M/s Merchant Monger Agrotech Private Limited & Ors. v. Indian Bank & Ors. and connected appeal

               IN THE HIGH COURT AT CALCUTTA



              AN APPEAL FROM ORDER PASSED IN



                   IT’S CONSTITUTIONAL



                    WRIT JURISDICTION



                      ORIGINAL SIDE







BEFORE :-



THE HON’BLE JUSTICE SHAMPA SARKAR



             &



THE HON’BLE JUSTICE ARJUN RAY MUKHERJEE















                      A.P.O No. 38 of 2026



                      I.A. No. G.A. 1 of 2026











                        M/S. Merchant Monger



                       Agrotech Pvt. Ltd. & Ors.



                               vs.



                       Indian Bank & Ors.







                               With











                      A.P.O No. 39 of 2026



                      I.A. No. G.A. 1 of 2026







                       M/S. Merchant Monger



                      Hospitality Pvt. Ltd & Ors.



                                vs.



                       Indian Bank & Ors.







  For the Appellant          : Mr. Debashis Kundu, Sr.Adv.



                               Mr. Jishnu Saha, Sr.Adv.



                               Mr. Krishnaraj Thaker, Sr. Adv.



                               Mr. Debabrata Basu Ray, Adv.



                               Mr. Aditya Kanodia, Adv.



                               Mr. Rajendra Nath Barik, Adv.



                               Mr. Chayan Gupta, Adv.



                               Mrs. Shreya Trivedi, Adv.



                                       2



















                                       Mr. Amitayu Kundu, Adv.



                                       Ms. Kaushani Dey, Adv.







      For the Respondent Bank        : Mr. Shiv Mangal Singh, Adv.



                                      Mrs. Madhu Shaw, Adv.



                                      Ms. Anjali Mishra, Adv.











      Judgment reserved on           : 20.08.2026



      Judgment pronounced on         : 25.08.2026



      Judgment uploaded on           : 25.08.2026











Shampa Sarkar, J.







1.   APO 38 of 2026 and 39 of 2026 involved a similar question of law and as







such were heard analogously.







2.   APO 38 of 2026 was filed challenging an order dated July 28, 2026 passed







in WPO No. 329 of 2026. WPO No. 329 of 2026 was filed with the following







prayers :-







      “a) A writ of and/or in the nature of Mandamus do issue commanding



      the respondents to forthwith cancel, rescind and withdraw all steps



      taken by the respondent under the provisions of SARFAESI Act, 2002



      against the petitioner no. 1 and its secured assets without first



      complying with the provisions of prudential norms required for the



      purpose of corrective action for revival and rehabilitation of the stressed



      assets under MSMED Act and rules framed thereunder as also the



      circulars/guidelines issued by RBI from time to time;



      b) A writ of and/or in the nature of Mandamus do issue commanding the



      respondents to forthwith cancel, rescind and withdraw all the steps



      taken by them under Section 13 of the SARFAESI Act, 2002 and to send



      the application dated 11th of June, 2026 being Annexure "P22" made by



      the petitioners for sending the same to the Committee for a Corrective



      Action Plan;



      c) A writ of and/or in the nature of Mandamus do issue commanding the



      respondents to forthwith cancel, rescind and withdraw the notices under



      Section 13(2), non-consideration of the representation made by the



                                 3



















petitioners under Section 13(3) by the respondent bank and thereafter



taking symbolic possession of the secured assets of the petitioner



company as also proceeding to obtain the permissions from the District



Magistrates in which the secured assets are located under Section 14 of



the SARFAESI Act, 2002;



d) A writ of and/or in the nature of Mandamus do issue commanding the



respondents to forthwith cancel, rescind and withdraw the alleged



classification of account of the petitioner no. 1 as NPA on 27th February,



2026 without first adhering to the applicability of the prudential norms



for revival and rehabilitation of the stressed assets of the petitioners;



e) A writ of and/or order in the nature Mandamus do issue commanding



the respondents and each one of them to forthwith restructure all the



accounts, namely, CC account and Term Loan Account so that the



petitioners can make the payments in terms of the restructured accounts



to the respondent bank;



