Authority: High Court at Calcutta (Constitutional Writ Jurisdiction)

Order Date: 28 July 2026

Case Overview

  • Petitioners: M/s. Merchant Mongar Agrotech Pvt. Ltd. (registered MSME) and associated entities, represented by senior advocates Debashis Kundu, Krishnaraj Thaker, etc.; Respondent: Indian Bank.
  • Initial facilities: Open Cash Credit (OC) Rs 2 crore, later enhanced to Rs 8 crore under “Agri Scheme Plantation Crop‑Tea Grower Scheme”; Term loan Rs 5 crore for renovation, repair and spare parts; Secured Overdraft Rs 19.25 crore to associated company Merchant Monger Hospitality Private Ltd.
  • Dispute arose when the bank, after a “foreclosure” clause appeared in a sanction letter dated 25 Mar 2025, debit‑froze CC account No. 7695285777 on 21 Apr 2025, restricting payments despite sufficient balance. Only Rs 2 lakh (25 Apr 2025) and Rs 1 crore (12 Jun 2025) were allowed; Rs 8 lakh were deducted from a current account for interest/charges.
  • Petitioners filed WPA No. 21732 of 2025; the court on 18 Sep 2025 directed the bank to consider their representation. The bank lifted the freeze on 25 Sep 2025 without notice.
  • On 4 Mar 2026 the bank issued a SARFAESI Act §13(2) notice demanding Rs 12,69,33,776 and declared the accounts NPA as of 27 Feb 2026. Petitioners replied denying default and sought withdrawal of the notice, claiming the bank should have referred the matter to the MSMED Board under the MSMED Act 2006.
  • Without a §13(4) notice, the bank took symbolic possession of secured assets on 27 May 2026 (notice affixed to walls) and published a newspaper notice in The Telegraph on 1 Jun 2026 demanding full repayment within 60 days.
  • Petitioners only sought revival/rehabilitation under the RBI MSME framework on 11 Jun 2026, after the bank’s possession and newspaper notice. The court noted that the petitioners never invoked the framework before the SARFAESI notice, contrary to statutory requirements and precedents (Mahua Bhaumik, Bizitza Retail, Pro Knits, Shri Shri Swami Samarth).

Final Outcome

  • The Court held that the petitioners did not claim the benefit of the MSME revival and rehabilitation framework before the SARFAESI notice and therefore could not invoke it thereafter.
  • W.P.O. No. 329 of 2026 is dismissed. Parties may rely on the judgment posted on the Court’s official website.

Topics: Banking Regulation, MSME Revival Framework, SARFAESI Enforcement