DEBPARA TEA COMPANY LIMITED AND ORS vs STATE BANK OF INDIA AND ANR

IN THE HIGH COURT AT CALCUTTA
(Constitutional Writ Jurisdiction)
ORIGINAL SIDE

Present:
The Hon’ble Justice Krishna Rao

W.P.O. No. 198 of 2026


Debpara Tea Company Limited & Ors.

Vs.

State Bank of India & Anr.


Mr. Abhrajit Mitra, Sr. Adv.
Mr. Abhidipto Tarafder
Mr. Debayan Ghosh
Mr. Dipankar Thakur
....For the petitioners.

Mr. Anirban Pramanick
Mr. P. Nath
Ms. Bhagyasree Dey
….For the respondents.

Hearing Concluded On : 06.08.2026
Judgment Delivered On : 02.09.2026
Judgment Uploaded On : 02.09.2026

2

Krishna Rao, J.:
1. The petitioners have filed the present writ petition praying for
declaration that the respondents have not discharged their obligations
under the Framework for Revival and Rehabilitation of Micro, Small
and Medium Enterprises (hereinafter referred to as “MSMEs”) dated
th
17 March, 2016, before declaring the account of the petitioner no.1 as
Non-Performing Asset (hereinafter referred to as “NPA”) and
consequently the declaration of NPA is null and void.

2. The petitioner no.1 being an MSME applied for grant of financial
assistance from the respondent no.1 and the same was granted to the
th
petitioner no. 1 for a sum of Rs. 13,73,00,000/- on 7 October, 2020.
The petitioner nos. 2, 3 and 4 are the guarantors for the financial
assistance granted to the petitioner no. 1. The petitioner nos. 2, 3 and 4
are also the Directors of the petitioner no.1 company. The financial
th
assistance granted to the petitioner no.1 were enhanced on 6 May,
2022.

nd
3. The respondent no.1 by a communication dated 2 January, 2024,
informed the petitioners that the account of the petitioner no.1 is
th
classified as a Non-Performing Asset on 29 December, 2023.


4. Mr. Abhrajit Mitra, Learned Senior Advocate, representing the
petitioners submits that the financial assistance granted to the
petitioner no.1 being an MSME and the petitioners were under the
legitimate expectation that the petitioner no.1’s account would be dealt

3

with in terms of the Framework for Revival and Rehabilitation of Micro,
th
Small and Medium Enterprises dated 29 May, 2015, read with the
th
Framework dated 17 March, 2016 and the Master Directions dated
st
21 July, 2016. He submits that the loan limit of the petitioner no. 1
was below Rs. 25 Crores, the Framework of 2016 would be applicable
to the petitioners.

5. Mr. Mitra submits that instead of considering the case of the petitioners
under the framework of 2016, the respondents through its advocate by
th
a letter dated 15 January, 2024, demanded repayment of a sum of Rs.
st
13,24,91,937/-. On 21 March, 2024, the respondent no.1 has issued
a notice under Section 13(2) of the Securitization and Reconstruction of
Financial Assets and Enforcement of Security Interest Act, 2002
(hereinafter referred to as “SARFAESI Act”) calling upon the petitioners
rd
to pay the sum of Rs. 14,28,25,618/- along with future interest. On 3
April, 2024, the respondent bank has again issued notice to the
petitioners giving liberty to the petitioners to visit the branch with an
acceptable settlement/ resolution plan failing which the bank will
proceed to initiate further action against the petitioners.

th
6. By a reply dated 17 May, 2024, the petitioners informed the bank that
th
the account of the petitioner no.1 declared as NPA on 29 December,
2023 on the grounds of alleged irregularities but the petitioners have
not received any prior reminders regarding the regularization of the
loan accounts before they have classified under the Special Mention
Account (SMA) and designated as Non-Performing Assets (NPAs),

4

category as mandated under the Reserve Bank of India. In the said
letter, the petitioners also informed the bank that the bank has
disregarded the directives of the Reserve Bank of India by declaring the
account of the petitioner no. 1 as NPA.

7. Mr. Mitra submits that time and again the petitioners have requested
the respondent bank for consideration of the request of the petitioners
in terms of the frameworks, guidelines, directives and circulars issued
by the MSME authorities but without following the respondent bank
has initiated recovery proceedings under the Recovery of Debts and
Bankruptcy Act, 1993 before the Tribunal at Siliguri. He submits that
the respondent bank has also issued notice under Section 13(4) of the
SARFAESI Act. The petitioner no.1 by challenging the said notice, has
filed an application under Section 17 of the SARFAESI Act before the
Tribunal and the same is pending.

8. Mr. Anirban Pramanick, Learned Advocate, representing the
respondent bank submits that the account of the petitioner no. 1
th
declared as NPA on 29 December, 2023, and the same was duly
nd
informed to the petitioners by a notice dated 2 January, 2024. On
th
15 January, 2024, the respondent bank has sent a notice to the
petitioners calling upon the petitioners to pay the amount of
Rs.13,24,91,937/- within 7 days from the date of issue of the notice
and on receipt of the said notice. The petitioners have submitted reply
to the bank but the petitioners in the said reply have not prayed for the

5

benefit of the framework as claimed by the petitioners in the present
writ petition.

