Kerala High Court M/S Meridian Contractors And Engineers vs Canara Bank on 17 February, 2025 WP(C) NO. 45285 OF 2024 1 2025:KER:14920 PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. MONDAY, THE 17TH DAY OF FEBRUARY 2025 / 28TH MAGHA, 1946 WP(C) NO. 45285 OF 2024 PETITIONER/S: 1 M/S MERIDIAN CONTRACTORS AND ENGINEERS REPRESENTED BY ITS PROPRIETOR AJITH KUMAR.M.J, T.C 10 87, ANJANASREE, PIPPINMOODU, PEROORKADA, THIRUVANANTHAPURAM, PIN 695005 2 AJITH KUMAR.M.J AGED 48 YEARS S/O. MANOHARAN NAIR, JALAJA BHAVAN, NEDUMPARA, KARAKULAM THIRUVANANTHAPURAM, PIN 695564 BY ADVS. G.P.SHINOD GOVIND PADMANAABHAN AJIT G ANJARLEKAR ATUL MATHEWS GAYATHRI S.B. RESPONDENT/S: 1 CANARA BANK SASTHAMANGALAM BRANCH, SASTHAMANGALAM P.O, THIRUVANANTHAPURAM, REPRESENTED BY ITS AUTHORISED OFFICER, PIN 695010 2 THE AUTHORISED OFFICER CANARA BANK, SASTHAMANGALAM BRANCH, SASTHAMANGALAM P.O, THIRUVANANTHAPURAM, PIN 695010 BY ADVS. WP(C) NO. 45285 OF 2024 2 2025:KER:14920 GOPIKRISHNAN NAMBIAR M. K.JOHN MATHAI(K/413/1984) JOSON MANAVALAN(J526) KURYAN THOMAS(K/131/2003) PAULOSE C. ABRAHAM(MAH/58/2006) RAJA KANNAN(K/356/2008) OTHER PRESENT: M.GOPIKRISHNAN NAMBIAR(SC) THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 17.02.2025, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C) NO. 45285 OF 2024 3 2025:KER:14920 JUDGMENT The petitioners have approached this Court challenging the proceedings initiated against the petitioners 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) to recover amounts due under a loan availed by the petitioners from the respondent bank. 2. According to the petitioners, the 1st petitioner is a Micro, Small or Medium Enterprise (hereinafter referred to as 'the MSME') entitled to the benefits of the framework for revival and rehabilitation of the MSME's which has been framed in respect of MSME's registered as such under the Micro, Small and Medium Enterprises Development Act, 2006 (hereinafter referred to as 'the MSMED Act'). It is submitted that the Reserve Bank of India (hereinafter referred to as 'the RBI') has issued guidelines directing that the framework for the revival and rehabilitation of the MSME's issued by the Ministry of Micro Small and Medium Enterprises, shall be WP(C) NO. 45285 OF 2024 4 2025:KER:14920 implemented by all Banks and Financial institutions falling under the umbrella of the RBI. 3. The learned counsel for the petitioners would submit that the framework is a statutory framework issued in terms of the powers conferred on the Central Government, under the provisions of Section 9 of the MSMED Act. It is submitted that, when a unit is registered as an MSME, the framework which is on record as Exhibit P3 mandates that the loan account shall be referred to a committee [known as the Committee for Stressed Micro Small and Medium Enterprises] for implementation of a corrective action plan, which may include rectification and restructuring; and only if either rectification or restructuring is not possible, can the bank proceed for recovery. It is submitted that the framework contains detailed guidelines for restructuring/rectification and any action for recovery without considering the scope of rectification or restructuring, would be contrary to the statutory framework and the guidelines issued by the RBI. It is submitted that the judgment of the Supreme Court in Pro Knits v. Canara Bank, (2024) 10 SCC 292 deals with a WP(C) NO. 45285 OF 2024 5 2025:KER:14920 situation where no claim was made by the unit in question that it was an MSME. It is submitted that where the loan itself was granted as an MSME loan, the question of identification or a claim being raised by the borrower that the matter is to be referred to the committee for corrective action plan as noticed above, does not arise. It is submitted that it is clear from the judgment of Pro Knits (supra) especially paragraph No. 16 thereon, that where there are verifiable materials already before the bank which shows that the borrower is to be class