f) A Writ of and/or order and/or direction in the nature of Prohibition do



issue prohibiting the respondents and each one of them and/or anyone



claiming under them from taking and steps or further steps and/or



coercive measures in respect of the secured properties mentioned in the



schedule being annexure "P5" until disposal of the instant writ petition;



g) A Writ of and/or order and/or direction in the nature of Prohibition do



issue prohibiting the respondents and each one of them and/or anyone



claiming under them from taking and steps or further steps and/or



coercive measures pursuant to the application to obtain the permissions



from the District Magistrates in which the secured assets are located



under Section 14 of the SARFAESI Act, 2002 and all the steps taken



pursuant thereto and in terms thereof till the disposal of the instant writ



petition;



h) Rule Nisi in terms of prayers above;



i) An in interim order be passed restraining the respondents and each



one of them and/or anyone claiming under them from taking and steps



or further steps and/or coercive measures in respect of the secured



properties mentioned in the schedule being annexure "P5" until disposal



of the instant writ petition;



j) An interim order be passed restraining the respondents and each one



of them and/or anyone claiming under them from taking and steps or



further steps and/or coercive measures pursuant to the application to



obtain the permissions from the District Magistrates in which the



secured assets are located under Section 14 of the SARFAESI Act, 2002



and all the steps taken pursuant thereto and in terms thereof till the



disposal of the instant writ petition;



k) An interim order be passed directing the respondents to forthwith



restructure all the accounts, namely, CC account and Term Loan



                                       4



















      Account so that the petitioners can make the payments in terms of the



      restructured accounts to the respondent bank;



      l) Ad-interim orders in terms of prayers (i), (j) and (k) above;



      m) Costs of and incidental to this application including the Advocates'



      fees be borne by the respondents;



      n) Such further or other order or orders be passed and/or direction or



      directions be given as this Hon'ble Court may deem fit and proper;”











3.   APO 39 of 2026 was filed challenging an order dated July 28, 2026 passed







in WPO No. 330 of 2026. WPO No. 330 of 2026 was filed with the following







prayers :-







      “a) A writ of and/or in the nature of Mandamus do issue commanding



      the respondents to forthwith cancel, rescind and withdraw all steps



      taken by respondent bank under the provisions of SAFAESI Act, 2002



      against the petitioner no. 1 and its secured assets without first



      complying with the provisions of prudential norms required for the



      purpose of corrective action for revival and rehabilitation of the stressed



      assets under MSMED Act and rules framed thereunder as also the



      circulars/guidelines issued by RBI from time to time;



      b) A writ of and/or in the nature of Mandamus do issue commanding the



      respondents to forthwith cancel, rescind and withdraw all the steps



      taken by them under Section 13 of the SARFAESI Act, 2002 and to send



      the application dated 11th of June, 2026 being annexure "P18" made by



      the petitioners for sending the same to the Committee for a Corrective



      Action Plan;



      c) A writ of and/or in the nature of Mandamus do issue commanding the



      respondents to forthwith cancel, rescind and withdraw the notices under



      Section 13(2), non- consideration of the representation made by the



      petitioners under Section 13(3) by the respondent bank and thereafter



      issuance of notice dated 27th May, 2026 taking symbolic possession of



      the secured assets of the petitioner company as also proceeding to obtain



      the permissions from the District Magistrates in which the secured



      assets are located under Section 14 of the SARFAESI Act, 2002;



      d) A writ of and/or in the nature of Mandamus do issue commanding the



      respondents to forthwith cancel, rescind and withdraw the alleged



      classification of account of the petitioner no. 1 as NPA on 27th February,



      2026 without first adhering to the applicability of the prudential norms



      for revival and



      rehabilitation of the stressed assets of the petitioners;



