Writ Appeal Before the High Court of Kerala – Challenge to Recovery Proceedings Under the SARFAESI Act

BEFORE THE HON’BLE HIGH COURT OF KERALA AT ERNAKULAM

By Mathews J. Nedumpara

28.10.2024

W.A. No. ___ of 2024
(Against the order dated 23-10-2024 of this Honourable Court in I.A. No.1/2024 in W.P.(C) No. 30885/2024)

M/s. SARK Spice Produce Pvt. Ltd. & Anr.
: Appellants/Applicants/Petitioners

V/s

Reserve Bank of India & Ors.
: Respondents
S Y N O P S I S
The 1st petitioner is an MSME enterprise, which had availed credit facilities
from the respondent-bank by mortgaging properties to the latter. Being an
MSME-borrower, registered under the MSMED Act, 2006, the 1st petitioner/Micro
enterprise was entitled to the benefits under the various statutory notifications
and circulars issued by the MSME Ministry and the Reserve Bank of India, to
ensure that a viable unit is given a full opportunity to revive and continue, instead
of being a victim of hasty coercive recovery proceedings and closure of the
enterprise. Respondents 2 to 4, without complying with the mandatory Exts. P2
and P3, and other statutory notifications/circulars issued by the central
government and the Reserve Bank of India, has hastily initiated recovery
proceedings against the petitioner’s enterprise, under the SARFAESI Act. The
illegal actions of respondents 2 to 4, are in gross violation of the fundamental
rights of the petitioner under Articles 14, 19, 21, and 300 A of the Constitution.
Hence, the above Writ Petition (Civil) filed by the petitioners.
The Respondent Bank filed a counter affidavit, contending that the
Petitioner had approached this Hon’ble Court, so too, the DRT, DRAT, so too, the
Madras High Court, on a number of occasions as when a new cause of action
arose/whenever he faced the threat of dispossession, and that the same
constitutes a bar. The Petitioner filed a reply affidavit pointing out that the earlier
petitions which the Petitioner had instituted mostly when a fresh cause of action
arose, namely, when the property was sought to be taken forceful possession of
or put to sale etc. do not constitute a bar. The Petitioner, therefore, was advised
that it is absolutely necessary for him to seek an express declaration at the hands
of this Court that the earlier proceedings do not constitute a cause of action
estoppel or res judicata, much less merger. Accordingly, the Petitioner filed an
application for amendment of the writ petition to incorporate the additional
statement of facts and additional prayers. This Hon’ble Court rejected the I.A for
amendment observing that the facts which are sought to be incorporated are
facts which were known to the Petitioner and therefore, the plea for amendment
is not justified.
Hence, this Writ Appeal.
Chronology of Events
24-03-2021 –Classification of the 1st petitioner’s account as a Non-Performing
Assets (NPA).
09-06-2021 – Issuance of demand-notice u/s. 13(2), SARFAESI Act
01-09-2022 – Issuance of possession notice u/s. 13(4)
06-09-2022 – Issuance of sale-notice
2023 – Filing of SA No. 77/2023 before DRT-II, Ernakulam, and
Acts & Rules to be Cited:
SARFAESI Act, 2002
Micro Small and Medium Enterprises Development Act, 2006
Dated this the 28th day of October, 2024.
MARIA NEDUMPARA
K / 1527/2019
Counsel for the Appellant
BEFORE THE HON’BLE HIGH COURT OF KERALA AT ERNAKULAM
W.A. No.
of 2024
(Against the order dated 23-10-2024 of this Honourable Court in IA No.1/2024 in
WP(Civil) No. 30885 /2024)
Appellants/Applicants/Petitioners
1.
Vs
M/s. SARK SPICE PRODUCTS Pvt. Ltd.
Represented by its Managing Director, Having its registered
address at
TAK Industrial Complex, Eara North, Neelamperoor, Alappuzha,
Kerala – 686 534.
2. ABRAHAM T. KURUVILA @ T.A. KURUVILA, S/o. late
T.C. Abraham, Chairman & Managing Director, SARK Spice
Products Pvt. Ltd., Thuruthithara House, Eara North P.O.,
Neelamperoor, Alappuzha, Kerala – 686 534.
Respondents/ Respondents/ Respondents
1.
RESERVE BANK OF INDIA
Represented by its Governor
Shahid Bhagat Singh Road, Fort, Mumbai – 400 001.
