TaxTMI 
TaxTMI 
2026 (9) TMI 643
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....026 Soumen Sen, C. J. Heard Mr. Mathew Nedumpara, learned counsel for the appellants, Mr. Millu Dandapani, learned counsel for respondent No.1 and Mr. Aneesh K.M. representing Mr. K. Santhosh Kumar (Kaliyanam), learned counsel for respondent Nos. 2 to 4. 2. The appeal is arising out of the judgment dated 9th June 2026 in a writ petition filed by the appellants seeking protection of Ext. P1 MSME Notification No. S.O.1432(E) dated 29th May, 2015 and Ext. P2 Circular issued by the Reserve Bank of India dated 17th March, 2016, apart from challenging the entire proceedings initiated by the Bank under Sections 13(2), 13(4) and 14 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereinafter referred to as, "the SARFAESI Act") being violative of the aforesaid Notification. 3. The learned Single Judge dismissed the writ petition with a finding that the writ appellants have not claimed the benefit of the terms of the framework after the issuance of the demand notice under Section 13(2) of the SARFAESI Act. The said benefit has been claimed by the petitioners for the first time in the writ petition when proceeding was initia....
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....d Single Judge as the said judgment has categorically emphasised that if a borrower asserts that it is an MSME and claims the benefit of the framework, the secured creditor would be mandatorily required to look into such claim keeping further action under the SARFAESI Act in abeyance. Insofar as the finding of the learned Single Judge that in the earlier proceedings no relief was claimed as regards protection of Exts. P1 and P2, it is submitted that the writ petition was filed with a fresh cause of action resulting from the auction notice being issued by the secured creditor. 6. Mr. Mathews J. Nedumpara has submitted that there cannot be a res judicata on a pure question of law as held in Isabella Johnson (Smt.) v. M. A. Susai (Dead) By LRS (1991) 1 SCC 494 Attention of the Court is drawn to paragraph 5 of the judgment where it has been held that when the question is one purely of law and it relates to the jurisdiction of the court or a decision of the court sanctioning something which is illegal by resort to the rule of res judicata to prevent the party affected by the decision from challenging the validity of the order would not be sustainable. 7. Per contra, Mr. Aneesh K. ....
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....231 of 2025 praying for the following reliefs:- "i. To issue a writ of Certiorari or any other appropriate writ, order or direction to quash Exhibit-P9 as unjust and unsustainable. ii. Issue a writ of mandamus or any other appropriate writ, order or direction compelling the respondents to provide breathing time to pay of arrears of instalments and to regularise the bank account. iii. Issue a writ of mandamus or any other appropriate writ, order or direction compiling the bank to release the gold ornaments to the petitioner in Loan A/C Numbers:180351696420, 180351724568 and iv. Grant such other reliefs to the petitioner, as this Honourable Court may deem appropriate as the nature of the case." 10. Ext.P9 was the first reminder letter for NPA AGRI/Gold Loan Account 190351696420 dated 11th February, 2025. The said reminder letter was preceded by notice under Section 13(2) of the SARFAESI Act dated 10th February, 2025 and notice issued under Section 13(4) of the SARFAESI Act dated 13th May, 2025. These two letters were annexed to the said writ petition as Exts.P1 and P6 respectively. It was thus implicit that a challenge to Ext.P9 must precede a challenge ....
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....hallenge the measures taken by the secured creditor as provided under the SARFAESI Act, if so advised." 12. Instead of approaching the Tribunal for redressal of their grievance, another writ petition was filed seeking protection under the said Notification. It appears that the Bank, before initiating the proceedings, gave six months' time for renewal of the said account. The letter dated 9th August, 2024 has clearly stated the documents required for the purpose of renewal of the overdraft facility. Although it has been strenuously argued that the second writ petitioner visited the Aluva branch of the Canara Bank and handed over a bunch of documents, including the financial statements and MSME certificates, there is nothing on record to show that the said letter was ever replied nor in any subsequent communication there has been any reference of the letter dated 9th August, 2024 and submission of the required documents. The writ appellants did not make any application for rehabilitation. 13. In the light of the aforesaid facts, we need to decide whether we should exercise our discretion under Article 226 of the Constitution of India to interfere with the order passed by the le....
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....abilitation of the defaulting borrower. In the instant case, we do not find from the record that the appellants have ever approached the financial creditors to avail the benefit of the terms of the Framework after the demand notice under Section 13(2) of the SARFAESI Act was issued. In fact, under Clause 4 of the Framework for Revival and Rehabilitation of Micro Small and Medium Enterprises, any eligible stressed MSME is entitled to file an application to the Committee, in the manner specified by the Bank, for a decision on a corrective plan. It was only at the stage of implementation of an order passed by the learned Magistrate under Section 14 of the SARFAESI Act that the writ petition was filed questioning the jurisdiction of the secured creditors to proceed under the SARFAESI Act. Both the aforesaid decisions in the facts and circumstances of the case cannot be either accepted as judgment sub silentio or per incuriam." 17. The argument that the present writ petition was filed after the bank has proceeded with the auction of the secured assets cannot be accepted. The petitioner has not been able to demonstrate that due procedure for the auction sale has not been followed. The....
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....mitted to re-open the lis in respect of issues which might have been brought forward as part of the subject in contest but were not, irrespective of whether the same was due to any form of negligence, inadvertence, accident or omission. It was further held, that principle of res judicata applies not only to points upon which the Court was called upon by the parties to adjudicate and pronounce a judgement but to every possible or probable point or issue that properly belonged to the subject of litigation and the parties ought to have brought forward at the time. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. 19. In Yat Tung Investment Co. Ltd. v. Dao Heng Bank Ltd., [1975] A.C. 581 it has been held that it would be an abuse of procedure to permit further action based on another ground that could have been advanced earlier. 20. Once a court of competent jurisdiction has adjudicate....
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....es-judicata for assuring finality to litigation. The relevant observations read as under: - "3. The principle of estoppel per rem judicatam is a rule of evidence. As has been stated in Marginson v. Blackburn Borough Council [(1939) 2 KB 426 at p. 437], it may be said to be "the broader rule of evidence which prohibits the reassertion of a cause of action". This doctrine is based on two theories: (i) the finality and conclusiveness of judicial decisions for the final termination of disputes in the general interest of the community as a matter of public policy, and (ii) the interest of the individual that he should be protected from multiplication of litigation. It therefore serves not only a public but also a private purpose by obstructing the reopening of matters which have once been adjudicated upon. It is thus not permissible to obtain a second judgment for the same civil relief on the same cause of action, for otherwise the spirit of contentiousness may give rise to conflicting judgments of equal authority, lead to multiplicity of actions and bring the administration of justice into disrepute. It is the cause of action which gives rise to an action, and that is why it i....