M/S PHARMAKEM THROUGH DIVYESH VALJIBHAI JAGANI vs PUNJAB AND SINDH BANK
- Court
- Gujarat High Court
C/SCA/16175/2026 JUDGMENT DATED: 03/11/2026
(GJHC240800092026)
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 16175 of 2026
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE NIKHIL S. KARIEL SD/-
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Approved for Reporting Yes No
Yes
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M/S PHARMAKEM THROUGH DIVYESH VALJIBHAI JAGANI
Versus
PUNJAB AND SINDH BANK & ORS.
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Appearance:
MR NR PARIKH(578) for the Petitioner(s) No. 1
MS MITTAL GADHVI FOR MR ANKIT SHAH(6371) for the Respondent(s) No.
3
MR MOHITKUMAR R GUPTA(10588) for the Respondent(s) No. 1
MR RITURAJ M. MEENA FOR SNB ASSOCIATES(20131) for the
Respondent(s) No. 2
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CORAM: HONOURABLE MR. JUSTICE NIKHIL S. KARIEL
Date : 03/11/2026
ORAL JUDGMENT
1. Heard learned advocate Mr. N.R. Parikh for the
petitioner, learned advocate Mr. Mohitkumar Gupta for
respondent No.1, learned advocate Mr. Rituraj Meena for
respondent No.2 and learned advocate Ms. Mittal Gadhvi for
learned advocate Mr. Ankit Shah for respondent No.3.
2. Rule returnable forthwith. Learned advocates waive
service of notice of rule on behalf of the respective
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respondents.
3. By way of this petition, the petitioner has interalia
challenged the decision of respondent No.1 – Bank of issuing
the sale notice dated 29.09.2026 with regard to the property in
question, more particularly, on the ground that respondent
No.1 – Bank has not followed the Master Direction of the
R.B.I. whereby, special protection is granted to MSME under a
Framework.
4. Learned advocate Mr. Parikh would submit that the R.B.I.
has issued a Notification whereby, framework for Revival &
Rehabilitation of Micro, Small and Medium Enterprises
(hereinafter to be referred to as the “Framework”) has been
published, which interalia requires the Bank, before declaring
the account of an MSME as “Non-Performing Asset” (NPA), to
identify incipient stress in the account falling under one of the
three sub-categories found in the said Framework. Learned
advocate would submit that while the loan account of the
petitioner had been classified as NPA on 30.04.2026 and
whereas, symbolic possession had been taken over by the
respondent – Bank under section 13(4) of the Securitization
and Reconstruction of Financial Assets and Enforcement of
Security Interests Act, 2000 (for short, “the Act”) on
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09.07.2026, yet, during the entire exercise, the respondent –
Bank has conveniently not taken into consideration the fact
that the petitioner was an MSME and would be covered under
the Framework referred to herein-above. Thus, learned
advocate would request this Court to interfere and set aside
the measures undertaken by the respondent – Bank.
5. As against the same, learned advocate Mr. Gupta on
behalf of the respondent – Bank would vehemently contest this
petition by submitting that the present petition may not be
entertained by the Court, more particularly, since the
petitioner has approached this Court belatedly. Learned
advocate would submit that the under-lying idea being that an
MSME, having availed of a loan and not being able to repay
the same, should take up the issue immediately and whereas,
it would not enure in its favour, if the MSME is initiating
proceedings at a belated stage.
5.1 Learned advocate would submit that since the procedure
under Section 13(4) of the Act has been followed by the
respondent – Bank while taking symbolic possession of the
property, there may not be any requirement for initiating
proceedings under Section 14 of the Act.
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5.2 Learned advocate would submit that the Apex Court in
the decisions in case of Pro Knits v. Board of Directors of
Canara Bank and others reported in (2024) 10 SCC 292 and in
Shri Swami Samarth Construction & Finance Solution and Anr.
v. The Board of Directors of NKGSB Co-operative Bank Ltd.
and others reported in 2025 INSC 908 have interalia laid down
that the MSMEs should be vigilant and should follow the
process laid down under the Framework and bring it to the
notice of the Bank at the earliest. It is also laid down that if
the Enterprise allows the entire process for enforcement of
security interest under the Act to be over or having challenged
such action of the Bank / Creditor in the Court of Law and
having failed, such an Enterprise could not be allowed to
misuse the process of law for thwarting the actions taken
under the Act.
5.3 It is also pointed out that in a similar scenario, where
the order passed by the Magistrate under Section 14 of the Act
has been taken, the Hon’ble Apex Court in case of the later
decision in the case of Shri Swami Samarth Construction
(supra) had refused to entertain the present petition, more
particularly, the Hon’ble Apex Court having observed that the
bonafides of the petitioning Enterprise was suspicious.