9. Mr. Pramanick submits that the petitioners have not paid the amount,
st
accordingly, on 21 March, 2024, the bank has issued notice under
rd
Section 13(2) of the SARFAESI Act. Again on 3 April, 2024, the bank
has issued notice to the petitioners requesting the petitioners to come
with an acceptable settlement/ resolution plan failing which the bank
will proceed to recover the dues pending against the petitioners under
the SARFAESI Act. The petitioners have neither come for settlement or
th
have paid the dues to the bank. Accordingly, on 16 September, 2024,
the bank has issued notice under Section 13(4) of the SARFAESI Act for
taking possession of the Secured Assets of the petitioners. He submits
that the petitioners have also initiated a proceeding under Section 17 of
the SARFAESI Act and now the petitioners have filed the present
application praying for grant of benefit under the Framework for Revival
th
and Rehabilitation of Micro, Small and Medium Enterprises dated 17
March, 2016, which is not maintainable.

10. Heard the Learned Counsel for the respective parties and perused the
materials on record. The admitted fact in the present case is that the
petitioner no. 1 is an MSME and the account of the petitioners declared
as NPA, and the bank has issued notice under Section 13(2) as well as
Section 13(4) of the SARFAESI Act. The petitioners have submitted their
th st
reply dated 17 May, 2024 to the demand notice dated 21 March,
2024, issued under Section 13(2) of the SARFAESI Act wherein the

6

petitioners have informed the bank that the petitioners did not receive
any prior reminders regarding regularization of the loan accounts
before classified under the Special Mention Account (SMA) category or
designated as Non-Performing Assets (NPAs) as mandated by the
th
Reserve Bank of India. On 4 December, 2024, the petitioners have
submitted second revised proposal for settlement of dues and requested
the bank to extend the benefit to the petitioners for a reasonable and
th
amicable settlement, again on 4 January, 2025, the petitioners have
requested the same benefit from the bank. As both the requests have
th
not been considered by the bank, accordingly, on 30 March, 2025, the
th
petitioners have again submitted its 4 revised proposal by requesting
the bank to consider their request in terms of Framework for Revival
and Rehabilitation of Micro, Small and Medium Enterprises as per the
Reserve Bank of India Circular and in terms of the judgment passed by
the Hon’ble Supreme Court from time to time.

11. The petitioners have made a representation to the Reserve Bank of
th
India on 10 April, 2026, informing that the petitioners are entitled to
get the benefit under the Framework for Revival and Rehabilitation of
th
the Micro, Small and Medium Enterprises dated 17 March, 2016.

12. Initially the Ministry of Micro, Small and Medium Enterprises issued a
th
notification dated 29 May, 2015 for the purpose of facilitating the
th
promotion and development of MSMEs. Subsequently on 17 March,
2016, a Framework for Revival and Rehabilitation of the MSMEs is
issued by the Reserve Bank of India. The said framework could be

7

applicable to the MSMEs having loan limits upto Rs. 25 crores,
including the accounts under consortium or multiple banking
arrangements. As per Clause 2.1 of the Framework for Revival and
th
Rehabilitation of the MSME dated 17 March, 2016, before a loan
account of MSME turns into a NPA, the banks or creditors should
identify incipient stress in the account by creating three sub-categories
under the Special Mentioned Account (SMA) category which reads as
follows:
SMA Sub-categories Basis for classification
SMA-0 Principal or interest payment not
overdue for more than 30 days but
account showing signs of incipient
stress (Please see Annex – I)
SMA-1 Principal or interest payment
overdue between 31-60
SMA-2 Principal or interest payment
overdue between 61-90 days


13. As per Clause 3.3, the Composition of the Committee shall be as under:

(a) The regional or zonal head of the convener
bank, shall be the Chairperson of the
Committee;


(b) Officer-in-charge of the Micro, Small and
Medium Enterprises Credit Department of
the convener bank at the regional or zonal
office level, shall be the member and
convener of the Committee;

(c) One independent external expert with
expertise in Micro, Small and Medium
Enterprises related matters to be nominated
by bank.

8

(d) One representative from the concerned State
Government. Endeavour should be made to
bring representative from the respective
State Government in the Committee. In case
State Government does not nominate any
member, then the convening bank should
proceed to include an independent expert in
the Committee, namely a retired executive of
another bank of the rank of AGM and
above.

(e) When handling accounts under consortium
or MBA, senior representatives of all banks/
lenders having exposure to the borrower.”


14. In the case of Pro Knits vs. Board of Directors of Canara Bank &
Ors. reported in (2024) 10 SCC 292 , the Hon’ble Supreme Court held
that:
“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 by the Central Government in
exercise of powers conferred under Section 9 of
the M SMED 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 S ARFAESI 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

9

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 M SMED Act.

19. 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 authorised person.

20. Therefore, the stage of identification of
incipient stress in the loan account of MSMEs and
categorisation 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 MSME
concerned 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
ARFAESI
Chapter III of the S Act for the enforcement
of the security interest.

