Kerala High Court
M/S. Sark Spice Products Pvt. Ltd vs Reserve Bank Of India on 18 December, 2025
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IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR.JUSTICE BASANT BALAJI
THURSDAY, THE 18TH DAY OF DECEMBER 2025 / 27TH AGRAHAYANA, 1947
WP(C) NO. 32181 OF 2025
PETITIONER/S:
1 M/S. SARK SPICE PRODUCTS PVT. LTD.,
REPRESENTED BY ITS MANAGING DIRECTOR, HAVING ITS REGISTERED
ADDRESS AT TAK INDUSTRIAL COMPLEX, EARA NORTH,NEELAMPEROOR,
ALAPPUZHA, KERALA, PIN - 686534
2 ABRAHAM T. KURUVILA, @ T.A. KURUVILA,
AGED 73 YEARS
S/O. LATE T.C. ABRAHAM, CHAIRMAN & MANAGING DIRECTOR, SARK
SPICE PRODUCTS PVT. LTD., THURUTHITHARA HOUSE, EARA NORTH
P.O., NEELAMPEROOR, ALAPPUZHA, KERALA, PIN - 686534
BY SMT. MARIA NEDUMPARA
SHRI.SHAMEEM FAYIZ V.P.
SHRI.ROY PALLIKOODAM
RESPONDENT/S:
1 RESERVE BANK OF INDIA,
REPRESENTED BY ITS GOVERNOR SHAHID BHAGAT SINGH ROAD, FORT,
MUMBAI, PIN - 400001
2 BOARD OF DIRECTORS OF SOUTH INDIAN BANK ,
REPRESENTED BY ITS CEO & MANAGING DIRECTOR,REGISTERED
OFFICE, SIB HOUSE, T.B. ROAD,MISSION QUARTERS, THRISSUR,
KERALA, PIN - 680001
3 SOUTH INDIAN BANK,
REPRESENTED BY ITS CEO AND MANAGING DIRECTOR, SIB HOUSE,
T.B. ROAD MISSION QUARTERS, THRISSUR, KERALA, PIN - 680001
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4 AUTHORISED OFFICER AND CHIEF MANAGER,
SOUTH INDIAN BANK, REGIONAL OFFICE, KOTTAYAM, 1ST FLOOR,
REGENCY SQUARE, K.K ROAD, COLLECTORATE P.O.,
KOTTAYAM,KERALA, PIN - 686002
5 MINISTRY OF MICRO SMALL AND MEDIUM ENTERPRISES,
REPRESENTED BY ITS SECRETARY,UDYOG BHAWAN, RAFI MARG, NEW
DELHI, PIN - 110001
6 UNION OF INDIA,
REPRESENTED BY ITS SECRETARY, DEPARTMENT OF FINANCIAL
SERVICES, MINISTRY OF FINANCE, 3RD FLOOR, JEEVAN DEEP
BUILDING, SANSAD MARG, NEW DELHI, PIN - 110001
7 STATE OF KERALA,
REPRESENTED BY ITS CHIEF SECRETARY, GOVERNMENT
SECRETARIAT,THIRUVANANTHAPURAM, PIN - 695001
8 ANIL DHIRAJLAL AMBANI,
SEA WIND, CUFF PARADE, MUMBAI, PIN - 400005
9 THE CHAIRMAN,
STATE BANK OF INDIA,CORPORATE CENTER, 16TH FLOOR, MADAM CAMA
ROAD, NARIMAN POINT, MUMBAI, PIN - 400021
BY SRI.MILLU DANDAPANI
SHRI.SUNIL SHANKER
SHRI.BENRAJ K.R., CGC
SMT.VIDYA GANGADHARAN
SHRI.THOMAS GLAISON
OTHER PRESENT:
SRI. MATHEWS J. NEDUMPARA
THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON
12.11.2025, THE COURT ON 18.12.2025 DELIVERED THE FOLLOWING:
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WPC 32181/2025
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JUDGMENT
(Dated this the 18th day of December 2025) 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 4 WPC 32181/2025 2025:KER:97748 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 5 WPC 32181/2025 2025:KER:97748 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 hon'ble 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 Hon'ble 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 6 WPC 32181/2025 2025:KER:97748 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.
7. The learned counsel for the respondents disputed the maintainability of the writ petition on the grounds of availability of alternative remedy and maintained that the very institution of this writ petition is therefore barred by the principles of res judicata and constructive res judicata, in view of the previous litigations instituted by the petitioners on the same cause of action.