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5.4 Learned advocate would submit in this regard that while
the proceedings against the petitioner for enforcement of
security interest had been initiated after the loan account of
the petitioner had been declared NPA, the petitioner, for the
first time, had submitted his representation on 28.09.2026 after
the notice under Section 13(2) of Act was issued by the
respondent – Bank. Learned advocate would submit that as
such, the notice under Section 13(2) of the Act was dated
04.05.2026 and whereas, the symbolic possession under Section
13(4) of the Act was taken over on 09.07.2026 and whereas, it
is just but a belated approach of the petitioner in filing the
representation on 28.09.2025, more particularly, since the said
reply is to a notice, which has out-lived its utility, upon the
Bank going further with the measures under the Act. Thus,
learned advocate would request this Court not to interfere in
the present petition.
6. Learned advocate Mr. Meena for respondent No.2 and
learned advocate Ms. Gadhvi for respondent No.3 would
support the stand of respondent No.1 – Bank.
7. Having heard the learned advocates for the respective
parties and having perused the documents on record, the only
question which arises for consideration of this Court is whether
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the petitioner makes out a case for interference as per the
Framework set out for MSMEs. At the outset, before travelling
further, it would be apposite to refer to the decision of the
Hon’ble Apex Court in case of Shri Swami Samarth
Construction (supra) and whereas, paragraphs – 7 and 8 of the
said decision being relevant for the present purpose, they are
reproduced herein-below for benefit;
“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 SARFAESI Act was issued. It is at the
stage of compliance with an order passed by the relevant
Magistrate under Section 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.
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
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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.”
8. A perusal of the dictum of the Hon’ble Apex Court
interalia reveals that in paragraph-7, on facts, the Hon’ble
Apex Court has observed that the petitioner did not claim
benefit of the Framework after the demand notice under
Section 13(2) of the Act was issued and whereas, it was at the
stage of compliance with an order passed by the Magistrate
under Section 14 of the Act that the petition had been
presented before the Hon’ble Apex Court claiming benefit of
the Framework. The Hon’ble Apex Court, in this regard, had
not been inclined to interfere with the decision of the Bank.
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9. The Hon’ble Apex Court, thereafter, refers to the decision
in Pro Knits (supra) and whereas, the Hon’ble Apex Court
emphasises the law laid down in the case of Pro Knits (supra)
that MSME have to be vigilant enough to follow the process
laid down under the Framework and whereas, if the Enterprise
allows the process for enforcement of security interest under
the Act to be over or having challenged such action of the
Bank in Court and having failed, then such Enterprise would
not be permitted to misuse the process of law by thwarting the
actions under the Act.
10. As against this, this Court notices that in the present
case, while the Notice under Section 13(2) of the Act had been
issued on 04.05.2026, the petitioner did not file any reply
thereto. It also appears that thereafter, the respondent – Bank
had initiated proceedings under Section 13(4) of the Act for
taking symbolic possession of the property in question and
whereas, the symbolic possession of the property had been
taken over, more particularly, after the notice dated
09.07.2026.
11. It appears that even after the symbolic possession had
been taken over, the petitioner had waited for a few months,
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for the first time, to raise a dispute about the petitioner being
an MSME and being entitled to the benefit under the
Framework. It also appears that while the said communication
ostensibly refers to the show cause notice dated 04.05.2026,
the same would not be of any avail to the petitioner since it is
clearly seen that while the notice under section 13(2) of the
Act had been issued on 04.05.2026 whereas, the reply of the
petitioner to such notice was on 28.09.2026, i.e. after the
symbolic possession of the property had been taken-over.
12. Considering from the perspective of the law laid down by
the Hon’ble Apex Court, it would appear that the benefit of
the Framework has to be sought for by the MSME in reply to
the notice under Section 13(2) of the Act. In the instant case,
while the reply portrays as if it is to the notice under Section
13(2) of the Act, yet, it would appear that the petitioner had
permitted the proceedings under the Act to continue for a
while, i.e. till symbolic possession of its property had been
taken over under Section 13(4) of the Act and even almost
three months thereafter, i.e. while the symbolic possession had
been taken over on 09.07.2020, the reply to the notice under
Section 13(2) of the Act was given on 28.09.2026. The
petitioner having initiated steps for getting benefit under the
Framework, in the considered opinion of this Court, as per the
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law laid down by the Hon’ble Apex Court in case of Shri
Swami Samarth Construction (supra), the petitioner would not
be entitled to any benefit of the Framework.
13. Considering the above position, the petition stands
disposed of, as rejected. Rule is discharged. No order as to
costs. It is clarified that the petitioner would be entitled to
exercise his rights as available under the SARFAESI Act for
challenging the measures under Sections 14 or 13(4) of the
Act, as the case may be.
SD/-
(NIKHIL S. KARIEL, J)
PRAVIN KARUNAN
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