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Debpara Tea Company Cannot Seek MSME Revival Benefit After :
The has ruled that a micro, small or medium enterprise (MSME) cannot invoke the benefit of the after the bank has initiated under the and the borrower has already approached the (DRT). Justice Krishna Rao dismissed a filed by against the (SBI), holding that the petitioners had failed to claim the framework's protection at the appropriate stage.
The Loan and the NPA Classification
Debpara Tea Company, an MSME, was sanctioned financial assistance of Rs. 13.73 crore by SBI on , which was subsequently enhanced on . The company's account was classified as a on , and SBI informed the petitioners of this classification on .
On , the bank issued a notice under (), demanding repayment of Rs. 14.28 crore. The petitioners replied on , but did not seek the benefit of the MSME revival framework at that time. SBI subsequently issued a under on , following which Debpara Tea Company filed an application under Section 17 before the (S.A. No. 193 of 2024), which remains pending.
Petitioner's Argument: Framework Not Followed
Senior Advocate , representing the petitioners, argued that SBI was bound to follow the dated , before declaring the account as an NPA. He contended that the bank should have identified by categorizing the account under the categories and constituted a committee as per . The petitioners claimed they had made repeated representations—on , , , and —requesting the bank to consider their case under the MSME framework, but SBI ignored these requests and proceeded with recovery.
Bank's Stand: No Timely Claim for MSME Benefits
, counsel for SBI, submitted that the petitioners never sought the benefit of the MSME framework in their initial reply to the Section 13(2) notice. The bank emphasized that the petitioners had already invoked the under before the DRT, and therefore, the was not maintainable. SBI argued that allowing the petitioners to raise the MSME claim at a belated stage would amount to misuse of the legal process.
Legal Precedents: Pro Knits and Swami Samarth
The court extensively relied on two judgments. In Pro Knits vs. Board of Directors of & Ors. (2024), the held that while banks are bound to follow the MSME framework before classifying an account as NPA, it is equally incumbent on the MSME to be vigilant and bring its eligibility to the bank's notice at the appropriate stage. The court cautioned that if an MSME allows the SARFAESI process to be completed or challenges it unsuccessfully, it cannot later raise the MSME plea to thwart recovery.
In Shri Shri Swami Samarth Construction and Finance Solution & Anr. vs. Board of Directors of (2025), the reiterated that an enterprise must claim the framework's benefit promptly after the Section 13(2) . The court found that the petitioners in that case had not done so and their were suspect.
Court's Key Observations
Justice Krishna Rao noted that the petitioners had not requested MSME framework benefits in their reply to the Section 13(2) notice. Even in their subsequent representations, they merely sought a settlement without invoking the specific procedure under the framework. The court observed:
"Considering the above, this Court finds that only after issuance of notice under
, the petitioners have filed the present
praying for the benefit under the Framework for
of the MSMEs but this Court finds that the petitioners have not taken appropriate steps for getting the benefit of the said Framework for
of the MSMEs of the appropriate stage and on the other hand, the petitioners have taken the recourse of
by initiating a proceeding against the bank before the Learned Tribunal. Once the petitioners have invoked the provisions of Section 17 of
, the grievance of the petitioners cannot be decided in the writ proceeding."
The court further held that since the petitioners had already availed the under Section 17, the was not the proper forum to adjudicate their grievance.
Final Decision: Writ Dismissed
The dismissed W.P.O. No. 198 of 2026, holding that Debpara Tea Company was not entitled to the benefit of the MSME revival framework at a belated stage after SBI had issued the Section 13(4) notice and the petitioners had initiated proceedings under Section 17 before the DRT. The judgment underscores that MSMEs must proactively assert their rights under the framework at the earliest opportunity, or they risk losing that protection once SARFAESI enforcement actions are underway.