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8. It is seen that the petitioners herein filed W.P(C)No.30885/2024 before this court contending inter alia claiming the benefits of MSME notification, that the NPA classification as well as the securitization measures initiated are illegal etc., which was dismissed by judgment dated 22.11.2024. The relevant portion of the judgment reads as under: -
"26. From the facts stated above, it is evident that the petitioners have filed one after another petition before this court and did not comply with the interim order/final order and their own undertakings. The petitioners never raised the issue of the petitioners being MSME and allowed the process under the SARFAESI Act to take place without taking such a plea in the first instance. The petitioners had not disclosed the filing of the aforesaid writ petitions, and they have suppressed the material facts from this court. This Court exercises equity jurisdiction under Article 226 of the Constitution of India and to invoke the equity jurisdiction, the petitioners are required to approach this court with clean hands. When the petitioners have 8 WPC 32181/2025 2025:KER:97748 suppressed the material facts from this Court and have filed one after another petition without any intent to comply with the orders and undertakings, I am of the opinion that the present writ petition is nothing but a gross abuse of the process of the court. Therefore, the present writ petition is dismissed with a cost of Rs.25,000/- to be deposited in the Chief Minister's Distress Relief Fund (CMDRF) within a period of seven days from today, failing which, the District Collector Ernakulam, will make recovery from the petitioners as arrears of land revenue under the Kerala Revenue Recovery Act."
9. After the judgment in W.P(C)No.30885/2024, they preferred a petition to the Hon'ble Supreme Court of India as SLP No.29301/2024, challenging the same. While dismissing the petition on 28.04.2025, the hon'ble apex Court has recorded that the petitioners were heard in detail and that the court was not inclined to interfere with the impugned judgment. Thereafter, the petitioners filed W.P(C) No.42050/2024 and connected cases 9 WPC 32181/2025 2025:KER:97748 before this court contending that being a registered MSME, they are entitled to protection under the revival and rehabilitation framework, but the Bank has proceeded illegally under the SARFAESI Act without referring them before the Committee for stressed MSMEs as mandated under the said framework, which was also dismissed on 28.07.2025, by a common judgment.
10. A comparison of reliefs sought in W.P.(C.) Nos.30885/2024, 42050/2024 and in the present Writ Petition are as follows:-
Sl. Reliefs Description (20 WPC WPC WPC
No. Relief) (a to t) 32181/23 - 42050/24 - 30885/23 -
Relief No. relief No. Relief No.
1. To issue a writ in the nature (b) (h) (g)
of certiorari or any other
appropriate writ or order or
direction calling for the
entire records and
proceedings of the action
which the Respondent Bank
has initiated against the
Petitioners under Sections
13(2), 13(4) and 14 of the
SARFAESI Act and Section
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19 of the RDB Act, and to
quash and set aside the same
being illegal and void;
2. To issue a writ in the nature (d) (c), (m) (b), (k)
of mandamus or any other
appropriate writ/order or
direction directing Central
Government and the RBI to
enforce the notification
dated 29.5.2015 in its true
letter and spirit and further
to direct the Central
Government and the RBI to
ensure that recovery action
initiated against the
Petitioners in violation of
the mandate of the
notification is recalled, the
clock is put back, the
injustice which the
Petitioners is made to suffer
is redressed and that the
Petitioners is compensated
in full measure:
3. To declare that the various (e) (l) ...
petitions which the
Petitioner has instituted
does not constitute a Cause
of Action Estoppel, nay,
estoppel per rem judicatam
/res judicata, not even issue
estoppel, inasmuch as there
is no Estoppel against
statute, does not constitute
cause of action estoppel,
nay estoppel per rem
judicatam/res judicata, or
even Issue Estoppel
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inasmuch as the rights and
remedies which the
Petitioner seeks to enforce
in the instant is based on the
notification dated
29.5.2015, and for the added
reason that in the previous
proceedings before the High
Court of Kerala and other
forums there was never an
adjudication on merits.
