A writ petition under Article 226 of the Constitution is not maintainable against a private scheduled bank regarding SARFAESI proceedings, as private banks do not perform public or statutory duties by virtue of complying with general banking regulatory guidelines.

JUDGMENT

P.V. BALAKRISHNAN, J.

1. The petitioner in W.P.(C)No.36978 of 2025 is the principal debtor, and the petitioner in W.P.(C)No.3278 of 2026 is the guarantor to a loan transaction availed by the petitioner in the former writ petition and they are aggrieved by the action taken by the respondent – Federal Bank under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as the ‘SARFAESI Act' for short), which action they allege is violative of Exts.P1 and P4(A) (in W.P.(C)No.36978 of 2025) MSME notifications.

2. The documents and the parties referred to hereinafter as in their status in W.P.(C)No.36978 of 2025 for convenience, except otherwise stated.

3. The facts in brief as they are necessary for the disposal of these writ petitions are as follows:- The petitioner in W.P.(C)No.36978 of 2025 had availed a loan from the 3rd respondent by mortgaging four items of immovable property owned by him and others for conducting business of his firm, by name ''VKS Combines''. The petitioner's brother (petitioner in W.P.(C)No.3278 of 2026), sister in law and wife were the guarantors for the said loan. During the period of COVID pandemic, as per the request of the 3rd respondent, the petitioner's establishment was registered under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the MSMED Act', for short) and the petitioner forwarded Ext.P3 copy of the registration certificate to the 3rd respondent, as per Ext.P4. While so, the petitioner's firm was declared an NPA on 22.02.2023 and Ext.P5 demand notice under Section 13(2) was issued on 02.03.2023. Even though Ext.P6 communication dated 14.02.2023 was issued by the 3rd respondent stating that the petitioner's enterprise is falling into SMA 1/2 and is having a stressed account, it failed to report the said stressed account to the committee under the notifications and proceeded to take steps under the SARFAESI Act. On receiving notice under Section 14 from the Advocate Commissioner, the petitioner approached this Court by filing W.P. (C) No.33280 of 2024 seeking indulgence and this Court, by Ext.P7(A) judgment, directed the petitioner to pay Rs.2 crores upfront and to pay the balance, in 12 equal installments. Unfortunately, the petitioner could not place the details of registration before this Court and claim the benefits of Exts.P1 and P4(A), because he was not aware that such a benefit was available for an MSME like the petitioner. Only when the petitioner approached another lawyer so as to approach the Hon'ble Supreme Court, he was informed that the petitioner could avail the benefit of the MSME Act, which is a mandatory provision binding the bank. Thereafter, the petitioner filed SLP No.28259 of 2024 before the Hon'ble Apex Court challenging Ext.P7(A) and the same was withdrawn with liberty to file a review petition. Subsequently, the petitioner filed RP No.1294 of 2024 against Ext.P7(A) judgment, but the same also ended in dismissal. Assailing the order in the RP, the petitioner again filed SLP before the Hon'ble Apex Court and the same was also dismissed as not maintainable, as per Ext.P11 judgment. It is the case of the petitioner that the act of the 3rd respondent-bank in proceeding with the coercive steps under the SARFAESI Act without granting the benefits under Exts.P1 and P4(A) notifications is illegal, and the bank is bound to constitute a committee to redress the grievance of the petitioner. On the other hand, the grievance of the petitioner in W.P.(C)No.3278 of 202