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2025 Supreme(SC) 1483
SUPREME COURT OF INDIA
HRISHIKESH ROY AND S.V.N. BHATTI, JJ.
Boltmaster India Private Limited And Another – Appellant
Versus
The Board Of Directors Of Union Bank Of India And Others – Respondent
Writ Petition(s)(Civil) No(s). 7 of 2025
Decided on : 03-01-2025
Headnote:(A) Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Sections 13, 34; Banking Regulation Act - Sections 35, 35A, 35AA, 36, 36AA; Reserve Bank of India Act - Sections 45-IE; MSMED Act - Sections 9, 10 - Writ petition challenging actions of banks regarding NPA classification of MSME accounts - Court found no justification for intervention - Court held that the petitioners did not substantiate their claims concerning violations of the MSMED Notification. (Paras 2-3)
Facts of the case:
Petitioners challenged the actions of a bank in classifying their MSME account as NPA, citing violations of the MSMED Notification and lack of mechanisms for redress under the MSMED Act.
Findings of Court:
The Court dismissed the writ petition, indicating no grounds for judicial intervention in the banking processes specified.
Issues: Determination of the legality of the bank's NPA classification and the applicability of the MSMED Notification in terms of enforcement and remedies for MSMEs.
Ratio Decidendi: The court ruled that the petitioners failed to provide sufficient rationale and evidence to justify intervention against the bank's actions under existing financial regulations.
Result: Petition dismissed.
Certainly. Based on the provided legal document, here are the key points:
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The petitioners challenged the actions of a bank in classifying their MSME account as Non-Performing Asset (NPA), alleging violations of the MSMED Notification and lack of redress mechanisms under the MSMED Act (!) .
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The petitioners sought declarations that the failure of the government and RBI to implement certain MSMED Notification provisions amounted to a statutory failure and that actions taken by the bank in violation of this notification were null and void (!) (!) .
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They also requested a declaration that Sections 13 and 34 of the relevant Act do not preclude the jurisdiction of civil courts to adjudicate disputes relating to MSME accounts, emphasizing that the MSMED Act does not create a specialized forum for such disputes and that existing tribunals lack jurisdiction over MSMED Act matters (!) .
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The court found no justification for intervention, noting that the petitioners did not substantiate claims of violations or demonstrate grounds to interfere with the bank's classification process under the existing financial regulations [paras 2-3].
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Consequently, the court dismissed the writ petition, holding that the petitioners failed to provide sufficient evidence or rationale to justify judicial interference, and ordered the closure of pending applications (!) (!) .
| Table of Content |
|---|
| 1. introduction of petitioners' status and representation. (Para 1) |
| 2. challenges against several financial statutes and their implications. (Para 2) |
| 3. court dismisses the writ petition. (Para 3) |
| 4. closure of pending applications. (Para 4) |
ORDER :
1. Heard Mr. Mathews J. Nedumpara, learned counsel appearing for the petitioners.
2. The petitioners are facing proceedings under The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. They have come before this Court before this Court with the following prayer:
"a) To declare that the failure on the part of the Central Government/RBI to implement the MSMED Notification dated 29.05.2015, in particular, to ensure that the Board of Directors of the Banks/financial institutions in this country, including the Respondent Bank, constitutes a committee for 'stressed micro, small and medium enterprise' and further to prevent the Banks and NBFCs from classifying the account of an MSME as NPA and resorting to recovery under the SARFAESI, RDB Act, IBC, NI Act, etc. in violation of the prohibition to do so as contained in Paragraph 1 and 5(4)(iii) of the said notification, amounts to gross failure on their part to comply with the statutory duty cast upon them under Sections 35, 35A, 35AA, 36, 36AA of the Banking Regulation Act and Sections 45-IE of the Reserve Bank of India Act, and Sections 9 and 10 of the MSMED Act; and
b) To declare that the entire proceedings initiated by the Respondent Bank as against the Petitioner in violation of the notification dated 29.05.2015, which not a single bank/financial institution in this country has given effect to, is rendered void ab initio, still born, and that that alone is the inevitable consequence because the notification does not provide for any penal provision for violation thereof, and that such an inevitable legal consequence is not lost or extinguished simply because an MSME, which the law recognizes as predominantly weak and financially illiterate, had failed to raise such a plea; and
c) To declare that the Section 13 of the SARFAESI Act, and Section 19 of the RDB Act, Sections 7, 9, 10 and 95 of the IBC are unconstitutional, ultra vires and void and are liable to be so declared, inasmuch as the said enactments are wholly one-sided, drafted on the grossly erroneous premise that the right to relief, nay, remedies, arise only at the hands of a banker as against the borrower and that the enquiry to be conducted is wholly onesided, or in the alternative to declare that the borrower's right to be an actor/petitioner for the enforcement of his remedies has to be read into the said Acts; and
d) To declare that Section 34 of the RDB Act, and Section 34 of the SARFEASI Act and Section 63 of the IBC which bar the jurisdiction of the Civil Court to entertain and adjudicate the Petitioner's/borrower's plea against the Respondent Bank nay, bank/financial institution, is unconstitutional and void inasmuch as the Petitioners, victims of the gross breach of contract, culpable negligence, malicious and tortious action, so too, violation of the express statutory provisions at the hands of the Respondent Bank, are entitled to institute an action/suit as against the Respondent Bank for the enforcement of the Petitioners' right as against them; and
e) Declare that the MSMED Act in so far as it has not created a special forum/tribunal to enforce the inter-se rights and obligations/remedies, which it has created in addition to those rights/obligations/remedies recognized by the common law, the jurisdiction of the Civil Court is not ousted, for it is impossible to oust the jurisdiction of the Civil Court without providing for an alternative forum/tribunal to adjudicate the inter se disputes between parties who are governed by the Act, and further as a corollary thereof, the DRTs, NCLTs created under the RDB Act 1993 and the Companies Act 2013 are invested of no jurisdiction to adjudicate a dispute arising out