2. BOARD OF DIRECTORS OF SOUTH INDIAN
BANK
Represented by its CEO &Managing Director
Registered Office, SIB House, T.B. Road
Mission Quarters, Thrissur, Kerala – 680 001.
3. SOUTH INDIAN BANK Represented by its CEO
&Managing Director, SIB House, T.B. Road
Mission Quarters, Thrissur, Kerala – 680 001.
4. AUTHORISED OFFICER & CHIEF MANAGER, SOUTH
INDIAN BANK, Regional Office, Kottayam, 1st
Floor, Regency Square, K.K Road,
Collectorate P.O., Kottayam
Kerala – 686 002.
5.
6.
7.
MINISTRY OF MICRO SMALL AND MEDIUM
ENTERPRISES
Represented by its Secretary.
Udyog Bhawan, Rafi Marg, New Delhi- 110001
UNION OF INDIA,
Represented by its Secretary,
Department of Financial Services,
Ministry of Finance, 3rd Floor, Jeevan Deep Building,
Sansad Marg, New Delhi – 110 001.
STATE OF KERALA
Represented by its Chief Secretary,
Government Secretariat
Thiruvananthapuram – 695 001.
The address for service of notices and processes on the appellant is that of his counsel
Maria Nedumpara, Nedumpara and Nedumpara, Advocates, Room No. 806, 8th Floor, KHCAA
Chambers, High Court Campus, Kochi – 682 031.
The addresses of service of notices and processes on the respondents are that as
shown above.
MEMORANDUM OF WRIT APPEAL FILED UNDER SECTION 5 OF THE
HIGH COURT ACT
Statement of Facts
1. The appellant is the applicant in IA No.1/2024 in WP(Civil) No. 30885 /2024, and the
respondents are the respondents therein. t is a fundamental principle of law that
a court can bind the parties by its decision, even an eIrroneous one, for
jurisdiction means the freedom to err on facts. However, no court has the
freedom or the jurisdiction to err on law. The doctrine of res judicata has
application on only disputed questions of fact or evidence, not on law. It is a
universal, undeniable principle of law that there is no estoppel against law.
2. It is well settled in law that where a court has erred on law or acted contrary
to the fundamental principles of judicial procedure, failed to observe natural
justice, etc. such an order or judgement is a nullity. It can be sought to be
corrected by all means, namely, indirect and collateral proceedings, review,
appeal, even a suit.
3. The instant Appellant invoked the jurisdiction of this Court under Article 226
seeking a writ in the nature of certiorari, prohibition, as also, many a
declaration. The core of the plea of the Petitioner was that the he being an
MSME, is entitled to the protection in terms of the notification dated
29.5.2015, that the rights and obligations inter se arising out of the MSMED
Act could only be adjudicated by a civil court, to the exclusion of all other
courts, and the recovery action under the SARFAESI Act is rendered void ab
initio. The Petitioner therefore, is entitled to a writ in the nature of prohibition
restraining the prohibiting the Respondents from continuing the illegal
recovery action, so too, a mandamus to put the clock back and extend him
the benefit of the notification. It is profitable to extract the prayers sought in
the writ petition as infra.
