BEFORE THE HONOURABLE HIGH COURT OF KERALA AT ERNAKULAM

BEFORE THE HONOURABLE HIGH COURT OF KERALA AT ERNAKULAM

By Mathews J. Nedumpara

28.10.2024

Writ Appeal No.
In
of 2024
W.P. (C) No. 41576 of 2023
(Against the Judgment dated 24-10-2024 of this Honourable Court in W.P. (C) No. 41576/2023)

P.K. KRISHNA KUMAR & ANR : Appellants/Petitioners
Vs.
INDUSIND BANK & ORS : Respondents/Respondents

S Y N O P S I S

The impugned Judgment suffers from factual and legal errors, apparent on the face of it, warranting a review thereof. The appellant is the Proprietor of M/s. Powerplus Power Unit, Eda Kochi, which had availed of credit facilities from the 1st respondent’s branch at M.G Road, Ernakulam District. Being an MSME-borrower registered under the MSMED Act, 2006, the petitioner’s micro enterprise was entitled to the benefits under various statutory notifications and circulars issued by the MSME Ministry and the Reserve Bank of India. These provisions aim 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 1 to 3, without complying with the mandatory Exts. P3 and P4 statutory notifications/circulars issued by the central government and the Reserve Bank of India, hastily initiated recovery proceedings against the petitioner’s enterprise under the SARFAESI Act. The illegal actions of respondents 1 to 3 are in gross violation of the fundamental rights of the petitioner under Articles 14, 19, 21, and 300 A of the Constitution.

This Hon’ble Court, by its judgment dated 24.10.2024, dismissed the writ petition on the sole ground that the Petitioner had approached this Court on two or three occasions earlier, but in none of those occasions was the protection in terms of the notification sought, and that the Appellants/Petitioners cannot be permitted to take a new plea. The said findings suffer from apparent factual and legal errors on the face of the record. Hence, this Writ Appeal.

Chronology of Dates and Events:

• 06.01.2022 – Classification of the petitioner’s account as Non-Performing Assets (NPA).
• 04.04.2022 – Issuance of demand-notice u/s. 13(2), SARFAESI Act.
• 13.07.2022 – Issuance of possession notice u/s. 13(4).
• 03.03.2023 – Addl. CJM, Ernakulam passed an order in MC 1113/2022, appointing an Advocate Commissioner to take physical possession of the Petitioner’s property.
• 04.09.2023 – Hon’ble High Court disposed of WP(C) 15055 of 2023 filed against the CJM’s Order by invoking jurisdiction under Article 226.
• 16.10.2023 – Hon’ble High Court protected the Petitioner against dispossession for a period of one week in WP (C) 31724 of 2023.
• 24.10.2024 – Judgment of this Honourable Court in WP. (C) No. 41576 /2023.

Acts, Regulations, and Authorities to be Cited:

• Micro Small and Medium Enterprises (Development) Act, 2006
• Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.

Dated this the 28th day of October, 2024.
MARIA NEDUMPARA
Counsel for the Appellants

BEFORE THE HONOURABLE HIGH COURT OF KERALA AT ERNAKULAM
Writ Appeal No.
In
of 2024
W.P. (C) No. 41576 of 2023
(Against the Judgment dated 24-10-2024 of this Honourable Court in W.P. (C) No. 41576/2023)

APPELLANTS/PETITIONERS:

1. P.K. KRISHNA KUMAR
   Managing Partner, M/s Powerplus Power Unit
   22/1486, Puthalath Krishnakripa,
   Palluruthy, Eda Kochi, Pin-682010
2. KALADEVI KRISHNA KUMAR
   Partner, M/s Powerplus Power Unit
   22/1486, Puthalath Krishnakripa,
   Palluruthy, Eda Kochi, Pin-682010

RESPONDENTS/RESPONDENTS:

