Irine Agro Spices Vs Board of Directors of Axis Bank Ltd. (Kerala High Court)
Material Facts
The appeal arose from the dismissal of a writ petition by a Single Judge, who granted the appellants liberty to approach the Debts Recovery Tribunal (DRT) under Section 17 of the SARFAESI Act. The first appellant claimed to be a Micro, Small and Medium Enterprise (MSME) engaged in manufacturing food products and had availed credit facilities from the respondent banks. Following defaults in repayment, the banks classified the loan accounts as Non-Performing Assets (NPAs) and initiated recovery proceedings under the SARFAESI Act.
Axis Bank issued a demand notice under Section 13(2) on 25.06.2025, followed by symbolic possession notices dated 12.09.2025 and 19.09.2025. Another demand notice under Section 13(2) had also been issued in respect of a home loan availed by the second appellant.
Procedural History
The writ petition challenging the recovery proceedings was dismissed on the ground that an effective alternative remedy was available before the DRT under Section 17 of the SARFAESI Act. The appellants challenged that decision before the Division Bench.
Legal Issues
- Whether the banks could continue SARFAESI proceedings despite the appellant’s claim of MSME status.
- Whether the writ petition was maintainable despite the statutory remedy under the SARFAESI Act.
- Whether the appellants could challenge the Reserve Bank notification dated 17.03.2016 relating to the Framework for Revival and Rehabilitation of MSMEs.
Relevant Statutory Provisions
- Articles 141 and 226 of the Constitution of India.
- Sections 13(2), 13(3A), 14 and 17 of the SARFAESI Act, 2002.
- Sections 7, 8 and 9 of the MSMED Act.
- Clause 3 and Clause 4 of the Framework for Revival and Rehabilitation of MSMEs.
- Reserve Bank notification dated 17.03.2016.
Appellants’ Submissions