a. To declare that the failure on the part of the Central Government/RBI to
implement the MSMED notification dated 29.5.2015, in particular, to ensure
that the Board of Directors of the Banks/financial institutions in this country,
including the Respondent Bank, constitutes a committee for ‘stressed micro,
small and medium enterprise’ and further to prevent the Banks and NBFCs
from classifying the account of an MSME as NPA and resorting to recovery
under the SARFAESI, RDB Act, IBC, NI Act, etc. in violation of the prohibition
to do so as contained in Paragraph 1 and 5(4)(iii) of the said notification,
amounts to gross failure on their part to comply with the statutory duty cast
upon them under Sections 35, 35A, 35AA, 36, 36AA of the Banking
Regulation Act and Sections 45-IE of the Reserve Bank of India Act, and
Sections 9 and 10 of the MSMED Act;
b. To grant a perpetual mandatory and/or prohibitory injunction, mandating and
the directing Central Government and the RBI to enforce the notification
dated 29.5.2015 in its true letter and spirit and further to direct the Central
Government and the RBI to ensure that recovery action initiated against the
Petitioners in violation of the mandate of the notification is recalled, the clock
is put back, the injustice which the Petitioners is made to suffer is redressed
and that the Petitioners is compensated in full measure;
c. To declare that the Section 13 of the SARFAESI Act, and Section 19 of the
RDB Act, Sections 7, 9, 10 and 95 of the IBC are unconstitutional, ultra vires
and void and are liable to be so declared, inasmuch as the said enactments
are wholly one-sided, drafted on the grossly erroneous premise that the right
to relief, nay, remedies, arise only at the hands of a banker as against the
borrower and that the enquiry to be conducted is wholly one-sided, or in the
alternative to declare that the borrower’s right to be an actor/petitioner for
the enforcement of his remedies has to be read into the said Acts;
d. To declare that Section 34 of the RDB Act, and Section 34 of the SARFEASI
Act and Section 63 of the IBC which bar the jurisdiction of the Civil Court to
entertain and adjudicate the Petitioner’s/borrower’s plea against the
Respondent Bank nay, bank/financial institution, is unconstitutional and void
inasmuch as the Petitioners, victims of the gross breach of contract, culpable
negligence, malicious and tortious action, so too, violation of the express
statutory provisions at the hands of the Respondent Bank, are entitled to
institute an action/suit as against the Respondent Bank for the enforcement
of the Petitioners’ right as against them;
e. declare that the 1st Petitioner being an MSME within the meaning of Sections
7 and 8 of the MSMED Act of 2006, it is entitled to the benefits of the said Act
and, in particular, the notification S.O. 1432(E) dated 29.5.2015 issued by
the Central Government under Section 9 of the Act which provides for a
mechanism of resolution of stress of MSMEs, as also, the circulars and
guidelines issued by the Reserve Bank of India under Section 10 of the
MSMED Act and further that no proceedings for recovery of the amounts due
by the MSMEs to banks/financial institutions, nay, even operational creditors,
shall lie against the Petitioner under the SARFAESI Act, RDB Act, IBC,
Negotiable Instruments Act or any other law, for recovery of the amounts
allegedly due, in as much as the MSMED Act being a special law/later law in
relation to the aforesaid enactments, the MSMED Act will prevail over them
and recovery can be made only in accordance with article 5 (4) (iii) of the
aforesaid notification dated 29.5.2015;
f. declare that the MSMED Act in so far as it has not created a special
forum/tribunal to enforce the inter-se rights and obligations/remedies, which
it has created in addition to those rights/obligations/remedies recognized by
the common law, the jurisdiction of the Civil Court is not ousted, for it is
impossible to oust the jurisdiction of the Civil Court without providing for an
alternative forum/tribunal to adjudicate the inter se disputes between parties
who are governed by the Act, and further as a corollary thereof, the DRTs,
NCLTs created under the RDB Act 1993 and the Companies Act 2013 are
invested of no jurisdiction to adjudicate a dispute arising out of/involving the
MSMED Act;
g. declare that the entire recovery steps initiated by Respondent Bank under the
SARFAESI Act or any other law, is without jurisdiction, illegal and void in as
much as the Respondent are not entitled to take recourse to any form of
recovery of the amounts they claim to be due to them from the Petitioner
except in the manner permitted by the ‘Committee for Corrective Action Plan’
contemplated in notification S.O. 1432(E) dated 29.5.2015, and quash and
set aside the entire action taken by the Respondent Bank under Section 13(2),
13(4) and 14 of the SARFAESI Act/Section 19 of the RDB Act;
h. declare that the Petitioners are entitled to be compensated from the
Respondents No. 2 Bank for the loss and injury, which it has suffered on
account of the gross breach of contract and trust, culpable negligence, and
malicious and tortious action at the hands of the Bank, financial institution
and its officers, which loss and injury far exceeds the very claim of the Bank
as against the Petitioners and therefore, no amount is due to the Respondents
by the Petitioner and further that the Respondents have no enforceable rights
as against the Petitioner;
i. declare that the guidelines and notifications issued by the Reserve Bank of
India from time to time empowering the bank and financial institutions to
