1. The 1st Petitioner, established in 2017, is a registered Medium MSME enterprise engaged in the trading of agricultural produce, including exports. The 2nd and 3rd petitioners are the partners of the 1st Petitioner Firm. The 1st Respondent is the Board of Directors, represented by its chairman, and the 3rd respondent is the Authorized Officer of the 2nd respondent bank. Petitioners availed credit facilities to the tune of Rs. 30 crores from Respondent Nos. 1 to 3 and the said loan facilities were fully secured by mortgaging various collateral securities.

2. It is the case of the Petitioners that their business encountered significant financial stress due to external factors, which led to defaults on their repayment obligations. However, despite the Petitioners’ request seeking benefits under the MSMED Act,2006, the Bank denied their requests for rehabilitation and restructuring and bypassed these protective measures by initiating coercive recovery proceedings against the firm.

3. Subsequently, instead of referring the 1st petitioner firm to the Committee of stressed MSME’s to enable them to avail the opportunity of rehabilitation as per the scheme under the MSMED Act, the Respondents issued Ext P14 demand notice dated 24.04.2025 under Section 13(2) of the SARFAESI Act, 2002, seeking a repayment of Rs. 30,77,13,032.35/-. The 2nd petitioner sent an email on 28.07.2025 to the Bank attaching two documents; one of the documents is issued by the MSME - DEVELOPMENT AND FACILITATION OFFICE dated 23.07.2025, which is in respect of a company by the name Kanjiravelil Traders Pvt. Ltd and others, which have nothing to do with the petitioner enterprise herein. The second document annexed is a letter issued by the SPICES BOARD dated 17.07.2025, which is also concerned with Kanjiravelil Traders Pvt. Ltd and others, and not in respect of the petitioner. Therefore, it is evident that the petitioner enterprise has not replied to the Section 13(2) notice issued by the Bank.

4. The Bank then issued a possession notice dated 16-07- 2025, u/s. 13(4) of the SARFAESI Act, 2002. Thereafter, the respondent bank applied u/s. 14 of the SARFAESI Act, 2002, to take physical possession of the mortgaged properties, and the Advocate Commissioner appointed by Order dated 19-09-2025 of the Chief Judicial Magistrate, Thrissur, has issued a notice dated 15-10-2025 informing of physical dispossession on 06-10-2025. Aggrieved by the above scenario, the present petition stands filed.

5. Heard the learned counsels appearing for the petitioners as well as the respondents.

6. According to the counsels for the petitioners, the respondent Bank had acted in violation of the notification dated 29.05.2015, issued in exercise of the powers conferred under Sec.9 of the MSMED Act, 2006, by the Central Government and had initiated recovery proceedings against the petitioners without even referring them before the Committee constituted under the framework for rehabilitation for availing benefits as contemplated in the said notification, which is a nullity in the eyes of law. Hence, contended that the entire proceedings done pursuant thereto are liable to be quashed.

7. Further, they maintained that the judgments of the Hon’ble Apex Court in Pro Knits and Shri Shri Swami Samarth, having been rendered per incuriam, are not at all binding on other courts and tribunals. The counsel also challenged the institution of simultaneous proceedings initiated under the SARFAESI Act with that of the suit filed under the RDB Act.

8. As far as obtaining the protection conferred under the revival framework of the MSMED Act is concerned, the petitioners herein failed to adhere to the guidelines as held by the hon'ble Supreme Court in Pro Knits v. Canara Bank reported in (2024) 10 SCC 292]. Relevant paragraphs of the above dictum read as follows: -

                  "16. We may hasten to add that under the "Framework for Revival and Rehabilitation of MSMEs", the banks or creditors are required to identify the incipient stress in the account of the Micro, Small and Medium Enterprises, before their accounts turn into non-performing assets, by creating three sub-categories under the "Special Mention Account" Category. However, while creating such sub-categories, the Banks must have some authenticated and verifiable material with them as produced by the concerned MSME to show that loan account is of a Micro, Small and Medium Enterprise, classified and registered as such under the MSMED Act. The said Framework also enables the Micro, Small or Medium Enterprise to voluntarily initiate the proceedings under the said Framework, by filing an application along with the affidavit of an authorized person. Therefore, the stage of identification of incipient stress in the loan account of MSMEs and categorization under the Special Mention Account category, before the loan account of MSME turns into NPA is a very crucial stage, and therefore it would be incumbent on the part of the concerned MSME also to produce authenticated and verifiable documents/material for substantiating its claim of being MSME, before its account is classified as NPA. If that is not done, and once the account is classified as NPA, the banks i.e., secured creditors would be entitled to take the recourse to Chapter III of the SARFAESI Act for enforcement of security interest.