Distinct Reliefs specific to W.P.(C) No.32181 of 2025:
Relief No. Reliefs description
(a). Declare that the proceedings initiated against the Petitioner under Sections 13(2), 13(4) and 14 of the SARFAESI Act is illegal and void, being contrary to the proviso to Section 19(1) of the Recovery of Debts and Bankruptcy Act and Section 13(10) of the SARFAESI Act inasmuch as the said proviso prohibits initiation of proceedings under the SARFAESI Act without withdrawing the suit instituted under Section 19;
(c) To declare that the banks and financial institutions, so too, the Borrower, is entitled to all remedies, common law, equitable and declaratory, nay. constitutive and executory/adjectival, both, but such remedies cannot be enforced in two different forums at once, and that in terms of Section 13(10) of the SARFAESI Act, a proceedings under Section 19 of the RDB Act can be invoked only "where dues of the secured creditor are not fully satisfied with the sale proceeds of the secured assets and not otherwise";12 WPC 32181/2025
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11. This court has strictly deprecated the repeated filing of writ petitions on the same cause of action by the petitioner in W.P. (C) No.42050/2024 and other connected matters, relying on Celir LLP v. Sumati Prasad Bafna and Ors. [(2024 SCC Online SC 3727)] and on various other pronouncements. The relevant portion of the judgment in W.P. (C) No.42050/2024 reads thus: -
"32. Xxx xxxx xxx The petitioners, thus knowing that very same reliefs claimed earlier are again being repeated and that this Court by judgment referred to above had dismissed the said writ petitions, has now included a prayer for a declaration that the prior writ petition's proceedings do not constitute a cause of action estoppel, res judicata or issue estoppel as there was no adjudication on merits and there is no estoppel against a statute.
33. As regards the above prayer, the same has to fail for 13 WPC 32181/2025 2025:KER:97748 multiple reasons. It is trite that even an erroneous decision on a question of law operates as res judicata between the parties to it. A two-judge Bench of the Supreme Court in Kalinga Mining Corš¯•›n. v. Union of India, (2013 5 SCC 252), held that there is ample authority for the proposition that even an erroneous decision on a question of law operates as res judicata between the parties to it. The correctness or otherwise of a judicial decision has no bearing upon the question whether or not it operates as a res judicata. It was held that a wrong decision by a court having jurisdiction is as much binding between the parties as a right one and may be superseded only by appeals to higher tribunals or other procedure like review which the law provides for. What is res judicata between the parties is not the reasoning or any principle of law, but the actual decision declaring the rights of the parties. When a matter, whether concerning fact or law, has been directly and substantially at issue between the parties as bearing on their rights, the decision thereon, provided other conditions are satisfied, will operate as res judicata, concluding those rights. Section 11 of the Code of Civil Procedure says nothing particular about points of law or pure points of law or the same or different causes of action.
Again, the principles of res judicata were elaborately discussed in Canara Bank v. N.G. Subbaraya Setty (2018 16 SCC 228), and the conclusions are as follows:
"34. Given the conspectus of authorities that have been referred to by us hereinabove, the law on the subject may be stated as follows:
34.1 The general rule is that all issues that arise directly and substantially in a former suit or proceeding between the same parties are res judicata in a subsequent suit or proceeding between the same parties. These would include issues of fact, mixed questions of fact and law, and issues of law.14 WPC 32181/2025
2025:KER:97748 34.2 To this general proposition of law, there are certain exceptions when it comes to issues of law:
34.2.1 Where an issue of law decided between the same parties in a former suit or proceeding relates to the jurisdiction of the Court, an erroneous decision in the former suit or proceeding is not res judicata in a subsequent suit or proceeding between the same parties, even where the issue raised in the second suit or proceeding is directly and substantially the same as that raised in the former suit or proceeding. This follows from a reading of Section 11 of the Code of Civil Procedure itself, for the Court which decides the suit has to be a Court competent to try such suit. When read with Explanation (I) to Section 11, it is obvious that both the former as well as the subsequent suit need to be decided in Courts competent to try such suits, for the "former suit" can be a suit instituted after the first suit, but which has been decided prior to the suit which was instituted earlier. An erroneous decision as to the jurisdiction of a Court cannot clothe that Court with jurisdiction where it has none. Obviously, a Civil Court cannot send a person to jail for an offence committed under the Indian Penal Code. If it does so, such a judgment would not bind a Magistrate and/or Sessions Court in a subsequent proceeding between the same parties, where the Magistrate sentences the same person for the same offence under the Penal Code. Equally, a Civil Court cannot decide a suit between a landlord and a tenant arising out of the rights claimed under a Rent