Shri Shri Swami Samarth Construction & Finance Solution vs Board of Directors of NKGSB Co-op. Bank Ltd. 2025 INSC 908 - SARFAESI Act - MSMED Act

Micro, Small and Medium Enterprises Development Act, 2006 - SARFAESI Act 2002 - Section 13 - Framework for Revival and Rehabilitation of MSMEs - A right under the MSME Act is not destroyed by the SARFAESI Act or vice versa - The terms of the FRAMEWORK do not prohibit the lending bank/secured creditor (assuming that it has no conscious knowledge that the defaulting borrower is an MSME) to classify the account of the defaulting MSME as NPA and to even issue the demand notice under Section 13(2) of the SARFAESI Act without such identification of incipient stress in the account of the defaulting borrower (MSME); however, upon receipt of the demand notice, if such borrower in its response under Section 13(3-A) of the SARFAESI Act asserts that it an MSME and claims the benefit of the FRAMEWORK citing reasons supported by an affidavit, the lending bank/secured creditor would then be mandatorily bound to look into such claim keeping further action under the SARFAESI Act in abeyance; and, should the claim be found to be worthy of acceptance within the framework of the FRAMEWORK, to act in terms thereof for securing revival and rehabilitation of the defaulting borrower. (Para 6)

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