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GOPINATH P.
M. D. Esthappan, Represented By Its Sole Proprietor, Mr. M. D. Esthappan – Appellant
Versus
Reserve Bank of India – Respondent
JUDGMENT :
[WP(C) Nos.45166/2024 & 46514/2024]
These writ petitions are filed raising identical contentions and can, therefore, be disposed of by common judgment. The 1 st petitioner in W.P.(C)No.46514/2024 is a Private Limited Company and the 2 nd petitioner in that writ petition is stated to be the Managing Director of the 1 st petitioner Company. In the connected writ petition, namely, W.P.(C)No.45166/2024, the 1 st petitioner is described as 'M/s. M.D. Esthappan' (a proprietary concern) and the 2 nd petitioner (who is also the 2 nd petitioner in W.P.(C)No.46514/2024) is stated to be the sole proprietor of the 1 st petitioner. The petitioners in these cases have availed credit facilities from the Dhanlaxmi Bank Ltd. (hereinafter referred to as ‘the Bank’). On default being committed, proceedings have been initiated against the petitioners 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’).
2. These writ petitions have been filed seeking various reliefs principally on the contention that the borrowers are ‘Micro, Small or Medium Enterprises’
Borrowers classified as MSMEs must assert their status before NPA classification to invoke benefits under the SARFAESI Act; failure to do so precludes subsequent claims.
The classification of accounts as Non-Performing Assets (NPA) under the SARFAESI Act is valid if MSMEs do not timely assert their status, failing to invoke protections under the MSMED Act's revival f....
Borrowers classified as MSMEs must assert their status timely to benefit from protective frameworks; failure to do so precludes relief under the SARFAESI Act.
MSMEs must raise their status before loan accounts are classified as NPAs; failure to do so precludes later claims for benefits under the SARFAESI Act.
The court upheld that simultaneous proceedings under the SARFAESI Act and the Recovery of Debts and Bankruptcy Act are permissible, and reiterated principles of res judicata and the responsibilities ....
A registered MSME must disclose its status before NPA classification to invoke protections under relevant frameworks; failure to do so precludes later challenges to recovery actions.
Banks must follow MSME Notification procedures to identify stress in accounts before classifying them as NPAs. Failure to do so legitimizes subsequent enforcement measures under the SARFAESI Act.
Borrowers must timely assert MSME status to access protective benefits under the MSMED Act; simultaneous recovery proceedings under SARFAESI and RDB Acts are permissible.
Point of Law : Supreme Court had, in unambiguous terms, observed that, despite the wide powers under Article 226 of the Constitution of India, the practice of entertaining writ petitions pertaining t....
MSMEs must timely assert their status to benefit from statutory protections under the SARFAESI Act; failure to do so precludes them from raising claims at a later stage.
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