                                 5



















e) A writ of and/or in the nature of Mandamus do issued commanding



the respondents and each one of them to set aside, cancel and/or



withdraw the notice issued under Sections 13(2) dated 4th March, 2026



and taking symbolic possession of the secured assets of the petitioners



as also proceeding to obtain the permissions from the District



Magistrates in which the secured assets are located under Section 14 of



the SARFAESI Act, 2002 and all the steps taken pursuant thereto and in



terms thereof;



f) A writ of and/or order in the nature of Mandamus do issue



commanding the respondents and each one of them to forthwith



restructure all the accounts, namely, Secured Overdraft so that the



petitioners can make the payments in terms of the restructured accounts



to the respondent bank;



g) A Writ of and/or order and/or direction in the nature of Prohibition do



issue prohibiting the respondents and each one of them and/or anyone



claiming under them from taking and steps or further steps and/or



coercive measures in respect of the secured properties in relation to the



loan



account until disposal of the instant writ petition;



h) A Writ of and/or order and/or direction in the nature of Prohibition do



issue prohibiting the respondents and each one of them and/or anyone



claiming under them from taking and steps or further steps and/or



coercive measures pursuant to the application to obtain the permissions



from the District Magistrates in which the secured assets are located



under Section 14 of the SARFAESI Act, 2002 and all the steps taken



pursuant thereto and in terms thereof till the disposal of the instant writ



petition;



i) Rule Nisi in terms of prayers above;



j) An interim order be passed directing the respondents to send the



application dated 11th of June, 2026 being annexure "P18" made by the



petitioners to the Committee for a Corrective Action Plan;



k) An interim order be passed directing respondents and each one of



them to forthwith restructure all the accounts, namely, Secured



Overdraft so that the petitioners can make the payments in terms of the



restructured accounts to the respondent bank;



l) An in interim order be passed restraining the respondents and each



one of them and/or anyone



claiming under them from taking and steps or further steps and/or



coercive measures in respect of the secured properties in relation to the



loan account until disposal of the instant writ petition;



m) An interim order be passed restraining the respondents and each one



of them and/or anyone claiming under them from taking and steps or



further steps and/or coercive measures pursuant to the application to



                                       6



















      obtain the permissions from the District Magistrates in which the



      secured assets are located under Section 14 of the SARFAESI Act, 2002



      and all the steps taken pursuant thereto and in terms thereof till the



      disposal of the instant writ petition;



      n) Ad-interim orders in terms of prayers (i), (k), (L) and (m) above;



      o) Costs of and incidental to this application including the Advocates'



      fees be borne by the respondents;



      p) Such further or other order or orders be passed and/or direction or



      directions be given as this Hon'ble Court may deem fit and proper;”







4.   The learned Single Judge concluded the hearing of the writ petition on the







point of interim order on July 15, 2026 and fixed the matters on July 23, 2026







under the heading ‘For Orders’. The judgments were delivered on July 28,







2026, thereby dismissing both the writ petitions on merits. His Lordship held







that the ‘Framework for Revival and Rehabilitation of MSMEs’ of the Reserve







Bank of India (RBI) would not be applicable to the appellants.







5.   We agree with the learned senior Advocate for the appellants on the issue







that, having concluded the hearing on the point of interim orders, His Lordship







could not have dismissed the writ petitions on the basis of factual issues raised







by the learned Advocate for the Bank, without calling for affidavits. The final







hearing of the writ petitions had not been concluded. The decision, thus,







violated the principles of natural justice and suffered from a procedural







irregularity.







6.   The question before us is, whether the appellants have made out a, prima







facie, case for obtaining an interim order, staying the proceeding initiated by







the Bank.



                                       7



















7.   The appellant No. 1 in both the appeals is a Company. The appellant Nos.







2 to 6 are the Directors. They own several immovable properties which have







been mortgaged to the respondent No. 1 Bank, as collateral security for the







credit facilities which were extended by the respondent No. 1 Bank to the







appellant to run, manage, control various tea gardens owned by the appellant







No. 1. The respondent No. 1 is a scheduled Bank and the respondent Nos. 2







and 3 are the officers of the respondent No. 1. The respondent No. 3 has also







been designated as the authorised officer under the provisions of the







Securitisation and Reconstruction of Financial Assets and Enforcement of







Security Interest Act, 2002 (hereinafter referred to as the SARFAESI Act).