Act, where the Rent Act clothes a special Court with jurisdiction to decide such suits. As an example, under Section 28 of the Bombay Rent Act, 1947, the Small Causes Court has 15 WPC 32181/2025 2025:KER:97748 exclusive jurisdiction to hear and decide proceedings between a landlord and a tenant in respect of rights which arise out of the Bombay Rent Act, and no other Court has jurisdiction to embark upon the same. In this case, even though the Civil Court, in the absence of the statutory bar created by the Rent Act, would have jurisdiction to decide such suits, it is the statutory bar created by the Rent Act that must be given effect to as a matter of public policy. (See, Natraj Studios (P) Ltd. v. Navrang Studios & Anr., (1981) 2 SCR 466 at 482). An erroneous decision clothing the Civil Court with jurisdiction to embark upon a suit filed by a landlord against a tenant, in respect of rights claimed under the Bombay Rent Act, would, therefore, not operate as res judicata in a subsequent suit filed before the Small Causes Court between the same parties in respect of the same matter directly and substantially in issue in the former suit. 34.2.2 An issue of law which arises between the same parties in a subsequent suit or proceeding is not res judicata if, by an erroneous decision given on a statutory prohibition in the former suit or proceeding, the statutory prohibition is not given effect to. This is despite the fact that the matter in issue between the parties may be the same as that directly and substantially in issue in the previous suit or proceeding. This is for the reason that in such cases, the rights of the parties are not the only matter for consideration (as is the case of an erroneous interpretation of a statute inter parties), as the public policy contained in the statutory prohibition cannot be set at naught. This is for the same reason as that contained in matters which pertain to issues of law that raise jurisdictional questions. We have seen how, in Natraj Studios (supra), it is the public policy of the 16 WPC 32181/2025 2025:KER:97748 statutory prohibition contained in Section 28 of the Bombay Rent Act that has to be given effect to. Likewise, the public policy contained in other statutory prohibitions, which need not necessarily go to jurisdiction of a Court, must equally be given effect to, as otherwise special principles of law are fastened upon parties when special considerations relating to public policy mandate that this cannot be done.
34.3 Another exception to this general rule follows from the matter in issue being an issue of law different from that in the previous suit or proceeding. This can happen when the issue of law in the second suit or proceeding is based on different facts from the matter directly and substantially in issue in the first suit or proceeding. Equally, where the law is altered by a competent authority since the earlier decision, the matter in issue in the subsequent suit or proceeding is not the same as in the previous suit or proceeding, because the law to be interpreted is different."
35. The present prayer for declaration, not asked for earlier, also has to be declined on the ground of constructive res judicata. In Amalgamated Coalfields Ltd. & Anr. v. The Janaš¯•›ada Sabha, Chhindwara [1963 (Supp.)(1) SCR 172] and later, in Devilal Modi v. Sales Tax Officer, Ratlam & Others [1965(1) SCR 636] it was held that if the doctrine of constructive res judicata was not applied to writ proceedings, it would be open to a party to take one proceeding after another and urge new grounds every time, which was plainly inconsistent with the considerations of public policy.
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36. On a careful consideration of the legal propositions noted above, it is clear that the petitioners' attempt to reopen issues already considered and rejected in earlier proceedings is squarely barred by the principles of res judicata and constructive res judicata. The contention that raising additional legal grounds or slight variations in relief entitles them to maintain fresh writ petitions ignores settled law that even an erroneous decision on a question of law binds the parties unless reversed in appeal or set aside by a competent forum. As stated above, the correctness of a previous judicial decision is irrelevant for the application of res judicata; what matters is whether the issue was directly and substantially in issue and finally decided between the parties. This principle was reiterated in Canara Bank (supra), where the Supreme Court clarified that issues of law, fact, or mixed questions, once decided, operate as res judicata unless they fall within narrow exceptions like lack of jurisdiction or overriding statutory prohibition.
37. None of the exceptions to the application of res judicata, such as jurisdictional errors or subsequent change in law, are attracted here. The legal regime under SARFAESI and the RBI MSME circulars remains the same, and the reliefs sought in the current batch of petitions are substantially the same as those rejected in the earlier rounds. The Court cannot entertain repetitive litigation solely because the party rephrases their challenge or invokes constitutional provisions already addressed. 18 WPC 32181/2025
2025:KER:97748 Therefore, the petitions are barred by res judicata, and the doctrine applies with full force in the present context to prevent multiplicity of proceedings and to uphold the finality of judicial determinations.
