Orissa High Court
M/S Trayambakam vs State Bank Of India on 4 August, 2025
Author: S.K. Sahoo
Bench: S.K. Sahoo
IN THE HIGH COURT OF ORISSA AT CUTTACK
W.P.(C) No.20765 of 2025
M/s Trayambakam
Healthcare and another
..... Petitioners
Mr. R.P. Kar,
Senior Advocate
-versus-
State Bank of India
and others ..... Opp. Parties
Mr. D.K. Mohapatra,
Advocate
CORAM:
HON'BLE MR. JUSTICE S.K. SAHOO
HON'BLE MR. JUSTICE S. S. MISHRA
ORDER
Order No. 04.08.2025
01. This matter is taken up through Hybrid
arrangement (video conferencing/physical mode).
Mr. R.P. Kar, learned Senior Advocate files his
appearance memo, which is taken on record.
Mr. D.K. Mohapatra, learned counsel and his
associates files power for the State Bank of India, which
is also taken on record.
This writ petition has been filed by the petitioners
with the following prayer:
Signature Not Verified
“I. Quashing the action of classification of loan
Digitally Signed
Signed by: RAJESH KUMAR BADHEI
Designation: Junior Stenographer
Reason: Authentication
account as NPA by opp. party no.3 vide letter
Location: HIGH COURT OF ORISSA,
CUTTACK
Date: 05-Aug-2025 18:00:16dated 02.05.2025;
II. Setting aside the SARFAESI recovery
proceedings initiated under section 13 of the
SARFAESI Act by State Bank of India against
the petitioner through a demand notice issuedPage 1 of 7
on 29.05.2025 under section 13(2) of the said
Act;
III. Declaring that the petitioner being an
MSME within the meaning of sections 7 and 8
of the MSMED Act, 2006, it is entitled to the
benefits of the said Act and, in particularly,
the notification S.O.1432(E) dated 29.05.2015
issued by the opp. party no.8 under section 9
of the Act which provides for a mechanism of
resolution of stress of MSMEs, as also, the
circulars and guidelines;
IV. Directing the opp. parties Bank authorities
to follow the prescribed framework for
rehabilitation and revival of the stressed
petitioner’s account in terms of the MSME
Notification and RBI Circular and Master
Directions, 2016;
V. Directing SBI to constitute a committee for
the resolution of the stressed petitioner
concern, an MSME, as contemplated in
paragraph 2 of the ‘Framework’ dated
29.05.2015, and further to direct the
committee to resolve the stress in accordance
with the said notification and RBI Circular and
Master Directions, 2016;
VI. Directing opp. parties no.8 to 10 to
enforce the notification dated 29.05.2015 in
its true letter and spirit and to ensure that
recovery action initiated against the
Page 2 of 7
petitioners in violation of the mandate of the
notification is recalled, and that the petitioners
is compensated in full measure.
At the outset, learned counsel for the opp. parties
brought to the notice of this Court that on 02.08.2025,
the possession notice under section 13(4) has already
been published in ‘The Times of India’ and he has filed
the copy of the same, which is taken on record. He
further submitted that prior to that the demand notice
under section 13(2) was published and he has also filed
the same, which is also taken on record.