8.   According to Mr. Jishnu Saha, learned Senior Advocate, the learned writ







court failed to appreciate the contentions of the appellants in both the writ







petitions. The appellants had sought to establish the illegality in the







declaration of the loan accounts of the appellant No. 1 in both the appeals as







‘NPA’. Further, all consequential steps taken pursuant to the notices under







Section 13(2) of the SARFAESI Act in respect of the two companies were also







illegal. The illegality arose on account of non-consideration or non-compliance







of the Master Circular of the RBI relating to the ‘Framework for Revival and







Rehabilitation of MSMEs’. According to Mr. Saha, the learned Single Judge,







proceeded on the basis of the submissions of the Bank, which were not







supported by any affidavit. The Bank had randomly handed over documents to







His Lordship and on the basis of those documents, His Lordship arrived at



                                       8



















certain factual findings which were actually contrary to the Bank’s records. The







fact that the Companies, being the appellant No. 1 in each of the appeals, were







all registered as a Micro, Small and Medium Enterprise under the appropriate







Ministry and had been allotted Udyam Registration Number on February 12,







2025, was a matter of record before the Bank. The loan was granted to the







companies under the MSME-IND SME Secure Scheme. Thus, the finding of His







Lordship that the appellants had not shown any document to establish that







they had requested the Bank for consideration of their cases for revival and







rehabilitation under the Revival Scheme of the Reserve Bank of India, was







perverse. Mr. Saha submitted that it was incumbent upon the Bank to identify







the incipient stress in the accounts by creating three sub-categories under the







SMA as per the Framework. The salient features of the Framework are quoted







below :-







      “i. Before a loan account of an MSME turns into a Non-Performing Asset



           (NPA), banks or creditors should identify incipient stress in the



           account by creating three sub-categories under the Special Mention



           Account (SMA) category as given in the Framework.



      ii. Any MSME borrower may also voluntarily initiate proceedings under



           this Framework



      iii. Committee approach to be adopted for deciding the correc5tive action



           plan



      iv. Timelines have been fixed for taking various decisions under the



           Framework.”







9.   The Bank was required to place a structured mechanism to monitor the







entire gamut of the credit related issues belonging to the MSME Sector. The







public sector Banks were advised to open at least one specialized branch in



                                       9



















each of the Districts as specialized MSME Branches for providing better service







to the said sector as a whole. Empowered Committees on MSMEs were required







to be constituted at the regional offices of the Reserve Bank of India under the







Chairmanship of the Regional Directors with the representatives of SLBC







Convenor, senior Officials from two Banks having predominant shares in







MSME financing in the state, representative of SIDBI Regional Office, the







Director of MSME or Industries of State Government, one or two senior







representatives from the MSME Associations in the State and a senior level







Officer for SFC/SIDC, as members.







10. According to Mr. Saha, the decisions of the Hon’ble Apex Court in Pro







Knits vs Board of Directors of Canara Bank and Ors. reported in (2024) 10







SCC 292 and Shri Shri Swami Samarth Construction and Finance







Solution and Anr. vs Board of Directors of NKGSB Co-op. Bank Ltd. and







Ors. reported in 2025 SCC Online SC 1566 clearly laid down that the







Framework for Revival and Rehabilitation of MSMEs should be mandatorily







followed by all scheduled Banks The distinction drawn in Shri Shri Swami







Samarth (supra) would not be applicable to the facts of the case on the ground







that in the said decisions the Bank was not aware that the borrower was a







MSME, whereas, in the case in hand the borrower was granted credit facilities







under a specific scheme for MSMEs. According to Mr. Saha, the learned Single







Judge misconstrued the ratio of Pro Knit (supra) and Shri Shri Swami







Samarth (supra) and erroneously held that there was an inordinate delay on



                                       10



















the part of the appellants in approaching the Bank by the representation dated







June 11, 2026, seeking revival, rehabilitation, rectification and restructuring of







the MSME credit facilities, in terms of the MSMED Act, 2006 and the







Framework of the Reserve Bank of India. According to Mr. Saha, His Lordship







erred in holding that, as the petitioners had never claimed the benefit in terms







of the Framework even after the demand notice was issued under Section 13(2)







