Authority: High Court at Calcutta (Constitutional Writ Jurisdiction)

Order Date: 28 July 2026

Case Overview

  • Parties: Petitioners – M/s. Merchant Monger Hospitality Pvt. Ltd. (registered MSME) and its associated company MMHPL; Respondent – Indian Bank.
  • Background: petitioner no.1 obtained an Open Cash Credit (CC) of Rs 2 crores, later enhanced to Rs 8 crores under the "Agri Scheme Plantation Crop‑Tea Grower Scheme"; a term loan of Rs 5 crores for renovation; and a secured overdraft facility of Rs 19.25 crores for MMHPL.
  • Dispute: The sanction letter dated 25 March 2025 contained a foreclosure clause not discussed; petitioners sought its removal. On 21 April 2025 the bank debit‑froze CC account No. 7695285777, blocking online labour payments despite sufficient funds.
  • Transaction History: From 15 March 2025 to 17 September 2025 the CC could not be utilized up to Rs 5 crores. After freeze, only Rs 2 lakh (25 April 2025) and Rs 1 crore (12 June 2025) were permitted for labour payments. The bank deducted Rs 8 lakh of interest/charges from the petitioners’ current account instead of the CC account.
  • Prior Litigation: Petitioners filed WPA No. 21732 of 2025; the Court on 18 September 2025 directed the bank’s Branch Manager to consider the petitioners’ representation.
  • Subsequent Bank Actions: Without notice, the bank lifted the freeze on 25 September 2025. On 4 March 2026 the bank issued a notice under Section 13(2) of the SARFAESI Act demanding Rs 12,69,33,776 and classified the accounts as NPA effective 27 February 2026. Petitioners replied denying default and requested withdrawal of the notice.
  • Symbolic Possession: By letter dated 27 May 2026 the bank affixed the SARFAESI notice on the outer walls of the secured assets and published a notice in The Telegraph on 1 June 2026, demanding full repayment within 60 days.
  • Legal Contentions: Petitioners argued the bank should have referred the matter to the MSMED Board under Section 4 of the MSMED Act, 2006, and sought revival/rehabilitation under the RBI’s MSME framework. The bank contended it acted under SARFAESI provisions and that petitioners never invoked the MSMED framework in their reply to the notice.
  • Judicial Findings: The Court noted that the petitioners never claimed the benefit of the MSMED revival framework before or at the time of the SARFAESI notice, and that the bank had lawfully classified the accounts as NPA and taken symbolic possession. The Court cited precedents (Mahua Bhaumik, Bizitza Retail Ventures, Pro Knits, Shri Shri Swami Samarth) emphasizing that MSMEs must proactively seek framework benefits before enforcement actions.

Final Outcome

  • The Court dismissed W.P.O. 330 of 2026, holding that the petitioners could not claim the MSMED revival and rehabilitation benefits after the SARFAESI notice and symbolic possession had been effected. Parties may obtain a certified copy of the judgment from the Court website.

Topics: Banking Regulation, MSME Revival Framework