Kerala High Court Dismisses Repeated Writ Petition by MSME Firm Against RBI

Court Upholds Doctrine of Res Judicata, Denies M/s. M.D. Esthappan Infrastructure Pvt. Ltd. Relief in Writ Petition

The Kerala High Court, on October 17, 2025, dismissed a writ petition filed by M/s. M.D. Esthappan Infrastructure Pvt. Ltd., an MSME firm, against the Reserve Bank of India (RBI) and others. The petitioners had sought relief under the revival and rehabilitation framework for MSMEs, claiming their accounts were wrongfully classified as Non-Performing Assets (NPA) without following the mandatory procedures.

The petitioners argued that, as a registered MSME, they were entitled to statutory protections under the Micro, Small and Medium Enterprises Development Act, 2006. They contended that the respondent bank violated the framework by not referring their case to a committee for corrective measures before initiating recovery steps under the SARFAESI Act.

However, the court, presided over by Justice Mohammed Nias C.P., emphasized that the doctrine of res judicata barred the re-litigation of issues already adjudicated between the same parties. The court noted that the petitioners had previously raised similar issues in multiple proceedings, including before the Supreme Court, all of which were dismissed. The judgment highlighted that the principle of judicial finality prevents multiplicity of proceedings and that a change of form or rephrasing of relief cannot circumvent the principle of res judicata.

The court further reiterated that MSME protections must be invoked before the classification of an account as NPA. The petitioners' attempt to seek MSME relief post-classification was deemed unsustainable. The court also pointed out the petitioners' history of repetitive and piecemeal litigation, which constituted an abuse of the judicial process.

Citing the Supreme Court's stance against repeated litigation, the judgment underscored the importance of upholding judicial finality to conserve judicial resources and protect parties from vexatious litigation.

Bottom Line:

Doctrine of Res Judicata and Constructive Res Judicata - A matter once finally adjudicated by a competent court cannot be reopened between the same parties. Multiplicity of proceedings on the same issues constitutes abuse of process of law and is barred under the principles of res judicata and constructive res judicata.

Statutory provision(s): Civil Procedure Code, 1908 Section 11, MSMED Act, 2006, SARFAESI Act, 2002

M/s. M.D. Esthappan Infrastructure Pvt. Ltd. v. Reserve Bank of India, (Kerala) : Law Finder Doc Id # 2796064