declare a borrower as a willful defaulter is without authority of law, for such
a declaration amounts to a civil death and further that the Petitioners, nay, a
borrower is not liable to the declared as a willful defaulter except by the
authority of an Act of Parliament or statutory instrument having the force of
law;
j. To declare that the failure on the part of the Central Government/RBI to
implement the MSMED notification dated 29.5.2015, in particular, to ensure
that the Board of Directors of the Banks/financial institutions in this country,
including the Respondent Bank, constitutes a committee for ‘stressed micro,
small and medium enterprise’ and further to prevent the Banks and NBFCs
from classifying the account of an MSME as NPA and resorting to recovery
under the SARFAESI, RDB Act, IBC, NI Act, etc. in violation of the prohibition
to do so as contained in Paragraph 1 and 5(4)(iii) of the said notification,
amounts to gross failure on their part to comply with the statutory duty cast
upon them under Sections 35, 35A, 35AA, 36, 36AA of the Banking
Regulation Act and Sections 45-IE of the Reserve Bank of India Act, and
Sections 9 and 10 of the MSMED Act;
k. To grant a perpetual mandatory and/or prohibitory injunction, mandating and
the directing Central Government and the RBI to enforce the notification
dated 29.5.2015 in its true letter and spirit and further to direct the Central
Government and the RBI to ensure that recovery action initiated against the
Petitioner in violation of the mandate of the notification is recalled, the clock
is put back, the injustice which the Petitioner is made to suffer is redressed
and that the Petitioner is compensated in full measure;
l. declare that the entire recovery proceedings, under the SARFAESI Act leading
to the forceful taking of possession of the Petitioners properties and sale
thereof is illegal and void ab initio, being in violation of express statutory
provisions and vitiated by fraud and further to quash and set aside the same;
m. grant a perpetual mandatory and prohibitory injunction restraining and
prohibiting Respondent Bank/Financial institution, their agents, servants,
officers, representatives from taking any action for recovery under the
SARFAESI Act, IBC, Arbitration and Conciliation Act, Recovery of Debts and
Bankruptcy Act, Negotiable Instruments Acts or any other law in respect of
the amounts they falsely claim to be due from the Petitioners, in particular
restraining Respondent no. 4, from dispossessing the Petitioners of their
properties;
n. grant a perpetual mandatory injunction directing the Respondent-bank to
constitute a committee for the resolution of the stress in the unit of the
Petitioners Company, an MSME, as contemplated in paragraph 2 of the
notification dated 29.5.2015 issued under the MSMED Act, and further to
direct the Committee to resolve the stress in accordance with the said
notification and such other relevant notifications/regulations framed by the
RBI;
o. grant a perpetual mandatory injunction directing Respondents to put the clock
back in respect of the entire action initiated under the SARFAESI Act, in
particular, cancel the classification of the petitioners’ loan accounts as NPA
and the demand notice dated 09.06.2021, putting the Petitioners’ properties
to sale and further to make attempts to revive the Petitioners’ business as
mandated by the notification dated 29.5.2015;
p. to declare that Section 80 of the CPC is so far as it mandates that no suit shall
lie before the Civil Court against Centre/State Government without 60 days
prior notice is unconstitutional and void inasmuch as it denies the very access
to justice, particularly of the weaker sections of society to whom Article 226
and 32 remain a mirage;
q. declare that the proviso to Section 113 of the CPC which mandate that Civil
Courts shall refer any question of law as to the constitutionality of a statutory
instrument to the High Court is unconstitutional and void inasmuch as it
deprives the Civil Court, a court of record of plenary original jurisdiction
empowered and competent, nay, dutybound to embark upon any controversy
of a civil nature under the sun, accessible to even the least privileged, of its
pristine glory and efficacy;
r. pass such further and other orders as the nature and circumstances of the
case may require.
4. The Respondent Bank filed a counter affidavit, contending that the Petitioner
had approached this Hon’ble Court, so too, the DRT, DRAT, so too, the Madras
High Court, on a number of occasions as when a new cause of action
arose/whenever he faced the threat of dispossession, and that the same
constitutes a bar. The Petitioner filed a reply affidavit pointing out that the
earlier petitions which the Petitioner had instituted mostly when a fresh cause
of action arose, namely, when the property was sought to be taken forceful
possession of or put to sale etc. do not constitute a barThe doctrine of
estoppel, res judicata, merger, the principles which constitute the very
foundation on which our legal system is build, is a complex subject. Many of
these technical concepts which have its roots in classical Roman law, are
attributed to jurists like Ulpian, Gaius, Paulose, Papinian, Modestinus. Chief
Justice Coke in his commentaries on Laws of England said ‘estoppels are
odious’, so too, Lord Blackburn in Burkinshaw v. Nicolls (L.R. 2 App. Cas. at
p. 1026) and Lord Justice Bramwell in Baxendale v Bennet (L.R. 3 Q.B.D at
p. 529). The Petitioner, therefore, was advised that it is absolutely necessary
for him to seek an express declaration at the hands of this Court that the
earlier proceedings do not constitute a cause of action estoppel or res
judicata, much less merger.
