The MSME benefits can only be claimed before an account is classified as NPA.

J U D G M E N T

The petitioner is stated to be the Managing Partner of M/S Sylcon Trading Establishment, which is engaged in shoe trading in the State of Kerala. The petitioner submits that he falls within the definition of micro, small, and medium enterprises (MSME) and is entitled to the benefit of Ext.P1 guidelines issued by the Reserve Bank of India.

2. The petitioner had approached this Court by filing WPC No.174 of 2019 claiming the benefit of the MSME framework. Through Ext.P2 judgment, this Court directed the 3^rd respondent therein to consider whether the petitioner's case can be considered under the MSME framework, including the question as to whether the petitioner was a willful defaulter in respect of one of his accounts. RP No.140 of 2019 was filed contending that the 4^th respondent Committee was to consider the claim and not the 3^rd respondent Bank. However, it was noticed that the Bank had placed the request of the petitioner in terms of the judgment before the 4^th respondent Committee and that they had correctly understood the scheme; thus, the review was closed.

3. Through Ext.P4 decision dated 26.02.2019, the Committee found that the account was classified as Non-Performing Assets (NPA) on 24.09.2018 and even after providing six months additional time from the date of renewal, the firm failed to produce the requisite documents. It is also stated that the Managing Partner is already declared as a willful defaulter concerning another account of M/S Neha Leathers. It is pointed out that M/S Neha Leather is still continuing as NPA, even after obtaining a favourable order from the DRT-II, Ernakulam. It was also found that the firm was adopting a lethargic attitude despite being given ample chances for revival, and no corrective action plans were implemented. It is also held that the benefit of the circular issued by the Reserve Bank of India applies only to accounts that were not declared as NPA or before a loan account of MSME turns into NPA.

4. Under such circumstances, it was found that the MSME is not entitled to rectification or restructuring, and it was held that the secured creditor bank was entitled to continue with the recovery process. It is challenging Ext.P4 that this writ petition is filed.

5. The learned counsel appearing for the respondents brings to my notice a judgment of this Court reported inEsthappan M.D (M/S) v. Reserve Bank of India [2025 KHC Online 1626] , which in turn relied on the judgment of the Supreme Court in Pro Knits Vs. Canara Bank (2024 (10) SCC 292) holding that for claiming, for those who availed credit facilities from the bank, benefits under the MSME framework can be claimed only if sought before their accounts are classified as NPAs or in other words after an account is classified as a Non-Performing Asset, benefits of the framework for revival and rehabilitation under the MSME framework cannot be granted and that the provisions of the SARFAESI Act will prevail over the MSME Act . It is to be noted that this judgment referred to above squarely covers the case of the petitioner and no reliefs can be granted to him.

I do not find any merit in the writ petition and the same is accordingly dismissed.