The bench stated “Transparency in judicial proceedings does not extend to unauthorized recordings and circulation of court proceedings, which amounts to contempt of court and interferes with the administration of justice.”
Kerala: The Kerala High Court dismissed two writ petitions filed by M/S. M.D. Esthappan Infrastructure Pvt. Ltd. and its proprietor, M.D. Esthappan. The petitions challenged the enforcement proceedings initiated by Dhanlaxmi Bank Ltd. under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act).
Background
The petitioners had availed credit facilities from Dhanlaxmi Bank. Upon defaulting, the bank initiated recovery actions under the SARFAESI Act. The petitioners argued they were entitled to protections under the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act) and referred to the Reserve Bank of India (RBI) circular dated March 17, 2016.
This circular mandates that banks must refer stressed MSME accounts to a specialized Committee before declaring them as Non-Performing Assets (NPAs).
However, Justice Gopinath P., who presided over the case, observed that the petitioners had not claimed MSME rehabilitation benefits before their accounts were classified as NPAs. The court relied on the Supreme Court ruling in Pro Knits v. Canara Bank (2024) 10 SCC 292, stating that MSMEs must seek rehabilitation before their loan accounts become NPAs.
It was also noted that the petitioners had already approached multiple legal forums, including the Bombay High Court and the Debt Recovery Tribunal, without asserting their MSME status.
The Kerala High Court held that the legal position was already established by the Supreme Court and the Division Bench ruling in P.K. Krishnakumar v. IndusInd Bank (2024 SCC OnLine Ker 6888). Both judgments emphasized that MSMEs must act proactively before their accounts are classified as NPAs. The court stated:
“When the High Court declines to interfere in such circumstances, it does not mean that the petitioners’ waiver vested the bank with jurisdiction, assuming it is inherently lacking; it means that the borrower is not entitled to invoke writ jurisdiction irrespective of whether the bank’s actions are without jurisdiction or not.”
Additionally, the court rejected the argument that RBI guidelines should override the SARFAESI Act. It clarified that Section 35 of the SARFAESI Act supersedes any conflicting provisions in the MSMED Act.
An unexpected issue also arose regarding the unauthorized recording and circulation of the court’s virtual proceedings. It was brought to the court’s notice that some individuals had recorded the proceedings and circulated them via WhatsApp groups comprising lawyers and borrowers.
The petitioners’ counsel, Mathews J. Nedumpara, claimed his right to record and share the proceedings to ensure transparency. However, Justice Gopinath P. firmly rejected this argument, referring to the Electronic Video Linkage Rules for Courts (Kerala), 2021, and the Standard Operating Procedure (SOP) for Video Conferencing. The court emphasized:
“Transparency in judicial proceedings does not extend to unauthorized recordings and circulation of court proceedings, which amounts to contempt of court and interferes with the administration of justice.”
The court further directed the Registry to place the matter before the Chief Justice for consideration of initiating contempt proceedings.
