2. It is specifically agreed between all the Petitioners and all the Respondent-Banks or Non-Banking Financial Companies (for short "NBFC") appearing through their respective advocates including Mr. Nedumpara for all Petitioners, that presently, without going into facts and merits of individual cases, only the ground based on said Notification will be considered and depending on the outcome on the said issue, further directions would be passed. In that view of the matter, this common order is being passed.
3. By these petitions filed under Article 226 of the Constitution of India, the Petitioners, who are stated to be duly registered under the MSMED Act, and who are borrowers who have taken loans or other financial assistance from the Respondent Banks/NBFCs, have challenged the very action of declaring them as Page 33 of 58 JANUARY 11, 2024 Shubham Talle ::: Uploaded on - 12/01/2024 ::: Downloaded on - 13/01/2024 03:06:34 ::: WP-4620-2022-J.doc Non-Performing Assets (NPA) under Section 13 (2) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short "SARFAESI Act, 2002"), without following the procedure of restructuring as contemplated under the said Notification. The basic challenge of all the Petitioner MSMEs, which is presently under consideration, is essentially that none of the Respondent Banks/NBFCs have followed the procedure as provided under the said Notification, for identifying the incipient stress undergone by the Petitioners and its consequent due classification in the Special Mention Account categories SMA-0, SMA-1 and SMA-2 before classifying them as Non-Performing Assets. The argument, in essence is that, if the said procedure is not followed, then the very action of Respondent-Banks/NBFCs of classifying the Petitioners as NPAs is illegal, and if that be so, no notices under Section 13(2) of the SARFAESI Act, 2002, could have been issued. It is further argued that if notices under Section 13(2) could not have been issued to the Petitioners, then all the further actions, which are currently pending at various stages under the SARFAESI Act, 2002, against the Petitioners, are void ab initio, since their foundation itself is illegal. Page 34 of 58