.2024. Pursuant to the delay in
exports, the EPC limit was converted to CC. The
enhanced credit facilities were thereafter
disbursed in stages, as and when required by the
borrower, strictly in accordance with the sanction
terms and conditions, and the Appellant availed
the entire sanctioned facilities.
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5. Subsequently, an Ad hoc Working Capital
Facility of Rs.1.00 Crore was sanctioned on
24.03.2025, and the corresponding Loan
Agreement was executed on the same day. The
said facility was also disbursed in stages, in
accordance with the sanctioned terms and was
fully availed by the Appellant. Consequently,
during the year 2025, the total sanctioned credit
facilities available to the Appellant aggregated to
Rs.26.00 Crores.
6. The aforesaid loan accounts were classified as
Non-Performing Assets (NPA) on 22.06.2025. As on
the said date, the principal outstanding in Loan
Account No.922030029533435, pertaining to the
Working Capital/EPCS facility having a
sanctioned limit of Rs. 25.00 Crores, was
Rs.25,40,93,647.37. The accrued interest in the
said account as on the date of NPA was
Rs.10,76,939.38, making the total outstanding in
the said account Rs.25,51,70,586.75 excluding
penal interest.
7. As on the same date, the principal outstanding
in Loan Account No. 925030013306064,
pertaining to the Ad hoc Working Capital Facility of
Rs.1.00 Crore, was Rs.1,02,25,673.00. The
accrued interest in the said account as on the date
of NPA was Rs.48,102.69, making the total
outstanding in the said account Rs.1,02,73,775.69
excluding penal interest.
8. Thus, as on 22.06.2025, the aggregate principal
outstanding in both the loan accounts was
Rs.26,43,19,320.37, while the aggregate accrued
interest was Rs.11,25,042.07, resulting in a total
outstanding of Rs.26,54,44,362.44. This
statement is in compliance with the directions
contained in the Order dated 01.07.2026 passed
by this Hon’ble Court.”
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33. Having regard to the fact that the appellants have not
responded to notice issued under Section 13(2) of the
SARFAESI Act and also not even objected to the proceedings
initiated under Section 14 of the said Act and their failure to
demonstrate that at the time of availing the credit facilities
the appellant No.1 was an MSME enterprise, the rationes
decidendi of the decisions in Pro Knits (supra) and Shri
Shri Swami Samarth Construction and Finance
Solution (supra) squarely applies. Moreover, the appellants
have also not, before the account was declared as NPA,
approached the financial institutions for rehabilitation. We
also seriously doubt the bona fides of the appellants, having
regard to the fact that the appellants are not even prepared
to approach for revival and rehabilitation.
34. The contention of the appellants that the appellant No.1 was
unable to file an application for revival and rehabilitation,
due to the non-existence of the Committee to be constituted
under Clause 3 of the Framework, also cannot be accepted.
The respondent-Bank has categorically stated that at the
time of availing the credit facility, no certificate was
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produced by the appellant No.1 to show that it owns an
MSME certificate. Curiously, the appellants did not reply to
the notice issued under Section 13(2) of the SARFAESI Act.
Even at that stage, such a certificate was not produced
before the Bank. It is incumbent on the appellants to bring
to the notice of the Bank at the time of availing the loan
facility, or at least when the account of the appellant No.1
was classified as NPA, that it is an MSME unit. The
appellant No.1 was obliged to bring it to the notice of the
respondent-Bank by producing authenticated documents /
materials to show its eligibility in order to avail the benefit of
the said Framework. The appellants did not produce any
such certificate either before the learned Single Judge or in
this appeal. The appellants are unable to offer any
explanation for not replying to the notice issued under
Section 13(2) of the SARFAESI Act. Its continued silence in
respect of its status as an MSME unit raises serious doubt
as to its claim as an MSME unit at the time of availing the
credit facilities. In the absence of an MSME certificate,
which is to be valid when the appellant No.1 approached the
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Banks for availing credit facilities, the plea raised by the
appellants that the appellant No.1 was unable to file any
application under Clause 3 of the Framework as the
formation of the Committee was never intimated to the
appellants does not hold water. It is an argument in despair.
35. In view of the aforesaid, we do not find any reason to
interfere with the judgment delivered by the learned Single
Judge. The Appeal fails and is accordingly dismissed,
however, there shall be no order as to costs.
Sd/-
SOUMEN SEN,
CHIEF JUSTICE
Sd/-
ms/krj
