The 2015 Framework for Revival and Rehabilitation of MSMEs, notified under Section 9 of the MSMED Act, obliges banks to route stressed MSME accounts through a committee process — identification of incipient stress, a corrective action plan, restructuring where viable — before the recovery machinery takes over. But when must the enterprise claim that protection? In W.A. No. 1872 of 2026 with W.P. No. 2244 of 2026, decided on 23 September 2026, a Division Bench of the Madras High Court comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan answered: promptly — ideally before the account slips into NPA, and at the latest in response to the demand notice — and not as a plea of last resort against possession under the SARFAESI Act.
The dispute
Grandeur Fashions, a textile manufacturing partnership registered as an MSME, took credit facilities from Punjab National Bank. The account was classified as a non-performing asset on 26 August 2024, and the bank issued notices under Sections 13(2) and 13(4) of the SARFAESI Act. The firm resisted enforcement by claiming entitlement to the revival process under the 2015 Framework; the bank’s letter of 30 September 2025 rejected the request, and the dispute reached the High Court in writ proceedings and an intra-court appeal.
What the Division Bench held
Timing is substance
The Framework’s purpose is revival of viable enterprises, which presupposes early engagement. Borrowers must raise MSME status “promptly — ideally before NPA classification or at minimum in responses to initial demand notices.”
Affidavit-backed assertion triggers the duty
Where a borrower asserts MSME status on receipt of the demand notice, citing reasons supported by affidavit, the lending bank is “mandatorily bound to look into such claim.” The duty is real — but it is triggered by a proper claim, not a bare label.
No second bite after breach
This enterprise had received committee consideration and failed to honour its undertakings. Re-invoking the Framework at the enforcement stage was an attempt to stall recovery, not to revive, and the writ petition was dismissed.
The stressed-MSME sequence, correctly worked
The Framework does not extinguish the debt or bar classification: NPA categorisation follows the RBI’s prudential norms, which carry statutory force. What the Framework offers is a structured chance at restructuring — for enterprises that claim it in time and keep their word.
Drafting and strategy pointers
For MSME borrowers, three documents decide these disputes: the Udyam registration (establishing status), the reply to the Section 13(2) notice (establishing a timely, affidavit-supported claim), and the record of compliance with any committee-approved plan (establishing good faith). Enterprises in Delhi facing PNB, SBI or private-bank enforcement should treat the demand-notice reply as the pivotal pleading of the case — it is the document courts will later read to decide whether the Framework claim was genuine or tactical. For banks, the judgment is equally instructive: a demand-notice-stage MSME claim must be examined and answered on record, because an unconsidered claim is the one weakness that can unravel an otherwise regular SARFAESI action.
Core holding: the 2015 Revival Framework is mandatory when properly and promptly invoked, but it protects engagement, not evasion — an MSME that defaults on its committee undertakings cannot recycle the Framework to halt recovery.
This article is for general information only and is not legal advice. Enforcement timelines under SARFAESI are short and unforgiving; affected enterprises should seek advice immediately on receipt of a demand notice.
Frequently Asked Questions
What is the 2015 MSME Revival Framework?
A notification dated 29 May 2015 issued under the MSMED Act, 2006, operationalised through RBI directions, requiring banks to constitute committees for stressed micro, small and medium enterprises, identify incipient stress (SMA categories), and consider a corrective action plan — rectification, restructuring or recovery — before enforcement.
When should an MSME invoke it?
As early as possible: when stress first appears, and in any event when the bank issues its demand notice. The Court held that on receipt of a demand notice, a borrower asserting MSME status and claiming the Framework’s benefit — with reasons supported by affidavit — obliges the bank to examine that claim. Sitting on the claim until possession or auction forfeits its force.
Why did this particular enterprise fail?
Because it had already been through the committee process and had not honoured its undertakings. The Framework protects enterprises engaging genuinely with revival; it is not a revolving door for borrowers who default on the very plan the committee sanctioned.
Does this affect MSMEs in Delhi?
The judgment binds within its jurisdiction, but it applies principles the Supreme Court has laid down on the Framework’s invocation, and Delhi courts and DRTs take the same approach: assert MSME status early, on affidavit, with the Udyam registration and financials — not for the first time in a writ against the auction notice.