Allied Laws

Framework for Revival and Rehabilitation of MSMEs [Notification dated 29.05.2015] is binding to Banks/ Secured Creditors under SARFAESI and the entire exercise of the framework is required to be carried out by Banking Companies before the accounts of MSMEs turn into NPA – Pro Knits Vs. The Board of Directors of Canara Bank and Ors. – Supreme Court

/ 24 minutes of reading

Hon’ble Supreme Court has set aside the decision of Bombay High Court and has held that:

(i) 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 29.05.2015 having statutory force, are binding to all Scheduled Commercial Banks, licensed to operate in India by the Reserve Bank of India, as stated in the said Directions.
(ii) The whole process of enforcement of security interest under the SARFAESI Act, could be initiated only when the borrower makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as non-performing asset, in view of Section 13(2) of the said Act.
(iii) The Banking companies though may be ‘secured creditors’ are bound to follow the same, before classifying the loan account of MSME as NPA.

The Hon’ble Court also held that when it is mandatory or obligatory on the part of the Banks to follow the Instructions/Directions issued by the Central Government and the Reserve Bank of India with regard to the Framework for Revival and Rehabilitation of MSMEs, it would be equally incumbent on the part of the concerned MSMEs to be vigilant enough to follow the process laid down under the said Framework, and bring to the notice of the concerned Banks, by producing authenticated and verifiable documents/material to show its eligibility to get the benefit of the said Framework.

Framework for Revival and Rehabilitation of MSMEs [Notification dated 29.05.2015] is binding to Banks/ Secured Creditors under SARFAESI and the entire exercise of the framework is required to be carried out by Banking Companies before the accounts of MSMEs turn into NPA – Pro Knits Vs. The Board of Directors of Canara Bank and Ors. – Supreme Court Read Post »

High Court allows Ex-Director of Corporate Debtor to inspect of the record available with Resolution Professional – Shantanu Prakash Vs. State Bank of India and Ors. – Delhi High Court

/ 20 minutes of reading

In this case, SCNs issued by Bank to ex-director of Corporate Debtor for reporting of Fraud, however, complete documents, on the basis of which SCNs have been issued have not been provided.

Hon’ble High Court held that it is settled law that fair procedure and the Principles of Natural Justice require that the requisite documents, which form the basis of a SCN, ought to be provided to the concerned party in order to enable such party to submit a proper reply to answer all the allegations raised against it. No party can be expected to respond to a SCN in an effective manner, in the absence of the underlying documents, which form the basis of the said SCN.

Further, Hon’ble High Court directs that the petitioner shall be allowed inspection of the records of the company, as available with the lead bank, i.e., SBI. Since, record of the company is also stated to be in the possession of the RP, it is directed that the petitioner shall also be allowed to inspect of the record of the company, as available with the RP. Upon inspection of the record of the company, the petitioner shall state the specific documents that are required from the record of the company, that form the basis of the SCNs.

High Court allows Ex-Director of Corporate Debtor to inspect of the record available with Resolution Professional – Shantanu Prakash Vs. State Bank of India and Ors. – Delhi High Court Read Post »

RBI Master Direction-Reserve Bank of India (Asset Reconstruction Companies) (ARCs) Directions, 2024

/ 1 minute of reading

The RBI has issued the Master Direction – RBI (Asset Reconstruction Companies) Directions, 2024. The Directions have come into effect immediately. The Master Direction consolidates the existing regulatory guidelines issued to ARCs vide Master Circular on ARCs and Master Direction – Fit and Proper Criteria for Sponsors – Asset Reconstruction Companies (Reserve Bank) Directions, 2018.

RBI Master Direction-Reserve Bank of India (Asset Reconstruction Companies) (ARCs) Directions, 2024 Read Post »

In contractual matters, the High Courts do not like to exercise extraordinary jurisdiction under Article 226 of the Constitution of India – M/s Hornbill Consultants Vs. State of Punjab and Others – Supreme Court

/ 8 minutes of reading

Hon’ble Supreme Court held that it is, no doubt, correct that in contractual matters, the High Courts do not like to exercise extraordinary jurisdiction under Article 226 of the Constitution of India, even though this power is plenary in nature and not limited by any provision of the Constitution of India; as normally, when disputed questions of fact arise, adjudication in a civil court is more appropriate, just and fair. Nevertheless, this is not an absolute rule; more so in cases when the orders passed by the government authorities are arbitrary, unfair or unreasonable and where the facts are not in dispute and are easily ascertainable.

In contractual matters, the High Courts do not like to exercise extraordinary jurisdiction under Article 226 of the Constitution of India – M/s Hornbill Consultants Vs. State of Punjab and Others – Supreme Court Read Post »

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