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IN THE HIGH COURT OF KERALA AT ERNAKULAM
P. GOPINATH, J
LEKSHMI CASHEW COMPANY – Appellant
Versus
UNION OF INDIA, – Respondent
JUDGMENT :
1. The petitioners have approached this Court challenging the proceedings 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) to recover amounts due under a loan availed by the petitioners from the respondent bank.
2. The 1st petitioner claims that it is a Micro, Small or Medium Enterprise (hereinafter referred to as ‘the MSME’) entitled to the benefits of the framework for revival and rehabilitation of the MSME’s which has been framed in respect of MSME’s registered as such under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as ‘the MSMED Act’). It is submitted that the Reserve Bank of India (hereinafter referred to as 'the RBI') has issued guidelines directing that the framework for the revival and rehabilitation of the MSME’s issued by the Ministry of Micro Small and Medium Enterprises, shall be implemented by all Banks and Financial institutions falling under the umbrella of the RBI.
3. The learned counsel for the petitioners would submit that the framework is a statutory fra
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.
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....
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.
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.
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.
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.
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 ....
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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