Authority: Supreme Court of India, Civil Appellate Jurisdiction

Order Date: 17 September 2026

Case Overview

  • Appellants: Authorized Officer, State Bank of India & others; Authorized Officer, Canara Bank & others.
  • Respondents: A. Ganesamurthy; Rajappa Rajkumar; S. Ashok Sundaresan; A. K. Karthikeyan (in a separate appeal).
  • The appeals arise from a common judgment dated 3 June 2025 by a Division Bench of the Madras High Court, Madurai Bench, which set aside sale notices issued under Section 13 of the SARFAESI Act for the MSME borrowers and directed the secured creditors to formulate a revival and rehabilitation scheme per the 29 May 2015 MSME notification.
  • Borrowers were given an opportunity to submit settlement terms; a final opportunity was granted by an order dated 7 September 2026.
  • SBI rejected the settlement offer of A. Ganesamurthy; Canara Bank rejected the offer of Rajappa Rajkumar; SBI is actively considering the offer of S. Ashok Sundaresan.
  • Counsel for the secured creditors argued that no further opportunity should be given to the borrowers.
  • The Court referred to precedents: Pro Knits v. Canara Bank (2024) and Shri Shri Swami Samarth Construction & Finance Solution v. Board of Directors of NKGSB Co‑Op. Bank Ltd. (2025) on MSME rights and obligations.

Final Outcome

  • The High Court’s impugned order is set aside.
  • The appeals are allowed with the following directions:

1. SBI must consider Ashok Sundaresan’s settlement offer in accordance with law and give its decision within a fortnight from the order date.

2. A final opportunity is granted to A. Ganesamurthy and Rajappa Rajkumar to submit proposals with better settlement terms within one week from the order date; if received, SBI and Canara Bank shall dispose of them in accordance with law.

3. If the offers are not acceptable to SBI or Canara Bank, the borrowers may pursue remedies before the appropriate Debt Recovery Tribunal.

4. Secured creditors must communicate their decision within one week of receiving any proposals.

  • In the separate appeal of A. K. Karthikeyan, the Court also set aside the impugned order and granted the borrower liberty to submit a better settlement proposal within a week, with the same terms applying mutatis mutandis to Canara Bank.
  • All pending applications, if any, are disposed of.

Topics: Banking Regulation, MSME Insolvency