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BELA M. TRIVEDI, R. MAHADEVAN
Pro Knits – Appellant
Versus
Board of Directors of Canara Bank – Respondent
JUDGMENT :
BELA M. TRIVEDI, J.
1. Leave granted.
2. The Appellants in this batch of Appeals, who claim themselves to be the Micro, Small and Medium Enterprises (MSMEs) registered under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as the “MSMED Act”), have challenged the impugned common order dated 11.01.2024 passed by the High Court of Judicature at Bombay in Writ Petition (L) No. 20100 of 2023 and Others, whereby the High Court has dismissed the said Writ Petitions by holding that the Banks/ Non-Banking Financial Companies (NBFCs) are not obliged to adopt the restructuring process as contemplated in the Notification dated 29th May, 2015 issued by the Ministry of Micro, Small and Medium Enterprises, on its own without there being any application by the Petitioners/ MSMEs. The High Court without expressing any opinion on the merits or the factual aspects of the writ petitions granted leave to the Appellants – Writ Petitioners to agitate the other issues by adopting alternative remedies as may be available to them under the law.
3. The learned Counsels for the parties in the instant Appeals have also restricted their submissions only to the said
Instructions/Directions issued by Central Government under Section 9 of MSMED Act and by RBI under Sections 21 and 35A of Banking Regulation Act, 1949 have statutory force and are binding to all Bank....
Banks must adhere to the Framework for Revival and Rehabilitation of MSMEs before classifying accounts as non-performing assets, obligating both banks and MSMEs to fulfill their respective duties.
Banks must follow MSME Notification procedures to identify stress in accounts before classifying them as NPAs. Failure to do so legitimizes subsequent enforcement measures under the SARFAESI Act.
The classification of accounts as Non-Performing Assets (NPA) under the SARFAESI Act is valid if MSMEs do not timely assert their status, failing to invoke protections under the MSMED Act's revival f....
Petitioners did not establish MSME status prior to loan classification as NPA; statutory remedies under SARFAESI Act must be availed instead of writ jurisdiction.
The court ruled that the borrower’s failure to timely assert its MSME status and follow regulatory guidelines allowed the bank to declare the loan account as NPA and pursue recovery without further o....
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 ....
M.S.M.E borrowers must proactively notify banks of their status to avoid adverse actions like classification as N.P.A, underscoring compliance with statutory obligations outlined in the M.S.M.E.D. Ac....
The judgment emphasizes the discretion of the parties to apply for rehabilitation and restructuring under the MSMED Act, 2006 and leaves the determination of the mandatory nature of the framework to ....
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