5. Accordingly, the Petitioner filed an application for amendment of the writ
petition to incorporate the following as additional statement of facts and
additional prayers:
In the Statement of Facts, the following amendments are to be made.
After paragraph 44 the following paragraphs may kindly be allowed to be
added:
“44A. that the various proceedings, namely, more than half a dozen writ
petition before this Hon’ble Court, applications under section 17, appeal
before the DRAT and writ petition in the Madras High Court, came to be
instituted only because the Respondent Bank, which in terms of the
notification dated 29.5.2015 under the MSMED Act and the various circulars
issued by the RBI Sections 21 and 35A of the Banking Regulation Act, was
duty bound to constitute a committee for the resolution of stress, in fragrant
violation thereof invoked Section 13 and 14 of the SAARFAESI Act, so too,
Section 19 of the Recovery of Debts and Bankruptcy Act, nay, even Section
95 of the IBC. A true copy of the chart detailing the various proceedings
initiated by the Petitioner is produced as Exhibit P12.
44B. The Petitioners, though a graduate in Chemistry, is financially illiterate.
He was not fully aware of the various circulars issued by the Reserve bank of
India and of the notification dated 29.5.2015 and was under the erroneous
impression that the Respondent Bank has every right to classify his account
as NPA and initiate recovery proceedings. The Petitioners were constrained
to file writ petition after writ petition before this Court because inspite of the
Petitioner having paid a substantial amount, namely, Rs. 4,80,68,119,86/-
as against a claim of Rs. 11,90,40,929,86/= the Bank went on proceeding
under the SARFAESI. It took possession of a factory, working unit, titled
“Kalpaka” engaged in the manufacture and export of dehydrated peppercorn,
thereby bringing the Petitioner’s business to total ruin. Faced with the threat
of forceful possession of the unit in question, so too, of the sale of the
“Kalapaka unit which was taken possession of, in order to salvage his
business, the Petitioner was left with no option that to give a proposal of one
time settlement, so too, invoke the jurisdiction of this Court under Article
226, on every occasion when further coercive steps under the SARFAESI was
taken.
44C. The 2nd Petitioner came to learn of the protection which the MSMED Act
of 2006 and the notification dated 29.5.2015 only after the authoritative
pronouncements of the Supreme Court in M/s. Pro knits v. Board of Directors
of Canara Bank. He was advised that there is no estoppel against law and in
so far as in the various litigations in the past instituted before this Hon’ble
Court and other forums, the rights and remedies which inure in the 2nd
Petitioner was not a subject matter at all, nay, it was never raised at all. The
orders of this Court and the other forums constitute no estoppel or bar in the
institution of the instant proceedings for the enforcement of the rights and
remedies emanating from the notification dated 29.5.2015. He was advised
that the doctrine of res judicata estoppel, though a fundamental principle of
jurisprudence, is a technical rule which needs to be construed strictly. The
doctrine of res judicata, nay, ‘res judicata pro veritate accipitur’, attributed
to Ulpian of the 2nd century, is founded on the principle ‘interest reipublicae
ut sit finis litium’, that it is in the interest of republic that there shall be finality
of litigation. There is yet another reason for the doctrine, namely, ‘nemo
debet bis vexari pro una et eadem causa’, no man shall be vexed on the same
question more than once. To not allow a matter which has been adjudicated
by a court/tribunal of competent jurisdiction is in the public interest as also
in the interest of the parties who had agitated the issue, and a decision,
whether right or wrong, has been taken on the merits.
44D. Roman law, based on which the common law which we follow is
founded, is that the courts exist to do justice to the parties before it, and to
do justice is a divine duty. To repeat, courts exist only to do justice and
injustice ought to be avoided at any cost. The Roman lawyers (Gaius, Ulpian,
Augustinus, Paulose, Papinian) however, acknowledged the fact that because
of the limitations of fallible humans, no court can assuredly do justice.