21. 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 bank/creditor concerned that it is a Micro,
Small or Medium Enterprise under the M SMED Act
and if such an Enterprise allows the entire process
for enforcement of security interest under
the S ARFAESI 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 S ARFAESI 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

10

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 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.”


15. In the case of Shri Shri Swami Samarth Construction and Finance
Solution & Anr. vs. Board of Directors of NKGSB Co-op. Bank Ltd.
& Ors. reported in 2025 SCC OnLine SC 1566, the Hon’ble Supreme
Court held that:
“ 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 section 13(2) of the
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest Act
was issued. It is at the stage of compliance with an
order passed by the relevant Magistrate under
section 14 of the Securitisation and Reconstruction
of Financial Assets and Enforcement of Security
Interest Act that this writ petition has been
presented before this court claiming benefits of the
framework to restrain respondent No. 2 and its
officers from proceeding further under the
Securitisation and Reconstruction of Financial
Assets and Enforcement of Security Interest 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 co-ordinate
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

11

banks/secured creditors before the account of an
micro, small and medium enterprise is classified as
non-performing asset, this decision also lays stress
on the obligation of the micro, small and medium
enterprises by holding that “it would be equally
incumbent on the part of the micro, small and
medium enterprises 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 Securitisation and Reconstruction of
Financial Assets and Enforcement of Security
Interest 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 Securitisation and Reconstruction of
Financial Assets and Enforcement of Security
Interest Act by raising the plea of being an micro,
small and medium enterprise 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.”


16. In the present case, the account of the petitioner no. 1 declared as NPA
th
on 29 December, 2023, and the same was informed to the petitioners
nd th
on 2 January, 2024. On 15 January, 2024, the bank has issued
notice to the petitioners under Section 13(2) of the SARFAESI Act. The
petitioners have sent a reply to the said notice but the petitioners have
not informed the bank or not requested the bank for the benefit under
the Framework for Revival and Rehabilitation of the MSMEs.

12

th
17. The petitioners have submitted further representation on 15 July,
2024 and in the said representation also the petitioners have not
prayed for any benefit under the said framework. The bank has issued
notice under Section 13(4) of the SARFAESI Act read with Rule 8 of the
Security Interest (Enforcement) Rules, 2002 and after receipt of the said
notice, the petitioners have initiated a proceeding before the Debt
Recovery Tribunal under Section 17 of the SARFAESI Act against the
bank and the same is pending for adjudication.

18. Subsequently, the petitioners have made representations, only
requesting for extend the benefit of MSMEs but the petitioners have not
voluntarily initiated the proceedings under the Framework for Revival
and Rehabilitation of the MSMEs by filing an application along with
affidavit of an authorized process. In the case of Shri Shri Swami
Samarth Construction and Finance Solution (supra), the Hon’ble
Supreme Court by considering the case of Pro Knits (supra), held that
the petitioning enterprise does not seem to have ever claimed the
benefit of the terms of the framework after the demand notice under
Section 13(2) of the SARFAESI Act was issued.

19. In the present case, the account of the petitioner no. 1 was declared as
NPA in the month of December, 2023, the same was informed to the
petitioners in the month of January, 2024 and on the same month, the
notice under Section 13(2) of the SARFAESI Act was issued. The
petitioners have submitted reply to the said notice but the petitioners
have not requested for benefit of the framework and in reply to the

13

notice, the bank has again issued notice to the petitioners and
subsequently, the bank has issued notice under Section 13(4) of the
SARFAESI Act and on receipt of the said notice, the petitioners have
initiated a case under Section 17 of the SARFAESI Act against the bank
before the Debt Recovery Tribunal, Silirguri, being S.A. No. 193 of 2024
and the same is pending for adjudication.

20. Considering the above, this Court finds that only after issuance of
notice under Section 13(4) of the SARFAESI Act, the petitioners have
filed the present writ petition praying for the benefit under the
Framework for Revival and Rehabilitation of the MSMEs but this Court
finds that the petitioners have not taken appropriate steps for getting
the benefit of the said Framework for Revival and Rehabilitation of the
MSMEs of the appropriate stage and on the other hand, the petitioners
have taken the recourse of Section 17 of the SARFAESI Act by initiating
a proceeding against the bank before the Learned Tribunal. Once the
petitioners have invoked the provisions of Section 17 of SARFAESI Act,
the grievance of the petitioners cannot be decided in the writ
proceeding.

21. In view of the above, this Court did not find that the petitioners are
entitled to get the benefit of Framework for Revival and Rehabilitation of
the MSMEs at the later stage when the bank has also issued notice
under Section 13(4) of the SARFAESI Act and the petitioners have also
initiated a proceeding under Section 17 of the SARFAESI Act against
the bank before the Tribunal.

14

22. WPO No. 198 of 2026 is dismissed .
Parties shall be entitled to act on the basis of a server copy of the
Judgment placed on the official website of the Court.

Urgent Xerox certified photocopies of this judgment, if applied for,
be given to the parties upon compliance of the requisite formalities.

(Krishna Rao, J.)