Delhi High Court Affirms Bank’s Right to Claim Outstanding Amount Despite Non-Enforcement of Security Interest

In a recent judgment, the Delhi High Court dismissed an appeal challenging a judgment and decree passed by the Commercial Court, which decreed an amount along with interest in favor of ICICI Bank Limited. The court emphasized that a borrower cannot evade its liability merely because the lender has not enforced its security interest.

Case Background: ICICI Bank had filed a suit seeking recovery of a loan amount along with interest, which was secured by hypothecation of a vehicle purchased by the borrower. Despite the bank’s failure to recover the vehicle, the Commercial Court decreed the amount in favor of the bank as the borrower failed to contest the suit.

Appellants’ Contentions: The appellants argued that the bank’s failure to enforce its security interest disentitled it from claiming the outstanding amount. They also contended that the suit was barred by limitation.

Court’s Observations: The court rejected the appellants’ arguments, noting that the suit was filed within the limitation period. It emphasized that the mere fact that the bank did not enforce its security interest did not absolve the borrower from its liability. The court clarified that a creditor is not required to enforce its security before seeking recovery from the borrower.

Court’s Decision: The Delhi High Court upheld the judgment and decree passed by the Commercial Court, affirming ICICI Bank’s right to claim the outstanding amount from the borrowers. The court dismissed the appeal, stating that there was no merit in the appellant’s arguments.

Case Details:

• Case Title: Kulbhushan Sachdev v ICICI Bank Limited & Anr.
• Coram: Hon’ble Mr. Justice Vibhu Bakhru and Hon’ble Mrs. Justice Tara Vitasta Ganju
• Case No.: RFA(COMM) 288/2023
• Advocate for the Appellant: Mr. Ashwani Garg and Mr. Sameer Garg
• Advocate for the Respondents: Mr. Hemant Gupta, Mr. Shivang Jain, Ms. Payal Gupta, Ms. Nitikaa Guptha, and Ms. Alpana Singh

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