Therefore, it is necessary to give effect even to unjust decisions in the interest
of the republic/public interest. Ulpian put the need to give effect to even
unjust decisions in the interest of the republic metaphorically as, ‘res facit es
judicata facit ex albo nigrum, ex nigro album, ex curvo rectum, ex recto
curvum, namely a judicial decision can make what was white, black; what
was black, white; what was crooked straight; what was straight, crooked’.
44E. This Court exercising jurisdiction under Article 226 is a court of law and
a court of equity, of mercy. The common law courts before the Judicature Act
of 1852 were duty bound to administer justice according to strict letter of
law. ‘Ignorantia juris non excusat’, ignorance of the law is no excuse. But in
the court of equity, the said principle did not apply. What prevailed in the
Court of equity was lex securit ignoranti, namely, the court protects the
ignorant and that the King protects the weak and the meek, ‘rex est
procurator factorum’. Courts of equity
were
ordained to do justice, nullifying the law where it is in conflict with equity,
justice and good conscience. If there is a conflict between law and equity,
equity will prevail. The concept of ‘Ignorantia juris non excusat’ stricto sensu
belongs to the province of criminal law.
44F. The Petitioners, therefore, cannot be penalized for not having taken up
the plea based on the MSMED notification dated 29.5.2015. It is the duty of
the Court to enforce the law. ‘Jura novit curia, the Court knows the law is a
fundamental principle of law. The notification dated 29.5.2015 being a
preventive, remedial, benevolent, welfare legislation mandating the banks
and financial institutions to identify incipient stress and come to the rescue
of MSMEs which are financially illiterate and weak, the Respondent bank in
not complying with the said notification, has acted in violation of law. The
RBI, the Regulator also failed to discharge its duty. The Respondent Bank
which is invested of judicial powers under the SARFAESI Act, a legislation
which falls within the ambit of public law, and is liable to be proceeded against
under the Banking Regulation Act, which could include cancellation of license,
has chosen to accuse the Petitioner of invoking the jurisdiction of this Court
repeatedly, a case of the kettle calling the pot black.
44G. The Respondent Bank is manifestly at fault and is blaming the
Petitioners for approaching the Court when repeatedly proceeded against
with illegal action under the SARFAESI. It has therefore, become imperative
for the Petitioner to expressly seek a declaration at the hands of this Court
by seeking an amendment of the instant writ petition that the various
proceedings instituted before this Hon’ble Court, the DRT, Ernakulam, DRAT
Madras and the High Court of Madras, do not constitute an estoppel or bar in
the institution or continuation of the instant proceedings. As averred in the
writ petition, the Petitioner is advised to institute a suit before the City Civil
Court, Mumbai, within whose territorial limits the RBI and the ECGC are
situated for remedies against the RBI, because the Petitioner came to be
denied the protection under the notification only because of the RBI’s failure
to discharge its duty as a regulator, to enforce the notification. A copy of the
Civil suit No. 18837/2024 so instituted in the City Civil Court, Mumbai, is
produced as Exhibit P13.
44H. It is well settled that there is no estoppel against law and the rights
conferred by a statute, if denied, could be raised at any stage, and that an
action of an authority without jurisdiction or in violation of law, namely, such
as the proceedings which the Respondent bank initiated against the Petitioner
under the SARFAESI Act, could be challenged at any time, in direct or
collateral proceedings (A.R. Antulay v. R.S. Nayak & Anr. (AIR 1988 SC
1531), Mafatlal Industries v. Union of India (1997 5 SCC 536). For the
doctrine of res judicata or issue estoppel to apply, there must be a decision
on merits, after a proper contest, at least constructive. In the earlier
proceedings, no disputed question of fact or issues were raised, much less
discussed. In particular, concerning the rights emanating from the
notification dated 29.5.2015. In the earlier proceedings before this Hon’ble
Court, the DRT and the DRAT, none of the rights, cause of action or issues
raised in the instant petition were ever raised, nor were the remedies. In
those proceedings the Petitioner only sought some time to make the
payments, bona fide believing that the Bank’s action is legally tenable. The
undertaking which the Petitioner gave in the affidavit dated 11.6.2024 for in
I.A no. 1 of 2024 in W.P no. 19103 of 2024 is was on the premise that the
Bank has a right to recover and in ignorance of the Petitioner’s rights and the
protection that the notification dated 29.5.2015 provides for. Since there
cannot be an estoppel against statute, the said undertaking will not constitute
a bar/estoppel/issue estoppel/res judicata in prosecuting the instant writ
petition.”
