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IN THE HIGH COURT OF KERALA AT ERNAKULAM
MR. JUSTICE GOPINATH P., J
OJIN BAKES – Appellant
Versus
UNION OF INDIA – Respondent
JUDGMENT :
The petitioners are before this Court challenging the proceedings initiated under the provisions of theSecuritisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) for recovery of amounts due under credit facilities availed by the petitioners from the respondent bank. It is their specific case before this Court that they are registered as Micro, Small or Medium Enterprises (MSME) and therefore the proceedings under the SARFAESI Act could not be taken without following the guidelines issued by the Reserve Bank of India (RBI) read along with the notification issued by the Government of India in the Ministry of Micro, Small and Medium Enterprises in terms of the power conferred under Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the ‘MSMED Act’) laying down the framework for revival and rehabilitation of MSMEs.
2. The learned counsel appearing for the respondent bank submits that the issue raised in these writ petitions is squarely covered against the petitioners by a Division Bench judgment of this Court in Krishnakumar P.K. v. IndusInd Bank ; 2024 (6) KLT 606, whe
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 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....
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.
Borrowers classified as MSMEs must assert their status timely to benefit from protective frameworks; failure to do so precludes relief under the SARFAESI Act.
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.
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.
Timely assertion of MSME status is essential to invoke protections against loan enforcement actions; delays may bar legal recourse.
Borrowers must timely assert MSME status to access protective benefits under the MSMED Act; simultaneous recovery proceedings under SARFAESI and RDB Acts are permissible.
The High Court should not exercise jurisdiction under Article 226 in matters governed by the SARFAESI Act where effective remedies exist, and classification of accounts as NPAs is not subject to judi....
The court emphasized that banks must adhere to the MSME Framework before classifying an MSME account as NPA and highlighted the responsibility of MSMEs to engage with the process timely.
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