- 1 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 24TH DAY OF SEPTEMBER, 2025 BEFORE THE HON'BLE MR. JUSTICE B M SHYAM PRASAD WRIT PETITION NO. 24937 OF 2025 (GM-DRT) BETWEEN: CHANDRADHARA RICE MILL NO.17-C, 1ST PHASE, KIADB, ANTHARASANAHALLI INDUSTRIAL AREA, NH-4, TUMKUR-572106 REPRESENTED BY ITS PROPRIETOR, MRS ANITHA R, W/O V B RAMESH, AGED ABOUT 40 YEARS. …PETITIONER (BY SRI. C.M. NAGABHUSHAN, ADVOCATE FOR SRI. CHANDRASHEKAR L.,ADVOCATE) AND: 1. UNION BANK OF INDIA TUMKUR BRANCH, AT KASTURI MANSION, BEHIND KRISHNA TALKIES, M G ROAD, TUMKUR-572101 REPRESENTED BY ITS AUTHORISED OFFICER. 2. RESERVE BANK OF INDIA 10/3/8, OPP TO ST MARTHAS HOSPITAL, NRUPATHUNGA ROAD, OPP ST. NUNEGUNDLAPALLI, Digitally signed by VANAMALA N Location: HIGH COURT OF KARNATAKA - 2 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 AMBEDKAR VEEDHI, BENGALURU KARNATAKA-560001 BY GENERAL MANAGER. …RESPONDENTS (BY SMT.DIVYA PURANDAR., ADVOCATE FOR C/R1) THIS W.P. IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO I) ISSUE A WRIT OF CERTIORARI QUASHING THE ENTIRE PROCEEDINGS INITIATED BY THE RESPONDENT NO 1, DATED 29/4/2023, VIDE NO OR/TMK/134/2022-23, AS PER ANNEXURE-A; II) ISSUE A WRIT OF CERTIORARI QUASHING THE POSSESSION NOTICE ISSUED BY THE RESPONDENT NO 1, UNDER SECTION 13 (2) OF SARFAESI ACT, DATED 6/9/2023, VIDE NO NIL, PRODUCED AT ANNEXURE-B; III) ISSUE WRIT OF CERTIORARI QUASHING THE ORDER DATED 18/1/2024, PASSED BY THE ADDL SENIOR CIVIL JUDGE AND CJM, TUMAKURU, IN CRL MIS NO 249/2023, PRODUCED HEREWITH AT ANNEXURE-C; IV) ISSUE A WRIT OF MANDAMUS DIRECTING THE RESPONDENT NO 1, TO CONSIDER THE REPRESENTATION OF THE PETITIONERS PRIOR TO INITIATION OF ACTION UNDER SARFAESI ACT, AS PER REPRESENTATION DATED 15/4/2024 AND REPRESENTATION DATED 16/7/2025, PRODUCED AT ANNEXURE-K AND ANNEXURE-L. - 3 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, ORDER WAS MADE THEREIN AS UNDER: CORAM: HON'BLE MR. JUSTICE B M SHYAM PRASAD ORAL ORDER The petitioner, who has availed financial assistance from the first respondent, is aggrieved by the initiation of the proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short, 'the SARFAESI Act']. A brief statement of the proceedings by the first respondent under the SARFAESI Act can be thus: [a] the notice is issued under Section 13[2] of the SARFAESI Act on 29.04.2023, and this is followed by a Possession Notice under Section 13[4] of the SARFAESI Act on 06.09.2023, [b] the first respondent has filed an application under Section 14 of the SARFAESI Act in Crl. Misc. No.249/2023 on the file of the Additional - 4 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 Senior Civil Judge and CJM, Tumakuru, and this application is allowed on 18.01.2024, [c] the petitioner has filed this petition on 12.08.2025, and during the pendency of this petition i.e., on 03.09.2025, the notice is issued for e-auction under the Security Interest [Enforcement] Rules, 2002, [d] in terms of this notice, the e-auction is scheduled to be held on 26.09.2025. This Court must also as part of the afore details record that Sri T L Venkatesh [a third party] has filed a writ petition in W.P. No.22513/2024 asserting to be in possession of the subject property as a tenant under the petitioner and this Court has disposed of this petition observing that the petitioner must avail remedy under Section 17[4A] of the SARFAESI Act. 2. Sri C M Nagabhushan, the learned counsel for the petitioner, submits that this Court - 5 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 must intervene because the respondents cannot dispute that the petitioner is a 'MSME' and with a 'MSME', the secured creditor must follow the framework for revival and rehabilitation for 'MSME' as notified by the Central Government. The learned counsel relies upon the decision of the Apex Court in 'M/s. Pro Knits v. The Board Of Directors Of Canara Bank'1, and more specifically on the exposition as is in paragraph-13 which reads as under: "In view of the above, it is absolutely clear that the Instructions for the Framework for Revival and Rehabilitation of Micro, Small and Medium Enterprises as notified by the Central Government vide the Notification dated 29th May, 2015 in exercise of the powers conferred under Section 9 of the MSMED Act, as revised by the RBI Notification dated 17th March, 2016, and the Master Directions i.e. the Reserve Bank of India (Lending to Micro, Small and Medium Enterprises Sector) Directions, 2016, issued by the Reserve Bank of India in exercise of the powers conferred by Section 1 [2024] 8 SCR 140 - 6 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 21 and 35(A) of the Banking Regulation Act, having statutory force, are binding on all Scheduled Commercial Bank, licensed to operate in India by the Reserve Bank of India, as stated in the said Directions. It cannot be gainsaid that the Banking Regulation Act, 1949 basically seeks to regulate banking business and mandates a statutory comprehensive and formal structure of banking regulation and supervision in India. Section 21 and Section 35A of the said Act empower the Reserve Bank of India to frame the policy and give directions to the banking companies in relation to the advances to be followed by the banking companies. Such directions have got to be read as supplement to the provisions of the Banking Regulation Act and accordingly are required to be construed as having statutory force and mandatory." 