The Delhi High Court dismissed an appeal filed impugning the judgment and decree dated 04.08.2023 delivered by the learned Commercial Court decreeing an amount of ₹3,44,854/- along with simple interest at the rate of 9% per annum from the date of filing of the suit till the realization of the said amount. The Court observed that the fact that the bank was secured by hypothecation of the vehicle does not disentitle it to claim the amount outstanding from the borrowers.
Brief Facts:
The Bank had instituted the said suit seeking recovery of ₹3,44,854/- along with pendente lite and future interest at the rate of 24% per annum. The Bank claimed that respondent no.2 had approached it for a grant of a loan of a sum of ₹6,23,000/- for purchasing a vehicle. The said loan was granted and was secured by the vehicle purchased by the Company. The Bank did not take any steps for pre-institution mediation and filed the suit along with an urgent application for the appointment of a receiver ex-parte. Although the said application was allowed, the Bank did not recover the vehicle. Neither the appellant nor the Company filed their written statements. Absent any contest, the learned Commercial Court accepted the Bank’s claim and passed the impugned judgment and decree.
Contentions of the Appellants:
The Learned Counsel for the Respondents submitted that ICICI Bank could not proceed against the Appellant as it had taken no steps to recover the vehicle from the Company. He submitted that the proceedings under the Insolvency & Bankruptcy Code, 2016 in respect of the company had been initiated before the National Company Law Tribunal (NCLT) and an Interim Resolution Professional (IRP) had been appointed. Therefore, the Bank was required to make its claim before the IRP or the learned NCLT. He further contended that the suit against the appellant was barred by limitation.
Contentions of the Respondents:
The Learned Counsel for the Respondents submitted that the Loan Recall Notice was issued on 20.02.2021 and therefore, the suit was within the period of limitation. He pointed out that the appellant was not a guarantor but a co-borrower. He submitted that even if it is accepted that the period of limitation for filing the suit against the appellant commenced on 03.04.2019, the application for impleadment on 12.07.2022 would be within the period of limitation of three years after excluding the period from 15.03.2020 till 14.03.2021.
The Court noted that it is unable to accept that the period of limitation would commence from the date of the first default in payment of an EMI. At best, the claims in respect of EMIs that fell due three years prior to the date of filing the application to implead the appellant may be barred by limitation. In any view of the matter, the suit filed by the Bank was within limitation.
On the contention of the appellant that if the Bank had recovered the vehicle, the value of the same would have been sufficient to discharge its liability, the Court observed that the fact that the bank was secured by hypothecation of the vehicle does not disentitle it to claim the amount outstanding from the borrowers. A borrower cannot avoid its liability on the ground that the lender has not enforced its security interest. The contention that a creditor is required to enforce its security before proceeding to recover the claim, is without merit.
The Decision of the Court:
The Delhi High Court, dismissing the appeal, held that there is no merit in the appeal.
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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