of the SARFAESI Act, such prayer for restructuring of the credit facilities / loan







account could not be made at the fag end. It was further submitted that, it was







wrongly decided that, the appellants could not claim any benefit in terms of the







Framework of the RBI. Paragraphs 14-16 of the Pro Knit (supra) were placed







reliance upon by Mr. Saha, to urge that the instruction for the Framework for







Revival and Rehabilitation of Micro, Small and Medium enterprise as, notified







by the Central Government vide notification dated May 29, 2015, in exercise of







the powers conferred under Section 9 of the MSMED Act and as revised







thereafter, had a statutory force and was binding on all scheduled commercial







Banks licensed to operate in India by RBI. The RBI was empowered to frame







policies and Rules under Section 21 and 35A of the Banking Regulation Act,







1949 and give directions to the banking companies. Such directions were to be







read as supplements to the provisions of the Banking Regulation Act and were







accordingly required to be construed to have statutory force of being







mandatory in character. The entire exercise under the Framework was required







to be carried out by the banking companies before the accounts of the MSMEs



                                        11



















turned into Non-Performing Assets (NPA). The Framework was mandatorily







required to be followed prior to classification of the borrowers account as NPA.







Referring to Shri Shri Swami Samarth (supra) it was submitted that the ratio







of the said decision could be distinguished on the facts of this case. Their







Lordships held that assuming that the Bank did not know about the borrowing







enterprise to be a MSME, the duty was upon the said MSME to produce







authenticated documents and adequate material before the Bank in order to







establish its eligibility to get the benefit of the Framework. Whereas, in the case







in hand, such requirement was not necessary as the Bank had advanced the







credit facilities under a scheme solely applicable for MSMEs. As such, there







was no further requirement for the companies to produce material before the







Bank, thereby, claiming consideration under the Framework of the RBI. The







decision in Shri Shri Swami Samarth (supra) would apply only in cases







where the Bank did not have knowledge about the borrowing enterprise being







an MSME.







11. Mr. Saha took us through the documents, especially the reply issued by







the M/s Merchant Monger Agrotech Pvt. Limited dated April 28, 2026, to the







notice issued under Section 13(2) of the SARFAESI Act, wherein a request was







made to consider a proposal filed before the Bank in the middle of April, 2026,







seeking regularization and normal operation of the credit facilities. Such







request clearly indicated that the appellant No. 1 was seeking regularisation of







the account meaning, thereby, a request was made for restructuring of the



                                        12



















account on the basis of the Framework. Mr. Saha highlighted the portion in the







said reply, wherein, one of the Directors of the Company had put on record







that the credit facilities were taken under the SME Scheme. Similar reference







was also made to the answer made by the Director of Merchant Monger







Hospitality Private Limited. Mr. Saha further relied on the sanction letter dated







January 31, 2024 issued to M/s Merchant Monger Agrotech Pvt. Limited with







regard to the sanction of fresh OCC Limit of Rs. 2,00,00000/- under the







MSME-IND SME Secure Scheme, to urge that all along and throughout the







transactions and dealings between the parties, the Bank recognized the







appellants as MSMEs and accordingly granted the loans under the scheme







applicable to MSMEs..







12. Mr. Singh, learned Advocate for the Bank submitted that, although, no







directions for affidavits were called for, His Lordship had heard the matters at







length and the documents produced by the Bank clearly indicated that the







appellants   had   approached    the   court   with   unclean   hands   and   had







misrepresented the facts. Under such circumstances, the appellants could not







be protected by any order at all. Thus, the writ petitions were rightly dismissed.







13. Mr. Singh referred to a letter dated March 25, 2025, issued by the Indian







Bank to M/s. Merchant Monger Hospitality (P) Ltd. indicating that a fresh







sanction of SOD of Rs. 19.25 crores under general MSME had been granted in







favour of M/s. Merchant Monger Hospitality (P) Ltd., under certain terms and







conditions. One of such conditions being that the loan account of Merchant



                                       13



















Monger Agrotech Private Limited would be closed. The appellants accepted







such proposal and also furnished an undertaking before the Bank, to close the







loan account in respect of Merchant Monger Agrotech Private Limited. Mr.







