MSME status does not shield a proven Section 7 default

Bank of India sought CIRP against Shri Karvir Nivasini Mahalaxmi Ispat for default of about ₹23.66 crore. 

The MSME borrower argued that the bank had not followed the mandatory MSME rehabilitation framework and that its NPA classification was premature. 

NCLT held that, while those RBI and MSME requirements are binding on banks, its Section 7 enquiry is limited to whether financial debt and default exist.