1. INDUSIND BANK,
   Represented By its Branch Manager,
   Gowrinarayan, 1st floor, Opp. Jayalakshmi Silks,
   M G Road, Cochin- 682035
2. THE BOARD OF DIRECTORS OF INDUSIND BANK
   Represented by its Managing Director,
   IndusInd Bank Limited, 2401 Gen. Thimmayya Road (Cantonment),
   Pune-411 001
3. AUTHORISED OFFICER & CHIEF MANAGER,
   IndusInd Bank, Gowrinarayan, 1st floor, Opp. Jayalakshmi Silks,
   M G Road, Cochin- 682035
4. UNION OF INDIA
   Represented by Secretary,
   Ministry of Micro Small & Medium Enterprises
   Udyog Bhawan, Rafi Marg,
   New Delhi – 110 011.
5. SECRETARY, DEPT. OF BANKING,
   Ministry of Financial Services
   Government of India
   3rd Floor, Jeevan Deep Building
   Sansad Marg, New Delhi – 110 001.
6. RESERVE BANK OF INDIA,
   Represented by its Governor,
   Central Office Building
   Shahed Bhagat Singh Road
   Mumbai – 400 001.
7. STATE OF KERALA,
   Represented by its Chief Secretary,
   Government Secretariat,
   Thiruvananthapuram – 695 001.
8. ADV. BONIFUS P.A
   Advocate Commissioner appointed in MC No.1113/2022
   Said Mohammad Complex, C.P. Ummer Road,
   Ernakulam – 682035
9. STATION HOUSE OFFICER,
   Palluruthy Police Station,
   PS, Palluruthy PO, Kochi
   PIN- 682006

Address for Service of Notices and Processes

The address for service of notices and processes on the appellant is that of his counsel, Maria Nedumpara, Advocates, Room No. 806, 8th Floor, KHCAA Chambers, High Court Campus, Kochi – 682 031. The addresses for service of notices and processes on the respondents are as shown above.

MEMORANDUM OF Writ Appeal FILED UNDER SECTION 5 OF THE KERALA HIGH COURT ACT

Statement of Facts

1. It is a fundamental principle of law that a court can bind the parties by its decision, even an erroneous 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 applies only to 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 judgment is a nullity. It can be sought to be corrected by all means, namely, indirect and collateral proceedings, review, appeal, or even a suit.
3. The instant case invoked the jurisdiction of this Court under Article 226 seeking a writ in the nature of certiorari, prohibition, as well as several declarations. The core plea of the Petitioner was that he, being an MSME, is entitled to protection under the notification dated 29.05.2015, which states that the rights and obligations arising from the MSMED Act could only be adjudicated by a civil court, excluding all other courts, and that 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 Respondents from continuing the illegal recovery action, and also a mandamus to reinstate the benefits of the notification.

Prayers in the Writ Petition

The specific prayers sought in the writ petition include:

(a) Declaration that the Petitioner is an MSME within the meaning of the MSMED Act of 2006 and the notification issued by the Central Government under Section 9, as well as the circulars and guidelines issued by the Reserve Bank of India under Section 10, which provide for a mechanism for stress resolution. Hence, no recovery proceedings under the SARFAESI Act, RDB Act, or IBC will lie.

(b) Declaration that the MSME Act, in not creating a special forum/tribunals to enforce its rights, cannot operate to debar the Petitioner from availing the benefits of the Act.

(c) Declaration that the Respondents are not entitled to initiate recovery proceedings against the Petitioner under SARFAESI Act since they are a MSME.

(d) A writ in the nature of prohibition restraining the Respondents from continuing with the recovery proceedings initiated against the Petitioner.

(e) Any other relief deemed fit by this Honourable Court.

Grounds for Writ Appeal

1. The finding of the learned Single Judge that the present appeal is barred due to the previous proceedings is incorrect. The appeals were against separate proceedings, and therefore, the learned Single Judge ought to have examined the issue based on its own merit.
2. The learned Single Judge erroneously held that the petitioner cannot take a new plea without determining the merits of the case and the relevant laws governing the issue at hand.
3. The learned Single Judge failed to recognize the illegality in the proceedings initiated by the Respondents and the glaring violations of the statutory provisions, which entitle the Petitioner to relief.
4. The dismissal of the writ petition on the basis of prior proceedings raises serious concerns regarding justice and fair play, negating the legal principles governing access to justice.
5. The findings in the impugned judgment are contrary to established legal principles, resulting in a miscarriage of justice that needs to be rectified.
6. The fundamental rights of the petitioner under Articles 14, 19, 21, and 300 A of the Constitution are being violated by the Respondents’ actions, and this warrants immediate intervention by this Honourable Court.
7. The urgency of the matter necessitates the consideration of this appeal in light of the ongoing coercive actions against the petitioner’s enterprise.

Prayer

In light of the above-mentioned facts, the Appellants respectfully pray that this Honourable Court may be pleased to:

• Set aside the impugned judgment of the learned Single Judge in W.P. (C) No. 41576 of 2023, and grant the reliefs sought in the writ petition, including the declaration of the Petitioners’ rights as MSME borrowers and an injunction against the Respondents’ recovery proceedings.
• Pass such other orders as this Honourable Court may deem fit and proper in the interest of justice.

Dated this the 28th day of October, 2024.
MARIA NEDUMPARA
Counsel for the Appellants