Singh further submitted that, after such undertaking was given, the appellants







could not retract from the same. The undertaking was placed before the writ







court. Prior to the undertaking, Bank had marked debit freeze on the loan







account of Merchant Monger Agotech, which was removed only upon the







undertaking being given. Thereafter, payments towards monthly EMIs were







also made. The appellants also filed an application under Section 12-A of the







Commercial Courts Act, 2015, seek mediation of the disputes which had arisen







between the parties and the said proceeding was numbered as PLM 150 of







2026. The matter was fixed for hearing by the Mediation Tribunal on June 11,







2026, but the Bank chose not to appear. The Bank issued notice under Section







13(2) of the SARFAESI Act and possession notice under Section 14 of the







SARFAESI Act. After having made the representation for being considered







under the Framework of the RBI, the appellants filed S.A No. 281 of 2026 and







286 of 2026 before the Debts Recovery Tribunal, Kolkata (3) challenging the







entire SARFAESI Act action. Under such circumstances, Mr. Singh contended







that, the prayers in all the writ petitions for restructuring of the loan account







in terms of the Framework of the RBI could not be granted.







14. We find from the records that the credit facilities in favour of Merchant







Monger Hospitality Private Limited to the tune of more than Rs. 19 crores had



                                      14



















been sanctioned by the Bank subject to the condition that the credit facilities







already sanctioned in favour of Merchant Monger Agro Tech Private Limited







would be foreclosed and the appellant No. 1 in APO 38 of 2026 would exit from







the said account upon closing the same. The appellant did not close the said







account. The Bank marked a debit freeze on the account. After the undertaking







was filed by the Merchant Monger Agrotech Private Limited, the debit freeze







was removed. The Bank acted on the basis of the undertaking filed by way of a







notarized affidavit dated September 25, 2026 and altered its position. The







undertaking given by the appellants is quoted below :-







      “Accordingly, I/We hereby undertake that:



      a. That the Company will use the said Cash Credit Account No.



      7695285777 for the purpose of Business of the Company.



      b. That by February, 2026 the Company will close the Cash Credit



      Account No. 7695285777 and will not continue the said Account.



      C. That the Company will hear all the directive of Bank and will not raise



      any dispute and if any dispute arises bank's direction will be final and



      the Company will not contradict the same and all the disputes to be



      treated as null and void in the eye of law.



      d. If permitted as per norms of the Bank, the Bank in the mean time will



      provide another Loan Facility of equivalent amount or more to closure



      value.



      I/We, make this declaration sincerely and conscientiously knowing the



      same to be true and knowing that on the faith of the said declaration the



      Bank has given and agreed to continue to give permission for operation



      of Cash Credit Account No. 7695285777 for the stipulated period.”







15. We also find from the records that Merchant Monger Agrotech by letter







dated April 16, 2026, made a proposal for repayment of the outstanding







overdue so that the accounts could be regularised. The letter dated April 16,







2026 is quoted below :-



                              15



















“



                                                            16.04.2026







1.The AGM



Branch In Charge Indian Bank



AuC Bose Road Branch



119 Park Street



Kolkata -700016



2.Zonal Office Kolkata Central



2nd & 3rd Floor,



14 India Exchange Palace



Kolkata - 700001



Ref: C/CA/c. No. 7695285777 and Term Loan A/c No. 7829314518



both Accounts maintain by Merchan Monger Agrotech (P) Ltd. with the



AJC Bose Road Branch.



