The SARFAESI Act takes precedence over the MSME Act in recovery proceedings, and non-compliance with MSME frameworks does not invalidate actions under SARFAESI.

JUDGMENT

The original petitioner is a borrower from the erstwhile Corporation Bank, which has now merged with the Union Bank. An overdraft cash credit facility taken in the year 2011, the quantum of which was subsequently enhanced, was defaulted by the borrower. Proceedings were initiated by the bank under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short 'the SARFAESI Act'). By the impugned order dated 16.05.2022, the Chief Judicial Magistrate appointed an Advocate Commissioner to take possession of the secured asset under Section 14 (1) of the SARFAESI Act.

2. This writ petition was filed only on 28.03.2023, challenging Ext.P3 order dtd. 16.05.2022. After the hearing was completed, it was noticed that petitioner had filed an amendment petition, which was not brought to the notice of the court, though arguments were addressed entirely on that basis. The case was therefore posted again, and the amendment petition was allowed. All the learned counsel were again heard. In the amended writ petition, eleven new reliefs were sought. A few of the reliefs sought in the amended writ petition are as follows:-

a. Declare that the petitioner's enterprise is an MSME within the meaning of the MSMED Act of 2006 and the notification S.O.1432 (E) dated 29.05.2015 issued by the Central Government under Section 9 thereof, as also the circulars and guidelines issued by the Reserve Bank of India under Section 10 thereof, which provides for a mechanism of resolution of stress and that no proceedings for recovery under the SARFAESI Act, RDB Act or the IBC will lie, in as much as the MSMED Act being a special law qua the aforesaid Acts, and a later law in relation to the RDB Act and the SARFAESI Act, its provisions will prevail over the aforesaid enactments;

b. Declare that the MSME Act in so far as it has not created a special forum/ tribunals to enforce the inter-se rights and obligations/ remedies, which it has created in addition to those rights/ obligations/ remedies recognized by the common law, the jurisdiction of the Civil Court is not ousted, for it is impossible to oust the jurisdiction of the Civil Court without providing for an alternative forum/ tribunal to adjudicate the inter se disputes between parties who are governed by the Act;

d. Declare that the very Application, C.M.P.No.1337/2022 before the Ld. CJM, Manjeri, is vitiated by misrepresentation and fraud, and thus void ab initio and still born in the eyes of law and is liable to be rejected summarily in as much as the affidavit of the 1st respondent bank, is nothing but falsehood on oath, misrepresentation and wilful concealment of facts and a gross violation of the requirements to be stated by the Authorized Officer on oath as contemplated in Section 14 (1)

of the SARFAESI Act;

e. Declare that the guidelines and notifications issued by the reserve Bank of India from time to time empowering the bank and financial institutions to declare a borrower as a wilful defaulter is without authority of law and further that the plaintiffs, nay a borrower is not liable to the declared as a wilful defaulter except by authority of an act of Parliament or statutory instrument having the force of law;

h. Grant a perpetual mandatory and prohibitory injunction restraining and prohibiting defendant No.1 to 4, their agent, servants, officers, representatives and/ or anyone from taking any action for recovery under any law whatsoever in respect of the properties referred to in Ext.P3, or in any manner interfere with the petitioner's peaceful possession and enjoyment of the said properties;

i. Issue a writ of Certiorari calling for the records leading to the passing of Ext.P3/ Order, and the SARFAESI proceedings leading to it, and quash Ext.P3/ Order and the SARFAESI proceedings leading to it, as illegal;

j. Issue a writ of prohibition against respondents 1, 3 and

4, their agents, servants, officers, representatives and/ or anyone, restraining t