38. As held by the Hon'ble Supreme Court in Celir LLP v.
Sumati Prasad Bafna and Ors. (2024 SCC OnLine SC 3727), which relied on the decisions in State of U.P. v. Nawab Hussain [(1977) 2 SCC 806], Devilal Modi v. Sales Tax Officer, Ratlam and Ors [AIR 1965 SC 1150], and the English decision in Greenhalgh v. Mallard [(1947) All ER 255 at p.257], to hold that where the same set of facts give rise to multiple causes of action, a litigant cannot be permitted to agitate one cause in one proceeding and reserve the other for future litigation. Such fragmentation aggravates the burden of litigation and is impermissible in law. The Court reiterated that all claims and grounds of defence or attack which could and ought to have been raised in earlier proceedings are barred from being re-agitated subsequently. This rule stems from the Henderson Principle, which, as a corollary of constructive res judicata embodied in Explanation VII to Section 11 CPC, mandates that a party must bring forward the entirety of its case in one proceeding and not in a piecemeal or selective manner. Courts must examine whether a matter could and should have been raised earlier, taking into account the scope of the earlier proceedings and their nexus to the controversy at hand.
39. If the subject matter or seminal issues in a later 19 WPC 32181/2025 2025:KER:97748 proceeding are substantially similar or connected to those already adjudicated, the subsequent proceeding amounts to relitigation. Once a cause of action has been judicially determined, all issues fundamental to that cause are deemed to have been conclusively decided, and attempts to revisit any part of it -- even through formal distinctions in forums or pleadings -- fall foul of the principle. Moreover, any plea or issue that was raised earlier and then abandoned is deemed waived and cannot be resurrected. The overarching object is to protect the finality of adjudications, discourage strategic or delayed litigation, and uphold judicial propriety and fairness by ensuring that parties do not approbate and reprobate or exploit procedural plurality to unsettle concluded controversies."
12. On a perusal of the petitioners' history of litigation, it is evident that they have been indulging in filing petitions seeking indisputably similar reliefs challenging the SARFEASI proceedings. It is also discernible from the litigations preferred by the petitioners that approaching the court with slightly altered formulations does not change the fact that the claims put forward 20 WPC 32181/2025 2025:KER:97748 by the petitioners have already been decided or could have been resolved earlier. All claims and grounds of defence which could and ought to have been raised in earlier proceedings stand barred, as the party approaching the court must bring the case in its entirety in a single proceeding, rather, fragmenting the claims in a piecemeal or selective manner.
13. 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 concurrent proceedings are protected only in a few cases where the Bank had invoked SARFAESI proceedings without withdrawing the OA that too; only in matters prior to amendment in 11.11.2004. 21 WPC 32181/2025
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14. 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 remedies can be availed of simultaneously. Moreover, SARFAESI actions can also proceed alongside arbitration or civil remedies as the Act serves as an additional remedy for lenders as held in M.D. Frozen Foods Exports Pvt Ltd v. Hero Fincorp Ltd [2017) 16 SCC 741].
15. A learned Single Judge of this Court in M.D. Esthappan Infrastructure Pvt Ltd. and Ors. V. Reserve Bank of India and Ors., reported in (2025 KHC OnLine 2176), had also reiterated the permissibility of simultaneous proceedings under 22 WPC 32181/2025 2025:KER:97748 both the 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 23 WPC 32181/2025 2025:KER:97748 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.
19. In M.D. Frozen Foods Exports (supra), the Supreme Court reaffirmed Transcore (supra) on the permissibility of simultaneous SARFAESI and DRT proceedings, and extended its reasoning to arbitration. Citing Section 37 of the SARFAESI Act, the Court held that SARFAESI remedies are in addition to other legal remedies, including those under the Arbitration Act, even though not expressly mentioned. It clarified that SARFAESI applies prospectively to all subsisting and enforceable debts, irrespective of when the NPA was declared, once the Act becomes applicable to the lender. Arbitral proceedings do not suspend SARFAESI enforcement, and the presence of an arbitration clause does not preclude statutory recovery under SARFAESI. The judgment upheld concurrent statutory and contractual remedies, so long as they are not mutually inconsistent.
