Number of writs t filed before Bombay high court against financial institutions including NBFC , as the benifit of restructuring NPA defaulting unit was not given and Sarfaesi proceedings started
Number of appeal raised the similar question in SLP filed against the order of Bombay high court when order of Bombay high court was against the borrower and it was held by Bombay high court that bank is not obliged to have a process of sec 9 of MSMED ACT & RBI Notifications issued under sec 21 & 35A
In the judgement case title M/s Pro knits v/s directors of canara bank & others Appeal number SLP 7898/2024 decided on 1:/8/2024 by division bench It was held that after NPA of account MSME borrower may apply for restructuring of account but this benefit would not run when sarfaesi proceedings started
Thus the delaying tactics do not help to borrower when after Declaration of NPA of the account , surfciec proceedings began
As per MSME act : it is mandatory to classify stress account in three sub categories to resolve it , MSMED Act 2006 and Notification of RBI 2015 and 2016 was matter in issue but banks not followed the mandatory provision and declared accounts NPA
It was argued by appellant that non compliance of mandatory provision of MSMED Act and notification of 2015 & 2016 rendered the surfacei proceedings illegal & void ab initio
It was also argued by Banks that provisions of Sarfaesi act are not override by the MSMED act
In essence SLP allowed and held
That provisions of MSMED and RBI notifications has statutory force under sec 9 of MSMED Act & notifications issued under Sec 35 A& 21 of RBI act
The provisions are mandatory
There is no applicability of MSMED Act 2006 & RBI circular 2015 & 2016 upon regional rural banks
It
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