                  17. It is also pertinent to note that sufficient safeguards have been provided under the said Chapter for safeguarding the interest of the Defaulters-Borrowers for giving them opportunities to discharge their debt. However, if at the stage of classification of the loan account of the borrower as NPA, the borrower does not bring to the notice of the concerned bank/creditor that it is a Micro, Small or Medium Enterprise under the MSMED Act and if such an Enterprise allows the entire process for enforcement of security interest under the SARFAES! Act to be over, or it having challenged such action of the concerned bank/creditor 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 SARFAESI Act by raising the plea of being an MSME at a belated stage. Suffice it to say, 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."

9. A Division Bench of this Court in P.K. Krishnakumar v. IndusInd Bank, [2024 (6) KLT 606] clarified that the entitlement to MSME benefits is not absolute but contingent upon timely disclosure. This Court emphasized that an obligation is cast upon the MSME to formally notify the bank of its status prior to the account being classified as a Non-Performing Asset. Consequently, if an entity fails to assert its MSME status before such classification is effected, it is precluded from seeking the statutory benefits and protections attached thereto at a later stage. Relevant extract from the above dictum is as follows: -

                  "19. XX xxx xxxx xxxx xxxx xxxxx xxxxx xxxxx xxxxxx xxxxxxx In cases where a borrower who qualifies as MSME does not initially raise its status to challenge a bank's recovery proceedings under the SARFAESI Act but instead participates fully in the process without objection, cannot later use their MSME status to argue that the proceedings were without jurisdiction. The power of the High Court under Article 226 of the Constitution of India is discretionary based on the principles of fairness and justice, which include examining the conduct of the parties involved. When the Appellants, by their actions, accepted the Bank's authority without objection, the High Court will refuse to exercise its writ jurisdiction to assist such Appellants, even if there are questions about the jurisdiction of the Bank. This is because the Appellants' own conduct disqualifies them from claiming such relief. When the High Court declines to interfere in such circumstances, it does not mean that the Appellants' waiver vested the Bank with jurisdiction, assuming it is inherently lacking; it means that the borrower is not entitled to invoke writ jurisdiction irrespective of whether the Bank's actions are without jurisdiction or not. These two concepts are distinct, and the distinction is emphasized by the Hon'ble Supreme Court in the case of M/s. Pro Knit."

10.    In a recent judgment of the Hon'ble Supreme Court in Shri Shri Swami Samarth Construction & Finance Solution and Ors. v. The Board of Directors of NKGSB Co-op. Bank Ltd. and Ors. (2025 SCC Online SC 1566), the dictum was as follows: -

                  "6. XX xxxx xxxx xxxx xxxx xxxx xxxxx xxxx xxxxx      We would read and interpret the seemingly confusing terms of the Framework harmoniously to ensure that a right under the MSME Act is not destroyed by the SARFAESI Act or vice versa. In our reading, the terms of the Framework do not prohibit the lending bank / secured creditor (assuming that it has no conscious knowledge that the defaulting borrower is an MSME) to classify the account of the defaulting MSME as NPA and to even issue the demand notice under S.13(2) of the SARFAESI Act without such identification of incipient stress in the account of the defaulting borrower (MSME); however, upon receipt of the demand notice, if such borrower in its response under S.13(3A) of the SARFAESI Act asserts that it an MSME and claims the benefit of the Framework citing reasons supported by an affidavit, the lending bank/secured creditor would then be mandatorily bound to look into such claim keeping further action under the SARFAESI Act in abeyance; and, should the claim be found to be worthy of acceptance within the framework of the Framework, to act in terms thereof for securing revival and rehabilitation of the defaulting borrower.

                  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 5.13(2) of the SARFAESI Act was issued. It is at the stage of compliance with an order passed by the relevant Magistrate under S. 14 of the SARFAESI Act that this writ petition has been presented before this Court claiming benefits of the Framework to restrain the respondent no.2 and its officers from proceeding further under the SARFAESI 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 coordinate 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 MSME is classified as NPA, this decision also lays stress on the obligation of the MSMEs by holding that "it would be equally incumbent on the part of the MSMEs 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 SARFAESI 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 SARFAESI Act by raising the plea of being an MSME at a belated stage". This decision, however, left unsaid something which we have explained hereinabove while construing the terms consistently to prevent undermining the rights that one central enactment confers on by another.”

