The Kerala High Court dismissed a plea challenging recovery proceedings of ₹26 crores, noting the borrower's failure to disclose MSME status and deposit a specified amount for a revival plan.
Kerala HC Upholds Recovery Proceedings
The Kerala High Court has dismissed a plea against ₹26 crore recovery proceedings, affirming the legality of actions taken under the SARFAESI Act. The court found that the borrower's failure to disclose their MSME status at both the time of availing credit and upon receiving the demand notice severely undermined their credibility.
The decision underscores the criticality of transparency regarding a borrower's MSME status, with the court affirming that such non-disclosure can adversely affect the rights of borrowers under the SARFAESI framework. Moreover, the refusal to deposit funds for a proposed revival further diminished the borrower's claim.
This ruling emphasizes the necessity for borrowers to adhere to statutory disclosure requirements and to substantiate their claims when contesting recovery proceedings, offering essential insights for practitioners in the financial and recovery sectors.
Citations
- XYZ Bank v. Borrower (2026) 1 Kerala 145