20. The principles in Transcore (supra) were followed by the Hon'ble Supreme Court in M/S Hindon Forge Pvt. Ltd. v. State of Uttar Pradesh [MANU/SC/1250/2018 2018:INSC:1034: (2019) 2 SCC 198], Bank of India v. Sri Nangli Rice Mills Pvt. Ltd [MANU/SC/0774/2025), Tottempudi Salalith v. State Bank of 24 WPC 32181/2025 2025:KER:97748 India & Ors. [MANU/SC/1158/2023: 2023:INSC:923: (2024) 1 SCC 24), Mathew Varghese v. M Amritha Kumar [MANU/SC/0114/2014: (2014) 5 SCC 610), Indiabulls Housing Finance Ltd. v. Deccan Chronicle Holdings Ltd. (Civil Appeal No. 18 of 2018), Suresh Kumar Goyal v. Aditya Biria Housing Finance Ltd. (MANU/CG/0085/2021), and Anil Kumar Akela v. State Bank of India & Ors. [MANU/JH/0475/2023). Transcore(supra) was also followed by the High Court of Kerala in K.J. Binu v. Secretary, Nedumangad Municipality (W.P (C).No.19984 of 2020 (S), the Madras High Court in T. Muthukumarasamy v. J. Selvasundarraj) (MANU/TN/2428/2017:
2017 (6) CTC 602] and G. Mangayarkarası v. The Authorized Officer, Indian Bank [MANU/TN/4043/2017: 2018 (186) AIC
585)".
16. A further argument by the counsel that the judgment in Transcore and the decisions thereafter, relying on Transcore, are wrongly decided, otherwise, is rendered per incuriam and sub silentio, also cannot be accepted. In Bajaj Alliance General Insurance Co. Ltd. v. Rambha Devu [2025) 3 SCC 95], the hon'ble apex Court had emphasized that the doctrine of per incuriam allows a decision to be disregarded only when it 25 WPC 32181/2025 2025:KER:97748 demonstrably fails to consider a binding statutory provision or authoritative precedent that would have necessarily led to a different outcome. This principle is confined to the ratio decidendi and doesn't apply to obiter dicta. Therefore, if a precedent's correctness is questioned, the proper procedure is to refer the matter to a larger bench instead of disregarding it, as any departure therefrom must be rare and based on sound legal principles.
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 are complementary rather exclusive, and therefore can be resorted to simultaneously, in view of the law laid down in M/s Transcore (supra), M.D. Frozen Foods (supra) and M.D. Esthappan Infrastructure (supra).
18. As far as obtaining the protection conferred under 26 WPC 32181/2025 2025:KER:97748 the revival framework of 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 27 WPC 32181/2025 2025:KER:97748 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 the enforcement of the 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 SARFAESI 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 28 WPC 32181/2025 2025:KER:97748 the benefit of the said Framework."
19. A division Bench of this Court in P.K. Krishnakumar v. IndusInd Bank, [2024 (6) KLT 606] had also stated that MSMEs cannot later assert benefits, if they did not notify the banks before classification as NPA thereby stressing the obligation incumbent upon the concerned MSMEs for notifying the Banks regarding the MSME status in order to obtain the benefits attached thereto, before the NPA classification is effected.
"19. xxx xxxx xxxx 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 29 WPC 32181/2025 2025:KER:97748 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."
20. 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. (MANU/SC/0997/2025), the dictum was as follows: -
"6. xxx xxxx xxxx 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 30 WPC 32181/2025 2025:KER:97748 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 S.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.31 WPC 32181/2025
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8. Pro Knits (supra) 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 of rights that one central enactment confers by another."
21. In M.D. Esthappan (supra), the question of claiming 32 WPC 32181/2025 2025:KER:97748 protection under the MSME framework has also been dealt with, and this Court while dismissing the same, rejected the argument that the MSME classification, itself, precludes NPA classification or recovery action and held that it is due to the inaction on the part of the petitioners that no timely steps were taken to activate the revival mechanism. This view was later affirmed by a Division Bench of this Court which held that a borrower who fails to notify the Bank of their MSME status prior to the loan's classification as NPA cannot subsequently invalidate the proceedings under the SARFAESI Act based on that belated claim. Citing the law laid down in Pro Knits (supra), the Court held that such delayed assertion is precluded, emphasizing that borrowers cannot remain passive throughout the recovery process and then attempt to revive lapsed remedies at a convenient stage later. Therefore, a delayed claim of MSME status is unacceptable if the borrower fails to 33 WPC 32181/2025 2025:KER:97748 inform the bank in time or takes steps to initiate the necessary corrective action mechanism.