In the Prayers, the following amendments may be allowed to be made.
After prayer No. (r), the following may be allowed to be added:
“(s) To declare that the various writ petitions and other proceedings which the
Petitioner has instituted as detailed in the Exhibit P12/Chart does not constitute
a Cause of Action Estoppel, nay, estoppel per rem judicatam/res judicata, not
even issue estoppel, inasmuch as there is no Estoppel against statute and the
undertaking which the Petitioner had given before the Hon’ble High Court of
Kerala in IA No. 1/2024 in WP(c) No. 19103/2024 that he will deposit an amount
of Rs. 2 crores within the stipulated time, failing which he shall withdraw all cases
and surrender possession of the purported secured asset, does not constitute
cause of action estoppel, nay estoppel per rem judicatam/res judicata, or even
Issue Estoppel inasmuch as the rights and remedies which the Petitioner seeks
to enforce in the instant is based on the notification dated 29.5.215, and for the
added reason that in the previous proceedings before the High Court of Kerala
and other forums there was never an adjudication on merits;
6. When the above case was listed on 23.10.2024, since the arguing counsel,
Shri Nedumpara, was on his legs before the Bombay High Court, a plea was
made by his junior for a pass over. The Ld. Single judge was gracious enough
to accede to the said request. The matter was called again after lunch. Shri
Nedumpara could not appear online because of connectivity issues. This
Court was pleased to decline the plea for further pass over/adjournment. This
Hon’ble Court rejected the I.A for amendment observing that the facts which
are sought to be incorporated are facts which were known to the Petitioner
and therefore, the plea for amendment is not justified.
7. Accordingly, the application for amendment of the writ petition and also to
receive on record additional documents, were dismissed. Since Shri
Nedumpara could not join online due to connectivity issues, there was hardly
any argument or deliberation. The order of this Court is one rendered without
the Petitioner being afforded a due opportunity to be heard. Shri Nedumpara,
the arguing counsel was more than willing to be physically present for
hearing. Had the said plea been acceded to, he would have been able to
advance arguments on the doctrine of estoppel, which jurists like Lord Coke
had described as ‘odious, though an excellent and curious kind of learning’.
8. The Appellant is entitled to the protection of the notification dated 29.5.2015
which is mandatory and binding and creates rights, if not primary rights, at
least secondary rights, falling in the realm of vested rights. There is no
estoppel, waiver or res judicata against a statutory right.
9. The Petitioner did not raise it on earlier occasions because of his financial
illiteracy, an undeniable truth when it comes to MSMEs which the Legislature
and the RBI took notice of in enacting the notification and the various
circulars. That is precisely the reason why the notification mandates the
banks and financial institutions to identify incipient stress and prohibits it
from even classifying the account as NPA. There is no need for the MSMEs to
apply or bring its incipient stress to the notice of the bank concerned. The
Petitioner came to know about the full scope and ambit of the protection only
belatedly, and the moment he came to be aware of it, he invoked the
jurisdiction of this Court.
10. It is not the Appellant MSME who is at fault, but the Board of directors of
the IndusInd Bank, the RBI and the senior officials of the bank. By acting in
violation of the notification, the bank and its officials have rendered
themselves liable to be removed under Section 36AA of the Banking
Regulations Act. This Court was dutybound to make the Bank and its officials
accountable for this failure, so too, even the RBI and the Ministries of MSME
and Banking. Instead of punishing the Bank and its officials who acted
contrary to law, this Hon’ble Court in its judgment has chosen to penalize a
hapless MSME. To repeat, the error which the Court made here is not an error
in ascertaining the facts or in appreciating the evidence. It is not an error
with which the court can bind the parties like holding 1+1=0. This is a pure
failure to give effect to give effect to the notification.
11. There is no estoppel against law. the fact that the Petitioner did not
effectively plead the facts which are now sought to be brought on record
cannot in law stand in the way of his seeking to amend the writ petition to
seeking to enforce the rights based on the notification dated 29.5.2015. The
current writ petition is primarily based on the protection which the Appellant
MSME is entitled to under the MSMED Act, 2006. In the earlier proceedings,
out of financial illiteracy, the Appellant did not raise it or seek thereof. In the
current petition, out of bona fide human error, fallibility and ignorance of its
import, the Petitioner failed to disclose to his lawyer the previous proceedings
instituted through his earlier lawyer. The said failure cannot act as an
estoppel against him from seeking correction/rectification of the pleadings to
bring all relevant material on record. The rejection of his plea has resulted in
grave legal injury and breach of his equitable rights.