Sub: Our proposal for payment of the outstanding overdue amount in



respect of the aforesaid accounts so as to regularise the accounts by



eradicate the irregularities in the aforesaid account



Dear Sir,



The undersigned on behalf of Merchant Monger Agrotech (P) Ltd.



propose to make repayment of the entire overdue in the bank account



under reference with a view of regularise the same so as to continue



with normal and usual transactions in respect of the accounts stated



above, on the following terms and conditions:-



b)That upon payment of the overdue amount, the account will become



regularise and you shall allow us with the regular operation.



c) Bank shall let us know the present outstanding overdue amount



payable to our CC A/c and TL A/c at the earliest.



d) We shall make all our earnest endeavour to make repayment of all



the overdue amount immediately after receiving your communication



regarding overdue for both the accounts.



In the event, you are agreeable to our aforesaid proposal, confirm the



same by a letter/email at the earliest so that we can take all steps for



immediate payment of the outstanding overdue amount on account of



Merchan Monger Agrotech (P) Ltd (CC and TL). so as to regularise the



account and further if you have any query, please be feel tree to



communicate to us.



                                      16



















        Please note that once this account is regularised, we will also take



        initiative to regularise our Merchant Monger Hospitality (P) Ltd.



        Accounts at the earliest.



        Thanking you in anticipation.



        Yours Faithfully



        Merchant Monger Agrotech Pyt. Ltd”







16. Notices were issued to both the companies under Section 13(2) of the







SARFAESI Act. Thereafter, Merchant Monger Agrotech Private Limited issued







the letter dated April 16, 2026. Both the companies replied to the notices under







Section 13(2), whereby they called upon the Bank to withdraw the said notices







and furnish the detailed accounts so that the payments could be made upon







verification of those accounts. The appellants sought to regularize the accounts







in question and to proceed with normal operations of the tea gardens. His







Lordship recorded that on 1st June, 2026, the Bank published notification in







English newspapers calling upon the appellants to repay the entire outstanding







dues within 60 days from the date of publication of the notice. After the said







publication of the notice the appellants made the representation on June 11,







2026, seeking consideration of their case under the Framework of the Reserve







Bank of India.







17. It is a matter of record that the Bank took symbolic possession of the







secured assets of the appellants on May 27, 2026.







18. We also find that the entire SARFAESI proceedings have been challenged







before the DRT by both the companies. Thus, the question whether the







SARFAESI proceeding had been rightly initiated by the Bank and whether the



                                       17



















steps taken under the SARFAESI Act were legally permissible in view of the







Framework of the RBI, in our, prima facie, view can be decided by the Debts







Recovery Tribunal. With regard to the prayer for a direction upon the Bank to







consider the case of the appellants under the Framework of the RBI, we are of







the, prima facie, opinion that the appellants had missed the bus. In none of the







correspondences before us do we find that the appellants requested for







consideration of the case for revival under the Framework.







19. Prior to the notice under Section 13(2) of the Act and declaration of the







account as an NPA, several correspondences and communications took place







including furnishing of an undertaking that Merchant Monger Agrotech Private







Limited. The same discloses that, the sanction of the loan in favour of M/s.







Merchant Monger Hospitality (P) Ltd. was subject to the condition that the loan







account of Merchant Monger Agrotech Private Limited would be closed.







However, the appellants did not comply with the undertaking and did not







foreclose the loan account of Merchant Monger Agro Tech. Under such







circumstances, when the Bank had already taken all necessary steps under the







SARFAESI Act, it would not be proper to pass any interim protection in favour







of the appellants by staying such proceedings. The learned Single Judge will







hear the writ petition on affidavits and pass necessary orders with regard to the







directions of the Bank as His Lordship deems fit. We do not agree with the







learned senior Advocate for the appellants that the conduct of the appellants in







this case would not be a relevant factor for bringing them within the purview of



                                       18



















the Framework of the RBI. It is not only a question as to whether the Bank







knew that the appellant No. 1 was an MSME, but both parties were aware that







the loan was sanctioned under MSME Scheme, but the appellants continued to







negotiate with the Bank and sought to repay the amount at various stages, but







none of their requests and communications indicated that they were desirous







of coming within the Framework. In Pro Knits (supra), the Hon’ble Apex Court







held that the enterprise could not be permitted to misuse the process of law to







thwart the actions taken under the SARFAESI Act, by raising the plea of being







an MSME at a belated stage. Just as it was mandatory and obligatory on the







part of the Bank to follow the instructions of the RBI, it was equally incumbent







on the part of the MSME to be vigilant enough to follow the process under the







Framework and bring to the notice of the bank concerned by producing







authenticated and verifiable documents to show its eligibility to get the benefit







