Back
SABYASACHI BHATTACHARYYA
Olive Tree Retail Private Limited – Appellant
Versus
South India Bank Limited – Respondent
JUDGMENT :
SABYASACHI BHATTACHARYYA, J.
1. The petitioner no. 1-Company carries on the business of manufacturing and retailing of apparel and handloom and handicraft of West Bengal and is a small enterprise within the meaning of the Micro, Small and Medium Enterprises Development Act, 2006 (MSME).
2. The petitioner had taken various loans from the respondent no. 1-Bank and serviced those till a considerable time into the Pandemic.
3. Subsequently, the petitioner also obtained a restructuring of loans from the respondent no. 1-Bank.
4. Thereafter, allegedly being in financial doldrums due to downturn of trade and demonetization, the petitioner no. 1 approached the Bank for a further one-time rescheduling, not amounting to restructure.
5. The same was not allowed and the petitioners’ accounts were classified as NPA (Non-Performing Asset) on November 29, 2021, which was informed to the petitioners by a communication dated November 30, 2021.
6. Pursuant to such classification, a notice under Section 13(2) of the SARFAESI Act, 2002 was issued on April 27, 2022 to the petitioners.
7. The petitioners approached this Court in a writ petition which was decided on January 19, 2023, setting aside the
Banks are under a statutory obligation to comply with the RBI's Resolution Framework (R.F) 2.0 and consider applications for restructuring of MSME loans in accordance with its provisions.
The court's discretionary jurisdiction under Article 226 is not absolute and should be exercised judiciously.
Banks must adhere to the Framework for Revival and Rehabilitation of MSMEs before classifying accounts as non-performing assets, obligating both banks and MSMEs to fulfill their respective duties.
The classification of MSME loan accounts as NPAs without addressing the restructuring proposals violates RBI directives, mandating banks to consider such proposals before classification.
The legislative intent to prevent judicial or quasi-judicial intervention at the stage of issuance of demand notice under Section 13(2) of the SARFAESI Act.
Classification of an account as NPA under SARFAESI Act is not subject to judicial review and requires the borrower to seek recourse through statutory appeal under Section 17.
The judgment emphasizes the discretion of the parties to apply for rehabilitation and restructuring under the MSMED Act, 2006 and leaves the determination of the mandatory nature of the framework to ....
Where there is a breach of contract, the party complaining of such breach may required to file a suit for specific performance of the contract, if contract is capable of being specifically performed.
An indispensable Tool for Legal Professionals, Endorsed by Various High Court and Judicial Officers
Please visit our Training & Support
Center or Contact Us for assistance
Scan Me!
India’s Legal research and Law Firm App, Download now!
For Daily Legal Updates, Join us on :
Back to top