Mr. Kar, learned Senior Advocate appearing for the
petitioners submitted that the Bank authorities in
stamping all the loan accounts of the petitioner as NPA
vide demand notice dated 12.11.2024 and vide demand
notice through paper publication dated 29.05.2025 was
in clear violation of the Master Direction issued by the
RBI as well as framing notified by MSME Department. He
further submitted that the Central Govt. for the purpose
of facilities in promotion and development of the Micro,
Small and Medium Enterprises notified in gazette
notification dated 29.05.2015, the framework before
turning a loan account of MSME into non-performing
asset (NPA) and the bank or the creditors are required to
identify the incipient stress in the loan account by
creating three sub-categories i.e. SMA-0, SMA-1 and
SMA-2 and accordingly Mr. Kar submitted that the bank
authorities acted in excess of jurisdiction as there are
various statute mandated requirements as prescribed
Page 3 of 7
under the framework and Master Direction before
proceeding against the account of the petitioner, which is
a MSME registration firm and therefore, the action of the
bank is violative of Article 14 of the Constitution of India
and also illegally arresting the business operation
violating Article 19(1)(g) of the Constitution of India. He
further submitted that the Courts always insist upon
disclosure of the reason in support of the administrative
action and in the case in hand, the opp. party bank
authorities have acted arbitrarily by not considering the
petitioners case as per the framework and RBI Circular
and Master Direction without any rhyme or reason. In
support of his contention, he drew the attention of this
Court to the citation in the case of Pro Knits -Vrs.-
Board of Directions of Canara Bank and others
reported in (2024) 10 Supreme Court Cases 292,
wherein after considering the relevant provisions,
particularly, the guidelines/instructions pertaining to
MSME clause 4.8, it was held as follows:
“17. What is contemplated in the “Framework
for Revival and Rehabilitation of MSMEs”
contained in the Instructions/Directions stated
hereinabove, is required to be followed prior
to the classification of the borrower’s account,
(in the instant case MSMEs loan account), as
non-performing assets. The said Instructions
contained in the Notification dated 29-5-2015
as part of measures taken for facilitating the
promotion and development of MSMEs issued
Page 4 of 7
by the Central Government in exercise of
powers conferred under Section 9 of the
MSMED Act, followed by the Directions issued
by the RBI in exercise of the powers conferred
under Sections 21 and 35-A of the Banking
Regulation Act, the banking companies though
may be “secured creditors” as per the
definition contained in Section 2(zd) of the
Sarfaesi Act, are bound to follow the same,
before classifying the loan account of MSME as
NPA.
18. 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 MSME concerned to show that loan
account is of a Micro, Small and Medium
Enterprise, classified and registered as such
under the MSMED Act.
19. The said Framework also enables the
Micro, Small or Medium Enterprise to
voluntarily initiate the proceedings under the
Page 5 of 7
said Framework, by filing an application along
with the affidavit of an authorised person.
22. In that view of the matter, we are of the
opinion that the findings recorded by the High
Court in the impugned order that the banks
are not obliged to adopt the restructuring
process on its own or that the Framework
contained in the Notification dated 29-5-2015,
as revised from time to time could not be said
to be mandatory in nature, are highly
erroneous and cannot be countenanced. The
Instructions/Directions issued by the Central
Government under Section 9 of the MSMED
Act and by the RBI under Section 21 and
Section 35-A have statutory force and are
binding to all the banking companies.”
Learned counsel for the petitioner also placed the
recent decision of the Division Bench of this Court in M/s
Maa Tarini Enterprises, Balasore -Vrs.- Ministry of Micro,
Small and Medium Enterprises, New Delhi and others
passed in W.P.(C) No.9102 of 2025, wherein this Court
held as follows:
“5. At this stage, regard being had to narrow
compass of the case and apparent absence of
intricacies involved therein, we suggested and
both the sides graciously agreed that the
Petitioner-Borrower who claims to be an
MSME can make an appropriate representation
coupled vouching material in terms of the
Page 6 of 7
extant RBI Guidelines, as interpreted by the
Apex Court in Pro Knits, supra within two
weeks and the answer opposite parties should
consider the same and further informed to the
Petitioner result of such consideration within
an outer limit of eight weeks, and that till all
this accomplished, the impugned coercive
proceedings of loan recovery shall be kept at a
bay. We make it clear that what should
happen to the impugned proceedings of
recovery shall depend upon the outcome of
the consideration of the contemplated
representation. Both the sides agree that all
contentions should be kept open and
accordingly they are.”
Learned counsel appearing for the State Bank of
India submits that the matter may be taken up day after
tomorrow as he shall file citation of the Hon’ble Supreme
Court on this MSME matter, which was pronounced on
21.07.2025.
List this matter on 06.08.2025.
( S.K. Sahoo)
Judge
(S.S. Mishra)
Judge
Rajesh
Page 7 of 7