3. Smt Divya Purandar, the learned counsel for the first respondent, while emphasizing the details of the different proceedings as stated above and also proposing to contend that the petitioner’s modus is to initiate proceedings to defer conclusion of the - 7 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 enforcement of secured interest, submits that the Apex Court in its recent decision in 'Shri Shri Swami Samarth Construction & Finance Solution and Another v. The Board of Directors of NKGSB Co-op. Bank Ltd and Others'2 has clarified that the compliance with the framework notified by the Central Government could be mandatory and this must be considered when objections under Section 13[3A] of the SARFAESI Act are filed. The learned counsel relies upon the following exposition by the Apex Court in paragraph-6 of this Judgment which is as under: "6. xxxxx We would read and interpret the seemingly confusing terms of the Framework harmoniously to ensure that a right under the Micro, Small and Medium Enterprise Act is not destroyed by the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, or vice versa. In our reading, the terms of the 2 2025 SCC Online SC 1566 - 8 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 framework do not prohibit the lending bank/secured creditor (assuming that it has no conscious knowledge that the defaulting borrower is a micro, small and medium enterprise) to classify the account of the defaulting micro, small and medium enterprise as non-performing asset and to even issue the demand notice under section 13(2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, without such identification of incipient stress in the account of the defaulting borrower (MSME); however, upon receipt of the demand notice, if such borrower in its response under section 13(3A) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act asserts that it is a micro, small and medium enterprise and claims the benefit of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, citing reasons supported by an affidavit, the lending bank/secured creditor would then be mandatorily bound to look into such claim keeping further action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act in abeyance; and should the claim be - 9 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 found to be worthy of acceptance within the framework of the framework, to act in terms thereof for securing revival and rehabilitation of the defaulting borrower." 4. In rejoinder, Sri C M Nagabhushan submits that the respondents cannot dispute that on 15.04.2024, the petitioner has filed a representation with the first respondent's Manager stating that it is a 'MSME' and it must be extended the benefit of restructuring only to be told that this request would be subject to approval by the competent authority but no decision has been taken. 5. Sri C M Nagabhushan also submits that if the first respondent grants three [3] months time, the petitioner undertakes to clear the entire dues, and in response to these assertions, Smt Divya Purandar submits that the petitioner has repeated another representation in July 2025 for restructuring, which for reasons is rejected by decision dated 01.09.2025, which is also communicated to the petitioner. - 10 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 6. These rival submissions are considered, and this Court is of the view that whether the petitioner's request for restructuring vide letter dated 15.04.2024 is duly considered, and whether it is considered in time, must be examined based on whether the petitioner has filed any response or objections as is contemplated under Section 13[3A] of the SARFAESI Act and in the backdrop of the recent decision of the Apex Court. This would entail a factual enquiry, and for that the petitioner must necessarily avail the alternative remedy, and the petitioner must be at liberty in that regard. 7. As regards the scheduled e-auction and the petitioner's willingness to settle the entire dues to avoid the consequences of a concluded e-auction, this Court is of the view that unless interdicted under Section 17 of the SARFAESI Act, the auction must continue and if it continues, the outcome must be subject to the result in the application that the - 11 - HC-KAR NC: 2025:KHC:38397 WP No. 24937 of 2025 petitioner may file. While so observing, the petition stands disposed of. SD/- (B M SHYAM PRASAD) JUDGE AN/-