Ms Khukhrain Builders & Ors. v. Indian Bank & Ors.

14. Learned counsel for the respondents No.1 and 2/Indian Bank has urged that as the petitioners have already invoked the remedy before the competent forum, they cannot turn around and take benefit of the decision by the Supreme Court in the cited case of Pro Knits (supra).

15. Having heard the learned counsels for the parties and on perusal of the record, although notification dated 29.05.2015 issued by the Central Government under Section 9 of the MSMED Act is binding on the scheduled banks; and indeed before declaring the account of the petitioners as NPA, the matter should have been considered by the

6 Non Performing Asset 7 Securitisation Application Committee for Stressed Micro, Small and Medium Enterprises, however the case of the petitioners is on slippery ground.

16. It is pertinent to mention that as per the RBI Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs) dated March 17, 2016 vide clause 2.38, an option was available to the petitioner No.1 as well to move an application before the Committee for immediate convening of the meeting and deciding on the issue of reconstruction of its financial liabilities at the earliest available opportunity. However, no such application had been moved prior to 11.03.2024. It would be pertinent to refer to the observations of the Supreme Court in the case of Pro Knits (supra), which provides as under:-

2.[3] Identification by the Borrower Enterprise - Any MSME borrower may voluntarily initiate proceedings under this Framework, if the enterprise reasonably apprehends failure of its business or its inability or likely inability to pay debts or there is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth during the previous accounting year, by making an application to the branch or directly to the Committee as referred in para 3.3, wherever applicable.. When such a request is received by lender, the account with aggregate loan limits above Rs.10 lakh should be referred to the Committee. The Committee should convene its meeting at the earliest but not later than five working days from the receipt of the application, to examine the account for a suitable CAP. The accounts with aggregate loan limit up to Rs.10 lakh may be dealt with by the branch manager / designated official for a suitable CAP. Instructions/Directions issued by the Central Government and the Reserve Bank of India with regard to the Framework for Revival and Rehabilitation of MSMEs, it would be equally incumbent on the part of the concerned MSMEs to be vigilant enough to follow the process laid down under the said Framework, and bring to the notice of the concerned Banks, by producing authenticated and verifiable documents/material to show its eligibility to get the benefit of the said Framework.” {underlined portions emphasized}

17. Reverting to the instant matter, at the cost of repetition, no issue was ever raised by the petitioners seeking relief under the relevant notification issued under Section 9 of the MSMED Act, at the earliest point of time. Such issue was not even raised while filing SA NO. 204/2023. As a matter of fact, in the earlier writ petition bearing NO. 3294/2024 whereby the action of the respondents No.1 and 2/Indian Bank with regard to valuation placed on the subject property was questioned, no such issue was ever raised by the petitioner to the effect that the revival and rehabilitation of the petitioner company may be resorted to in terms of clause 2.39 of the RBI Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises (MSMEs) dated March 17, 2016. The said writ petition was disposed of with directions that the said petition be treated as a representation on behalf of the petitioners, to be decided by the 2.[3] Identification by the Borrower Enterprise - Any MSME borrower may voluntarily initiate proceedings under this Framework, if the enterprise reasonably apprehends failure of its business or its inability or likely inability to pay debts or there is erosion in the net worth due to accumulated losses to the extent of 50% of its net worth during the previous accounting year, by making an application to the branch or directly to the Committee as referred in para 3.3, wherever applicable.. When such a request is received by lender, the account with aggregate loan limits above Rs.10 lakh should be referred to the Committee. The Committee should convene its meeting at the earliest but not later than five working days from the receipt of the application, to examine the account for a suitable CAP. The accounts with aggregate loan limit up to Rs.10 lakh may be dealt with by the branch manager / designated official for a suitable CAP. respondents no.1 and 2/Indian Bank, after affording a hearing to the petitioners and by passing a speaking order.

18. Last but not the least, the assertion made by the petitioners that SA No. 204/2023 has been dismissed as withdrawn vide order dated 25.07.2024 is also not correct. The said application was dismissed for non-prosecution and has not been revived.

19. In view of the aforesaid blemishes in the case of the petitioners, unhesitatingly, the guidelines dated 29.05.2015 cannot be invoked at this belated stage. The petitioners have availed an efficacious remedy before the DRT and have chosen not to pursue the same after dismissal dated 25.07.2024. In fact, it was pointed out by the learned counsel for respondents no.1 & 2/Indian Bank that out of four properties that were mortgaged, possession of two of the properties has already been obtained.

20. In view of the foregoing discussion, the present writ petition is dismissed for being barred by laches and delay besides deliberate omission, on the part of the petitioners, to exhaust the efficacious remedy available in law.

21. The pending application also stands disposed of accordingly.

DHARMESH SHARMA, J. SEPTEMBER 18, 2024