of the Framework. In this case, the appellant did not take any step at all. In







Shri Shri Swami Samarth (supra) the Hon’ble Apex Court interpreted the







decision in Pro Knits (supra) and held as follows :-







        “7. As has been noted above, the petitioning enterprise does not seem



        to have ever claimed the benefit of the terms of the framework after the



        demand notice under section 12(2) of the Securitisation and



        Reconstruction of Financial Assets and Enforcement of Security



        Interest Act was issued. It is at the stage of compliance with an order



        passed by the relevant Magistrate under section 14 of the



        Securitisation and Reconstruction of Financial Assets and



        Enforcement of Security Interest Act that this writ petition has been



        presented before this court claiming benefits of the framework to



        restrain respondent No. 2 and its officers from proceeding further



        under the Securitisation and Reconstruction of Financial Assets and



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        Enforcement of Security Interest Act and other enactments except in



        the manner contemplated under the said notification. We find the bona



        fides of the petitioning enterprise to be suspect.



        8. Pro Knits is a decision of a co-ordinate Bench of this court holding,



        inter alia, that the notification is binding on the lending



        banks/secured creditors. Finding to the contrary by the High Court of



        Bombay in the judgment and order under challenge in the appeal was,



        thus, quashed. Though while stressing that the terms of the



        framework need to be followed by the lending banks/secured creditors



        before the account of an micro, small and medium enterprise is



        classified as non-performing asset, this decision also lays stress on the



        obligation of the micro, small and medium enterprises by holding that



        “it would be equally incumbent on the part of the micro, small and



        medium enterprises concerned to be vigilant enough to follow the



        process laid down under the said framework, and bring to the notice of



        the banks concerned, by producing authenticated and verifiable



        documents/material to show its eligibility to get the benefit of the said



        framework”. It was cautioned that “if such an enterprise allows the



        entire process for enforcement of security interest under the



        Securitisation and Reconstruction of Financial Assets and



        Enforcement of Security Interest Act to be over, or it having challenged



        such action of the bank/creditor concerned in the court of



        law/Tribunal and having failed, such an enterprise could not be



        permitted to misuse the process of law for thwarting the actions taken



        under the Securitisation and Reconstruction of Financial Assets and



        Enforcement of Security Interest Act by raising the plea of being an



        micro, small and medium enterprise at a belated stage”. This decision,



        however, left unsaid something which we have explained hereinabove



        while construing the terms consistently to prevent undermining of



        rights that one central enactment confers by another.”







20. We are of the, prima facie, opinion that the Bank had granted several







opportunities to the appellants to repay the loan at the request of the







appellants. Thereafter, when the appellants failed and committed a breach of







the undertaking, the Bank took steps in accordance with law.







21. In view of the above, we are not inclined to pass any interim order of







protection in favour of the appellants, by staying the SARFAESI actions. The



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prayers in the writ petition will be decided by His Lordship. We set aside the







order of dismissal of the writ petition as also the finding that the Framework







will not be applicable. We direct that the findings of His Lordship should be







treated as interim findings justifying refusal of an interim order. The appellants







have already approached the appropriate forum and as such the remedy with







regard to the illegality in the SARFAESI proceedings also lies before the forum.







Parallel proceedings should not be allowed.







22. Accordingly, the appeal and the connected applications are disposed of.







The learned Single Judge will proceed independently. Our observations are







tentative.







23. Urgent photostat certified copies of this judgment, if applied for, be







supplied to the parties, upon fulfilment of requisite formalities.











                                      (Shampa Sarkar, J.)







     I Agree.







                                      (Arjun Ray Mukherjee, J.)







Later:-







24. Learned Senior Advocate prays for stay of operation of this order.







Considered and refused.







                                      (Shampa Sarkar, J.)







     I Agree.







                                      (Arjun Ray Mukherjee, J.)