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IN THE HIGH COURT OF ORISSA AT CUTTACK
S.K.SAHOO, S.S.MISHRA
Trayambakam Healthcare – Appellant
Versus
State Bank of India – Respondent
ORDER :
This matter is taken up through Hybrid arrangement (video conferencing/physical mode).
2. Mr. R.P. Kar, learned Senior Advocate files his appearance memo, which is taken on record.
3. Mr. D.K. Mohapatra, learned counsel and his associates files power for the State Bank of India, which is also taken on record.
4. This writ petition has been filed by the petitioners with the following prayer:
I. Quashing the action of classification of loan account as NPA by opp. party no.3 vide letter dated 02.05.2025;
II. Setting aside the SARFAESI recovery proceedings initiated under section 13 of the SARFAESI Act by State Bank of India against the petitioner through a demand notice issued on 29.05.2025 under section 13(2) of the said Act;
III. Declaring that the petitioner being an MSME within the meaning of sections 7 and 8 of the MSMED Act , 2006, it is entitled to the benefits of the said Act and, in particularly, the notification S.O.1432(E) dated 29.05.2015 issued by the opp. party no.8 under section 9 of the Act which provides for a mechanism of resolution of stress of MSMEs, as also, the circulars and guidelines;
IV. Directing the opp. parties Bank authorities to follow the prescribed fram
Banks must follow statutory frameworks for classifying MSME loans as NPAs, ensuring adherence to regulations before taking coercive actions.
Borrowers classified as MSMEs must provide verifiable evidence to banks before their accounts are classified as Non-Performing Assets, as protections under MSMED Act and SARFAESI Act apply only when ....
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 classification of an account as NPA does not prevent banks from considering MSME revival requests under specific frameworks.
MSME units entitled to revival/rehabilitation review opportunity under RBI framework before SARFAESI recovery.
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.
Petitioners did not establish MSME status prior to loan classification as NPA; statutory remedies under SARFAESI Act must be availed instead of writ jurisdiction.
Banks are required to follow statutory protocols for MSME accounts before classifying them as NPAs; failure to do so renders the classification invalid.
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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