Aggrieved by the Against the order dated 23-10-2024 of this Honourable Court in IA
No.1/2024 in WP(Civil) No. 30885 /2024, this Writ Appeal is filed on the following among
other grounds:
GROUNDS
A. The order of this Court, is one, for all practical reasons, one which is
rendered without affording the Appellant a fair opportunity to be heard.
On 23.10.2024 when the above case called out, since the arguing
counsel, Shri Nedumpara, was on his legs before the Bombay High
Court, a plea was made by his junior for a pass over. The Ld. Single
judge was gracious enough to accede to the said request. The matter
was called again after lunch. Shri Nedumpara could not appear online
because of connectivity issues. This Court was pleased to decline the
plea for further pass over/adjournment. This Hon’ble Court rejected the
I.A for amendment observing that the facts which are sought to be
incorporated are facts which were known to the Petitioner and
therefore, the plea for amendment is not justified. The order of this
Court dated 23.10.2024 is therefore, vitiated by errors apparent on the
face of record and is thus one rendered void ab initio. It is the duty of
the court to recall an order which is a nullity, in violation of a statutory
provision, ex debito justitiae. ‘Actus curiae neminem gravabit’, no man
shall suffer because of the mistake of a court. The Supreme Court in
Antulay’s case even set aside a judgment of the 5-judge constitution
bench in its anxiety to undo the error of the court. A judgment of court
which is a nullity constitute no res judicata and can be challenged by
either direct or collateral proceedings (Kiran Singh, Antulay, Mafatlal).
B. By amendment, what the Appellant sought was a mere declaration that
the earlier proceedings, the full disclosure of which he failed to make
when he instituted the instant writ petition, out of bona fide human
error and ignorance, does not constitute a bar to the instant writ
petition, neither on the ground of estoppel/res judicata or suppression
of material facts. ‘Nemo praesumitur malus’, nobody is presumed to be
bad. The omission is not a malicious or wilful one. The Appellant could
well seek all the declaratory and other remedies he has sought even
after making a full disclosure of the previous proceedings. By not
disclosing the institution of the previous proceedings, a fact which is
well-known to the Respondent, the Petitioner does not achieve
anything. The risk is that often in litigation, the opposite parties would
like to take undue advantage of such bona fide omissions, however,
innocuous.
C. The current petition is primary founded on the protection under the
MSMED Act, a plea which is purely a legal plea. There is no estoppel
against law. Even assuming he had filed ten proceedings on earlier
occasions and all those were dismissed, still, a fresh proceedings under
Article 226 or a suit would lie. The cause of action in the earlier
proceedings and the current proceedings are not the same, the parties
are not the same. The current proceedings is to bring to the notice of
this Court that the Respondent Bank and the RBI which were under a
duty to extend protection to MSMEs by reaching out to them have
completely failed in their statutory duty and to compel them to
discharge their statutory duty and that a writ in the nature of
mandamus will lie, so too, writs in the nature of certiorari and
prohibition.
D. It is not only the banks and financial institutions which have failed in
their duty, but the courts and tribunals as well, for whenever an MSME
has sought protection under the MSMED Act and notification, the same
is declined offering curious reasons. A classic example is the judgment
of this Court in N.P Abdul Nazer vs. Union Bank of India & Others,
& Jayaprakash.A vs Union Bank of India & Others, to name a
few. The amendment was sought to prevent such injustice at the hands
of this Court, yet again.

In light of the above grounds and other grounds to be submitted at the time of
hearing, it is most humbly prayed that this Hon’ble Court may be pleased to consider
granting the following prayers:
PRAYERS
Set aside the order dated 23-10-2024 of this Honourable Court in IA No.1/2024 in
WP(Civil) No. 30885 /2024
Interim relief sought for
For the reasons stated in the Writ Appeal, it is most humbly prayed
that this Hon’ble Court may be pleased to Stay all further proceedings
initiated by the Respondent Bank under the SARFAESI and/or any other
law; pending final disposal of the above Original Petition (Crl.) in the
interest of justice.

Dated this the 28th day of October, 2024.
MARIA NEDUMPARA
K / 1527/2019
Counsel for the Appellant