- 1 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF JUNE, 2025 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 18458 OF 2025 (GM-RES) BETWEEN: 1. M/S. S A STEELS AND HARDWARE R/AT, NO. 1354, OPP. TAJ HOTEL, SATHANUR VILLAGE, BM ROAD, CHANNAPATNA-562160 REPRESENTED BY ITS PARTNER M SYED AHMED. …PETITIONER (BY SRI. MOHAMMED TAHIR., ADVOCATE) AND: 1. STATE BANK OF INDIA R/AT, BM ROAD, CHANNAPATNA BRANCH, PB NO. 2, NO. 2290, BENGALURU-MYSURU ROAD, CHANNAPATNA- 562160 REPRESENTED BY ITS BRANCH MANAGER. 2. CHIEF MANAGER (CREDIT & NPAM) STATE BANK OF INDIA REGIONAL BRANCH OFFICE 4 CHAMARAJANAGAR 571313. REP BY ITS AUTHORISED OFFICER. …RESPONDENTS (BY SRI. VIGNESH SHETTY., ADVOCATE) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO DIRECTING THE Digitally signed by VIDYA G R Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 RESPONDENT BANK TO RESTRUCTURE THE INTEREST RATE IN CASH CREDIT FACILITY AVAILED BY THE PETITIONER BY REFERRING THE CASE OF PETITIONER TO STANDING COMMITTEE TO IDENTIFY AND RESTRUCTURE THE ADVANCE OF MSMES AS PER THE GAZETTE NOTIFICATION DATED 29/05/2015 AT ANNEXURE-E AND RBI CIRCULAR DATE 17/03/2016 AT ANNEXURE- F IN SUCH MANNER AS THE COURT MAY DEEM FIT AND JUST. THIS PETITION, COMING ON FOR ORDERS, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR JUSTICE S SUNIL DUTT YADAV ORAL ORDER Petitioner has sought for issuance of writ of mandamus to direct the respondent - Bank to restructure the interest rate and cash credit facility availed by the petitioner by referring the case of the petitioner to Standing Committee to identify and restructure the advance of MSMEs as per the Gazette Notification dated 29.05.2015 at Annexure-E and RBI Circular dated 17.03.2016 at Annexure-F. Petitioner has also called in question the impugned demand notice dated 30.12.2024 at Annexure-B and the possession notice dated 21.03.2025 at Annexure-D. - 3 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 2. Petitioner has raised various contentions including that the classification of the loan of the petitioner as NPA by the respondent - Bank, is impermissible as the petitioner is an MSME. 3. Learned counsel for the respondent - Bank submits that in terms of the judgment of the Apex Court in the case of M/s. Pro Knits v. Board of Directors of Canara Bank - (2024) 10 SCC 292, no doubt the MSME would be entitled to benefits, however such contention must be raised by the petitioner prior to classification of the loan as NPA on 29.12.2024 as on which date, no reply was given. 4. Insofar as such contention, learned counsel for the petitioner submits that petitioner has brought it to the notice of the Bank regarding the petitioner being an MSME in terms of the notice dated 18.03.2025. - 4 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 5. In light of the contentions raised, it is relevant to take note of the observations of the Apex Court in the case of Union Bank of India v. Satyawati Tondon and Others - (2010) 8 SCC 110 that the appropriate remedy would be to relegate the petitioner to seek for substantive remedy before the Debt Recovery Tribunal. The relevant observations of the Apex Court are as follows: "43. Unfortunately, the High Court overlooked the settled law that the High Court will ordinarily not entertain a petition under Article 226 of the Constitution if an effective remedy is available to the aggrieved person and that this rule applies with greater rigour in matters involving recovery of taxes, cess, fees, other types of public money and the dues of banks and other financial institutions. In our view, while dealing with the petitions involving challenge to the action taken for recovery of the public dues, etc. the High Court must keep in mind that the legislations enacted by Parliament and State Legislatures for recovery of such dues are a code unto themselves inasmuch as they not only contain comprehensive procedure for recovery of the dues but also envisage constitution of quasi- judicial bodies for redressal of the grievance of any - 5 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 aggrieved person. Therefore, in all such cases, the High Court must insist that before availing remedy under Article 226 of the Constitution, a person must exhaust the remedies available under the relevant statute. 44. While expressing the aforesaid view, we are conscious that the powers conferred upon the High Court under Article 226 of the Constitution to issue to any person or authority, including in appropriate cases, any Government, directions, orders or writs including the five prerogative writs for the enforcement of any of the rights conferred by Part III or for any other purpose are very wide and there is no express limitation on exercise of that power but, at the same time, we cannot be oblivious of the rules of self-imposed restraint evolved by this Court, which every High Court is bound to keep in view while exercising power under Article 226 of the Constitution. 45. It is true that the rule of exhaustion of alternative remedy is a rule of discretion and not one of compulsion, but it is difficult to fathom any reason why the High Court should entertain a petition filed under Article 226 of the Constitution and pass interim order ignoring the fact that the petitioner can avail effective alternative remedy by - 6 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 filing application, appeal, revision, etc. and the particular legislation contains a detailed mechanism for redressal of his grievance. 55. It is a matter of serious concern that despite repeated pronouncement of this Court, the High Courts continue to ignore the availability of statutory remedies under the DRT Act and the Sarfaesi Act and exercise jurisdiction under Article 226 for passing orders which have serious adverse impact on the right of banks and other financial institutions to recover their dues. We hope and trust that in future the High Courts will exercise their discretion in such matters with greater caution, care and circumspection." 6. It is noticed that the contentions raised require a factual determination, which may not be appropriate in the pending proceedings taking note that substantive remedy is available under Section 17 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act. - 7 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 7. Accordingly, the petition is disposed off relegating the petitioner to avail of the substantive remedy as regards the impugned proceedings. All contentions of both the sides are kept open. 8. In light of disposal of writ petition, it would meet the ends of justice by directing the respondent - Bank not to take any precipitative steps for a period of four weeks from today. 9. The interim protection granted under this order is only to enable the petitioners to avail of the substantive remedy and must not be considered to be an order passed on the basis of adjudication on merits. Upon the lapse of the time stipulated, the protection granted would cease to operate and the authorities before whom petitioner may approach are to look at the matter afresh uninfluenced by the observations made herein. 10. Needless to state that while considering the aspect of limitation, in the event the proceedings are - 8 - HC-KAR NC: 2025:KHC:22654 WP No. 18458 of 2025 instituted before the DRT, time spent before this Court may be taken note of appropriately. 11. Needless to state when the action taken under Section 13 of the Act is challenged, it is open for the petitioner to raise all contentions including wrongful classification as NPA in light of the contentions raised. 12. Accordingly, petition is disposed off. Sd/- (S SUNIL DUTT YADAV) JUDGE VP