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

Delhi High Court dismissed an appeal challenging a Commercial Court’s decree in favor of ICICI Bank Limited, decreeing the repayment of a loan amount along with interest. The court affirmed that a borrower cannot evade its liability merely because the lender did not enforce its security interest.

Case Summary: ICICI Bank instituted a suit seeking recovery of a loan amount along with interest from the borrowers. The loan was granted for purchasing a vehicle, which served as security. Despite an ex-parte order appointing a receiver, the bank did not recover the vehicle. The Commercial Court decreed in favor of the bank, prompting the appellants to file an appeal.

Contentions: The respondents argued that the bank could not proceed against the appellants as it did not take steps to recover the vehicle. They also contended that the suit was barred by limitation.

Court’s Observations: The court rejected the contention that the suit was barred by limitation, noting that the bank’s claim was within the prescribed period. Additionally, it emphasized that a creditor’s failure to enforce security does not absolve the borrower of its liability. The court clarified that a borrower cannot escape repayment by citing the lender’s inaction in enforcing security.

Court’s Decision: The Delhi High Court dismissed the appeal, upholding the Commercial Court’s decree in favor of ICICI Bank Limited.

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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