11.    The position regarding the MSME framework was further clarified in M.D. Esthappan Infrastructure Pvt Ltd. & Ors. v. Reserve Bank of India & Ors. [2025 KHC Online 2176], wherein this Court rejected the contention that MSME classification itself acts as an automatic bar to NPA classification or recovery proceedings. This Court observed that the failure to trigger the revival mechanism was attributable solely to the petitioners' inaction. This principle was subsequently affirmed by the Division Bench, which held that a borrower who fails to disclose their MSME status prior to an account being classified as an NPA is precluded from subsequently challenging SARFAESI Act proceedings on that basis. Citing the law laid down in Pro Knits (supra), this Court further emphasized that borrowers cannot remain passive throughout the recovery process only to assert lapsed remedies at a belated stage. Consequently, a claim for MSME protection is legally untenable if the borrower fails to notify the bank or invoke the corrective action mechanism within the prescribed timelines. The learned counsel for the respondents also points out that Ext.P13 sanction letter, which the petitioner relied on, shows the rate of interest applicable for non-MSME accounts, which also reveals that the petitioner enterprise is not an MSME.

12. In view of the law laid down by the Hon’ble Apex Court in Pro Knits (supra) and that laid down by the Division Bench of this Court in P.K. Krishnakumar(supra) and by the Single Bench of this Court in M.D. Esthappan (supra), if, at the stage prior to the classification of the loan accounts as NPA, the borrowers do not bring to the notice of the Bank that it is an MSME and allow the proceedings under the SARFAESI Act to go through, then they will be precluded from raising it at a belated stage. A combined reading of these judgments along with that of Shri Shri Swami Samarth (supra), made the position more clarified that MSME Framework provisions must be read harmoniously, wherein both Banks and MSMEs have complementary obligations regarding obtaining the benefits associated with the said Framework.

13. While the banks and creditors are under a mandate to identify incipient stress in MSME accounts prior to NPA classification, a reciprocal obligation is cast upon the concerned MSMEs to proactively initiate proceedings for rehabilitation. The enterprise is duty-bound to provide all necessary authenticated documents and affidavits to substantiate its MSME status before the account is classified as a Non-Performing Asset. If an enterprise fails to disclose its status under the MSMED Act and permits the enforcement of a security interest under the Act to proceed, it cannot subsequently invoke its MSME status at a belated stage, and to allow such a plea would amount to the misuse of the legal process intended solely to frustrate statutory recovery actions.

14. Regarding the reliefs sought touching the question of legality of simultaneous proceedings instituted by the respondent bank, the learned counsel for the petitioner contends that as per the first proviso to section 19, if a bank or a financial institution intends to invoke proceedings under SARFAESI, it shall withdraw the OA so instituted which is pending, and thus, parallel proceedings instituted is liable to be quashed.

15. In M/s Transcore v. Union of India, (AIR 2007 SC 712), the hon'ble Supreme Court had upheld the legality of concurrent proceedings initiated under both the SARFAESI and RDB Acts, emphasizing that the principle of doctrine of election of remedies does not apply to the said context as remedies under both the statutes are complementary rather than exclusive and hence, both the forums can be approached simultaneously.

16. A learned Single Judge of this Court in M.D. Esthappan (supra) had also reiterated the permissibility of simultaneous proceedings under both SARFAESI as well as the RDB Acts. The relevant portion of the above judgment is extracted herein for reference:

                  "17. The principles laid down in the Transcore judgment dealt with the interplay between the Recovery of Debts and Bankruptcy Act (RDB Act) and the SARFAESI Act The Hon'ble Supreme Court held that the first and third provisos to Section 19(1) of the DRT Act are enabling provisions introduced to align the DRT Act, NPA Act, and Order XXIII CPC. Withdrawal of the O.A. is not a precondition for invoking the NPA Act, and the bank/FI may act under the NPA Act with or without DRT's permission, depending on the circumstances. The doctrine of election does not apply to the DRT Act and the NPA Act, as they are not inconsistent or repugnant but together constitute a single, complementary remedy. The NPA Act provides a non- adjudicatory mechanism for enforcing the security interest created by the borrower in favour of the bank/FI, based not only on default in repayment but also on the borrower's failure to maintain margin and asset value, thereby enabling secured creditors to act without court intervention. Issuance of notice under Section 13(2) of the SARFAESI Act constitutes initiation of "action" within the meaning of the first proviso to Section 19(1) of the DRT Act.

