Authority: Calcutta High Court

Order Date: 25.08.2026

Case Overview

  • Parties: Appellants – M/s. Merchant Monger Agrotech Pvt. Ltd. (and its directors) and M/s. Merchant Monger Hospitality Pvt. Ltd. (and its directors); Respondent – Indian Bank (a scheduled bank) and its officers.
  • Nature of Proceedings: Appeals (APO No. 38 of 2026 and APO No. 39 of 2026) against orders dated 28 July 2026 passed in WPO No. 329 of 2026 and WPO No. 330 of 2026, wherein the Single Judge dismissed the writ petitions filed under the SARFAESI Act, 2002.
  • Background: The writ petitions sought mandamus and prohibitory orders to cancel SARFAESI actions (Section 13 notices, symbolic possession under Section 14, NPA classification on 27 Feb 2026) and to compel restructuring of cash‑credit, term‑loan and secured‑overdraft accounts, invoking the RBI’s “Framework for Revival and Rehabilitation of MSMEs”. The appellants argued that the bank failed to follow the RBI framework and that procedural natural‑justice requirements were breached.
  • Key Documents Cited:
  • Application dated 11 June 2026 (Annexure P22/P18) for a corrective action plan.
  • Sanction letter dated 31 Jan 2024 for a fresh OCC limit of Rs 2,00,00,000 under the MSME‑IND SME Secure Scheme.
  • Letter dated 25 Mar 2025 granting a fresh SOD of Rs 19.25 crore to Merchant Monger Hospitality, conditioned on closure of the Agrotech loan.
  • Undertaking dated 25 Sep 2026 by Merchant Monger Agrotech to close its cash‑credit account and accept bank’s directions.
  • Letter dated 16 Apr 2026 proposing repayment of overdue amounts to regularise the accounts.
  • Procedural History: The Single Judge heard interim matters on 15 July 2026, fixed “For Orders” on 23 July 2026, and delivered the dismissal on 28 July 2026. The appellants contended that the judge decided on merits without affidavits, violating natural justice.

Final Outcome

  • The Division Bench set aside the Single Judge’s dismissal orders as interim findings but declined to grant any interim stay of the SARFAESI proceedings.
  • It held that the RBI’s MSME revival framework was not applicable to the appellants for the purpose of obtaining an interim protection, noting that the appellants had not sought the framework’s benefit at the appropriate stage.
  • The matter was remitted to the learned Single Judge to hear the substantive issues on affidavit evidence and pass appropriate orders.
  • The Court emphasized that the parallel proceedings before the Debt Recovery Tribunal, Kolkata (DRT) – S.A. Nos. 281/2026 and 286/2026 – remain the proper forum for challenging the SARFAESI actions.
  • No interim protection was granted; the earlier dismissal was treated as interim findings only.
  • The appeal and connected applications were disposed of.

Topics: SARFAESI Act, RBI MSME Revival Framework