Chhattisgarh HC: Father Must Provide Maintenance and Marriage Expenses to Unmarried Adult Daughter  ||  Delhi HC Rules That ‘Hermès’ and the 3D Shape of its ‘Birkin’ Bag are Well-Known Trademarks in India  ||  Kerala HC: Arrest is Illegal if Accused isn’t Produced in 24 Hours and Rearrest From Prison is Barred  ||  Supreme Court: Treating Every Sour Relationship as Rape Undermines the Seriousness of the Offence  ||  Supreme Court: Section 7 IBC Application Cannot be Rejected for Curable Defects in Affidavit  ||  NCLT Kochi: Sec 7 Insolvency Cannot be Filed Against Guarantor Without First Enforcing the Guarantee  ||  Patna High Court: Mere Two-And-A-Half-Year Incarceration is Not Sufficient for Bail under UAPA  ||  Bombay HC: Insolvency Cannot be Used to Evade a Family Court’s Maintenance Order  ||  Kerala HC: Forklifts and Factory Cranes Are Motor Vehicles and Must be Registered under MV Act  ||  Guj HC: Edible Crude Palm Kernel Oil Qualifies for Duty Exemption; End-Use Condition not Applicable    

Pro Knits vs. The Board Of Directors Of Canara Bank (Neutral Citation: 2024 INSC 565) - (Supreme Court) (01 Aug 2024)

Instructions issued by the Central Government under Section 9 of the MSMED Act and by the RBI have statutory force and are binding to all the Banking companies

MANU/SC/0814/2024

Commercial

The Appellants have challenged the impugned common order passed by the High Court, whereby the High Court held 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 Appellants who were the Writ Petitioners before the High Court had basically challenged the actions of the Respondents Banks/ NBFCs taken by them against the Appellants under the provisions contained in The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (“SARFAESI Act”). The bone of contention raised by the learned Counsel appearing for the Appellants in all the Appeals is that the Respondents-Banks could not have classified the loan accounts of the appellants who were the MSMEs, as Non-Performing Assets (NPA), without following the procedure laid down in the Instructions for Framework for Revival and Rehabilitation of MSMEs issued vide the Notification dated 29th May, 2015 by the Ministry of MSME, in exercise of the powers conferred under Section 9 of the MSMED Act.

When it is mandatory or obligatory on the part of the Banks to follow the 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.

The findings recorded by the High Court in the impugned order that, the Banks are not obliged to adopt the restructuring process on its own or that the Framework contained in the Notification dated 29.05.2015, as revised from time to time could not be said to be mandatory in nature, are highly erroneous. The Instructions/Directions issued by the Central Government under Section 9 of the MSMED Act and by the RBI under Section 21 and Section 35A have statutory force and are binding to all the Banking companies.

The impugned order therefore is set aside. Since, it has been submitted by the Learned Counsels for the Respondents-banks that in all the cases, the proceedings under the SARFAESI Act have already been concluded and the possession of the respective premises of the Petitioners has already been taken over, present Court do not propose to remand the matters to the High Court for deciding the Writ Petitions afresh. Appeals allowed.

Tags : RESTRUCTURING PROCESS   INSTRUCTION   COMPLIANCE  

Share :        

Disclaimer | Copyright 2025 - All Rights Reserved