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2026 Supreme(Ori) 582
IN THE HIGH COURT OF ORISSA AT CUTTACK
B. P. ROUTRAY, CHITTARANJAN DASH, JJ.
Suresh Chandra Sahu - Petitioner
Versus
Indian Bank, Cuttack & Others - Opposite Parties
W.P.(C) No.2844 of 2024
Decided On : 30-01-2026
For the Petitioner Mr. D. Panda, Advocate
For the Opposite Parties :Mr. S. K. Dey, Advocate, Mr. B. Routray, Advocate
Court upheld the lawful actions of the Bank in proceeding with e-auctions after classifying the loan as NPA, emphasizing the Petitioner's failure to timely claim MSME benefits under the RBI framework.
Headnote:(A) SARFAESI Act, 2002 - Sections 13(2) and 13(4) - Non-Performing Asset (NPA) classification and enforcement of security interest - Petitioner challenged e-auction of properties by the Bank for failure to service the loan due to COVID-19 impacts - Court found no violation of statutory mandates and confirmed the Bank's actions as lawful - Petitioner did not assert MSME status or claim benefits under RBI Framework timely. (Paras 10-14)
(B) Judicial Approach - The Court emphasized the balance of obligations between lenders and MSME borrowers under the SARFAESI Act and related frameworks. (Paras 10-12)
Facts of the case:
The Petitioner, an MSME, obtained a cash credit facility, which was classified as NPA due to non-payment amidst financial losses caused by COVID-19. The Bank proceeded with e-auctions of the collateral properties after issuing notices.
Findings of Court:
The Bank followed all statutory requirements and the actions for e-auction were justified under SARFAESI Act provisions.
Issues: Whether the classification of the account as NPA and subsequent actions by the Bank were justified, especially concerning the Petitioner’s MSME status claims.
Ratio Decidendi: The Court ruled that the Bank acted in accordance with law and that the Petitioner had failed to assert their rights under the MSME framework in a timely manner.
Result: Writ petition dismissed.
| Table of Content |
|---|
| 1. petitioner's collateral security details. (Para 1 , 2 , 3) |
| 2. petitioner's arguments on bank's actions. (Para 4 , 5 , 6 , 7 , 8 , 9) |
| 3. opposite parties' defenses and legal standards. (Para 10 , 11 , 12) |
| 4. court's analysis of case facts and law. (Para 13) |
| 5. writ petition dismissed for lack of merit. (Para 14) |
Judgment :
Chittaranjan Dash, J.
1. By means of this writ petition, the Petitioner seeks to assail the action of the Opposite Parties, who are alleged to have proceeded with the e-auction of the residential properties of the Petitioner, which were furnished as collateral security for a cash credit facility and working capital limits sanctioned by Opposite Party No.2-Bank on 25.08.2014.
2. The background facts, as pleaded, are that the Petitioner is an MSME establishment registered with the Ministry of Micro, Small and Medium Enterprises, Government of India, bearing Registration No. UDYAM-OD-07-004313. The Petitioner approached Opposite Party No.2-Bank for a cash credit facility, which was sanctioned in the year 2014. Initially, the Petitioner availed a cash credit facility of Rs.1,18,00,000/- (Rupees One crore eighteen lakhs only) and a working capital limit of Rs.21,00,000/- (Rupees Twenty-one lakhs only) on 25.08.2014. The facilities were subsequently renewed vide sanction letter bearing Ref. No. ZO/CREDIT/F-25/2015-16/678 dated 29.03.2016 issued by the Credit Department of the Zonal Office of the erstwhile Allahabad Bank (now merged with Indian Bank).
3. The facilities were secured by hypothecation of stocks, book debts, and receivables. For the working capital facility, fixed deposit receipts in the name of the Petitioner worth Rs.4,20,000/- along with existing securities in the form of four plots of land with buildings; two situated at Mangalabag, Cuttack and two at Kujang, were accepted as collateral and kept under equitable mortgage. The details of the immovable properties offered as collateral security are as follows:
“1. All that part and parcel of land and building situated in Khata no. 714, Plot no.890, 891 & 894 having area A0.016d situated at Balarampur SRO- Kujang, Jagatsinghpur, Odisha bounded by North- Road, South- Mr. Maheswar Behera, East-Mr. Arata Behera & West-Kalpatru Sahoo.
2. All that part and parcel of land and building situated in Khata no. 915, Plot no.1191/1198/1197 having area A0.021d situated at Makhanpur P.S.- Mangalabag, SRO-Cuttack, Mouza- Unit 18 Buxi Bazar bounded by North-Road & Krushna Chandra Sahoo, South-Road-East-Road & West-Maguni Charan Sahoo.
1. All that part and parcel of land and building situated in Khata no. 1036, Plot no. 817 having area A0.028d situated at Mirkamalpatna P.S.- Mangalahag, SRO- Cuttack, Mouza- Unit 22, Dist- Cuttack bounded by North-Road, South- Mr. Khan, East- Mr. Dhaneswar Dutta & West-Ishwar Chandra Sahoo.
2. All that part and parcel of land and building situated in Khata no. 714, Plot no.32/33 having area A0.019d situated at Mouza- Balarampur P.S.- Kujang, Jagatsinghpur, bounded by North-Forest Office, South- Road, East- Road & West- Barada Mohanty.”
3. The Petitioner contends that he continued to service the loan by paying interest on the originally sanctioned amount. However, owing to the COVID-19 pandemic, the business of the Petitioner suffered severe losses, resulting in irregular servicing of the cash credit facility. Consequently, the account was classified as a Non- Performing Asset (NPA). Despite financial hardship, the Petitioner claims to have made periodic deposits to avoid penal consequences, but the Bank allegedly classified the account as NPA arbitrarily and without assigning reasons.
4. It is further stated that even after issuance of a notice under Section 13(2) of the SARFAESI Act, 2002 on 26.07.2021 demanding Rs.1,27,09,351.58 within sixty days, the Petitioner approached the Bank seeking restructuring of the account. The Petitioner expressed willingness to liquidate the outstanding by sale of certain secured assets at market valua