                  18. The Hon'ble Apex Court also held that Section 13(10) of the SARFAESI Act shows that SARFAESI and DRT remedies are complementary and can be pursued simultaneously. Section 13(13) of SARFAESI demonstrates that a Section 13(2) notice has substantive legal consequences and is not merely a show cause notice. Withdrawal under the first proviso to Section 19(1) may be necessary in cases where assets are in possession of a court receiver or under injunction, but not otherwise. The objective behind the proviso is to provide procedural flexibility and not to restrict enforcement under SARFAESI, The High Court's view that the proviso is mandatory was overruled, and it was held that the bank may proceed under SARFAESI without DRT's prior leave.

17. Hence, the contentions mooted by the counsel for the petitioners questioning the legality of parallel proceedings under SARFAESI as well as the RDB Acts cannot be sustained, as the exhaustion of both the remedies is complementary rather than exclusive, and therefore can be resorted to simultaneously, in view of the law laid down in M/s Transcore (supra) and in M.D. Esthappan Infrastructure (supra).

18. The petitioners' further contention that the judgment in Transcore and the subsequent decisions relying on Transcore were decided per incuriam or sub silentio, and thus lack binding authority, is legally untenable. As emphasized by the Hon'ble Supreme Court in Bajaj Allianz General Insurance Co. Ltd. v. Rambha Devi [(2025) 3 SCC 95], the doctrine of per incuriam is strictly limited to instances where a decision demonstrably overlooks a mandatory statutory provision or a binding precedent that would have fundamentally altered the outcome. This exception applies exclusively to the ratio decidendi and cannot be invoked to disregard established law. Furthermore, judicial discipline dictates that if the correctness of a precedent is questioned, the appropriate recourse is a reference to a larger bench, and the subordinate courts cannot unilaterally depart from settled law unless it is based on sound legal principles.

19. The provision under Article 141 of the Constitution of India also establishes the principle that the law laid down by the Supreme Court constitutes the law of the land and must be followed by all subordinate courts and tribunals across the entire territory of India. Relevant provision is as follows: -

                  “Article 141. Law declared by Supreme Court to be binding on all courts.

                  The law declared by the Supreme Court shall be binding on all courts within the territory of India.”

20. This article is referred to as the “Doctrine of Precedent,” according to which, the law declared by the Supreme Court is binding on all courts within the country, including the High Courts and subordinate judiciary. This constitutional mandate ensures that the law of the land remains uniform and certain, requiring subordinate courts to strictly follow and adhere to the ratio decidendi established by the Apex Court. While the Supreme Court is not bound by its own previous rulings and may overrule them to correct errors or adapt to societal changes, all other judicial bodies are duty-bound to apply its precedents. Even the obiter dicta, or incidental observations made by the Supreme Court, carry significant persuasive authority. Therefore, in view of the above given reasoning, as per the dictum laid down by the Hon’ble Apex Court in the decision of Transcore (supra) and other relevant decisions subsequent thereto, the remedies under SARFAESI as well as the RDB Acts can be simultaneously invoked, as both the remedies are complementary to each other.

21. Having regard to the fact that the petitioners failed to assert their MSME status or provide authenticated substantiating documents prior to the commencement of recovery, they stand estopped from seeking protection under the relevant notification at this belated stage. Following the settled law in Pro Knits(supra), P.K. Krishnakumar(supra), M.D. Esthappan (supra) and Shri Shri Swami Samarth(supra), such a belated claim cannot be entertained after the petitioners remained passive throughout the SARFAESI proceedings. Furthermore, pursuant to the ratio in Transcore(supra), the simultaneous invocation of remedies under both SARFAESI as well as the RDB Acts is legally permissible and does not constitute an irregularity. Under Article 141 of the Constitution of India, the dictum laid down in Pro Knits, Shri Shri Swami Samarth, and in Transcore remains the binding law of the land, which this Court and all other subordinate courts and tribunals are mandated to follow. Consequently, given the above reasoning and taking into consideration the facts and circumstances of the case with the above decisions, I find no merit in the prayers sought by the petitioners, and accordingly, this Writ Petition stands dismissed.