1. The first petitioner is a registered Private Limited Company, under the MSMED Act, 2006, and the second petitioner is the Chairman and Managing Director of the first petitioner. The Respondent nos.2 and 3 Bank offered certain loan facilities to the petitioners. The 4th respondent is the Authorized Officer of the 2nd respondent Bank.

2. According to the petitioners, the Bank initiated proceedings under Sec.19 of the Recovery of Debts and Bankruptcy Act, 1993 (the RDDB Act,1993), after declaring the account of the petitioners as NPA and the issuance of demand notice dated 09.06.2021. After issuance of sec.13(2) notice under the SARFAESI Act, 2002 the respondent Bank issued a notice dated 01.09.2022, under sec.13(4), taking symbolic possession of the properties of the borrowers and guarantors. The fourth respondent thereafter issued a notice dated 06.09.2022 to the petitioners, for sale by public-auction.

3. Subsequently, the Bank obtained an order for taking possession of the properties under section 14 of the SARFAESI Act,2002, from the Chief Judicial Magistrate, Alappuzha, in CMP No. 3996/2022 in M.C. No.745/2022. The respondent Bank also instituted O.A. No.242/2021 before DRT-II, Ernakulam, against the petitioners. Following the proceedings under the RDDB Act, 1993, the bank commenced SARFAESI proceedings. This constrained the petitioners to institute S.A. No.77/2023 before DRT-II, Ernakulam, challenging the SARFAESI proceedings initiated by the Bank, which is still pending. The application for stay along with the SA has been dismissed by the Tribunal.

4. In the meanwhile, the National Company Law Tribunal, Kochi Bench (NCLT) has passed orders in the petitions filed by the respondent bank under section 95, IBC, against the Directors of the petitioner No.1, excluding the 2nd petitioner. The first petitioner then approached the Honourable Apex court under Article 32 of the Constitution of India, since the respondent Bank parallelly invoked SARFAESI, while the O.A. instituted by them is pending before the DRT. The Honourable Apex court relegated the petitioner to approach this court, and hence the present petition.

5. Heard the learned counsel for the petitioners as well as the learned counsel for the respondents.

6. The contentions raised by the petitioners is that 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 Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 (the SMED Act, 2006), by the Central Government as well as in violation of the circular dated 17.03.2016 issued by the Reserve Bank of India (RBI), wherein the accounts of the petitioners were classified as NPA, and therefore the proceedings initiated thereafter by the Bank are nullity and liable to be quashed. They further disputed the legality of the proceedings initiated under the SARFAESI Act simultaneously with that of the suit filed under the RDB Act,1993, without withdrawing the same.