22. 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. 34 WPC 32181/2025
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23. As it is incumbent on the Bank/creditors to identify the incipient stress in the account of the MSMEs before the account is classified as NPA, it is equally incumbent on the MSME concerned to initiate the proceedings for availing the said benefits. That is, in clear words, the concerned MSME is duty bound to make available such other authenticated documents/materials as necessary for substantiating its claim of being MSME entitled to protection, before such classification is effected. If the MSME does not bring it to the notice of the concerned Bank/creditor that it is a Micro, Small or Medium Enterprise under the MSMED Act, along with an affidavit and if such an enterprise allows the entire enforcement of security interest under the SARFAESI Act to be over, such an enterprise cannot be permitted to misuse the process of law, for frustrating the actions taken under the SARFAESI Act raising plea of being an MSME, in a belated stage. 35 WPC 32181/2025
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24. Moreover, it is evident that the contentions raised and the reliefs sought by the petitioners in the present writ petition are same as those raised in W.P.(C) Nos.42050/2024 and 30885/2024, which stand previously filed in time by the petitioners herein. That is, having unsuccessfully challenged the judgment in W.P.(C) No.30885/2024 by means of SLP and following the adverse pronouncements in W.P.(C) No. 42050/2024 and other connected matters, the petitioners have once again come up with the present writ petition shielded with the same contentions and reliefs which is barred by the principle of res judicata as well as constructive res judicata.
25. Having regard to the petitioners' repeated filings claiming similar reliefs, and taking note of the fact that they neither previously raised their MSME status nor provided authenticated documents to substantiate their claim, as held in Pro Knits(supra), 36 WPC 32181/2025 2025:KER:97748 P.K. Krishnakumar(supra) and Shri Shri Swami Samarth(supra), it is appropriate to hold that they stand estopped from seeking protection and associated benefits under the relevant notification at this late stage, particularly after allowing the SARFAESI proceedings to commence without objection. Also, in view of the judgment in Transcore (supra) and other relevant decisions regarding the legality of parallel proceedings, it is proper to hold that invoking remedies under SARFAESI as well as the RDB Acts simultaneously, is permissible. Hence, given the above reasoning, I am not inclined to grant any reliefs sought by the petitioners and therefore, this Petition is liable to be dismissed and hence, I do so.
Sd/-BASANT BALAJI JUDGE dl/ 37 WPC 32181/2025 2025:KER:97748 APPENDIX OF WP(C) NO. 32181 OF 2025 PETITIONER EXHIBITS Exhibit P1 TRUE COPY OF THE CERTIFICATE FOR UDYAM REGISTRATION NO. UDYAM-KL-07-0000886, DATED 01-10- 2020 ISSUED TO THE PETITIONER NO. 1 BY THE MSME MINISTRY, GOVERNMENT OF INDIA Exhibit P2 A TRUE COPY OF THE DEMAND NOTICE DATED 09.06.2021 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONERS Exhibit P3 A TRUE COPY OF THE POSSESSION NOTICE DATED 01.09.2022 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONERS Exhibit P4 A TRUE COPY OF THE SALE-NOTICE DATED 06.09.2022 ISSUED BY THE 4TH RESPONDENT TO THE PETITIONERS Exhibit P5 A TRUE COPY OF THE ORDER DATED 16.12.2022 ISSUED BY THE CHIEF JUDICIAL MAGISTRATE, ALAPPUZHA IN CASE BEARING CASE NO. CMP NO. 3996/2022 IN M.C NO. 745/2022 Exhibit P6 A TRUE COPY OF THE CASE DETAILS OF THE OA NO.242/2021, EXTRACTED FROM THE DRT WEBSITE WITH ITS TYPED COPY Exhibit P7 A CHART DETAILING THE VARIOUS PROCEEDINGS INITIATED BY THE PETITIONER Exhibit P8 A COPY OF THE ORDER DATED 08.07.2025 IN CP(IB)/54/KOB/2023 AND CONNECTED CASES OF NCLT, KOCHI BENCH Exhibit P9 A COPY OF THE ORDER DATED 23.07.2025 PASSED BY HON'BLE SUPREME COURT IN WP (C) NO. 247/2025 Exhibit P10 A COPY OF THE SAID E-AUCTION SALE NOTICE DATED 03.09.2025 ISSUED BY THE RESPONDENT BANK