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Informative

Delhi HC Restores Union Bank Loan Recovery Suit, Imposes ₹25,000 Cost and Orders Inquiry into Officer’s Negligence.

Update / Judgement Date

16 Oct 2025

Source

WCP News Bulletin

Author

Sakshi Bhardwaj — WCP Legal Desk

Reading Time

3 min read

Civil LawOther Legal Matters
Delhi HC Restores Union Bank Loan Recovery Suit, Imposes ₹25,000 Cost and Orders Inquiry into Officer’s Negligence.
WCP News Bulletin
Headnote:

The Delhi High Court allowed the petition filed by Union Bank of India challenging the dismissal of its loan recovery suit for non-prosecution, directing restoration of the suit despite repeated defaults by the bank and its counsel. The Court observed that though the petitioner bank had shown gross negligence and indifference in pursuing the case, public money was involved, and hence, the matter merited revival in the interest of justice. The Court imposed a cost of ₹25,000 to be deposited with the Delhi High Court Legal Services Committee (DHCLSC) within two weeks and ordered the bank to conduct an internal inquiry to fix accountability on the responsible officer or manager, with recovery of the said cost from the erring employee’s salary if found negligent or complicit.


Background:
  1. The petitioner bank filed a loan recovery suit against M/s Shabd Enterprises and another borrower, which was adjourned sine die on 02.07.2024 as the defendants were untraceable.
  2. The suit was later revived on 13.02.2025, but the bank failed to file an application for substituted service and remained absent on several dates.
  3. The trial court dismissed the suit in default on 08.04.2025 due to repeated non-appearance.
  4. Applications filed on 21.05.2025 and 24.05.2025 for restoration of the suit were also dismissed in default on 04.07.2025 and 15.07.2025 respectively, prompting the present petition.


Court’s Observations:
  1. The Court noted that there was no explanation or record indicating why the bank or its officers failed to monitor the proceedings despite multiple opportunities.
  2. Justice Kathpalia criticized the bank’s “lethargic and negligent” conduct, suggesting that the lapse might even be deliberate to benefit the defendants.
  3. However, considering that public funds were at stake, the Court held that the suit ought to be revived to prevent loss to the exchequer.


Directions:
  1. The loan recovery suit was restored, subject to:
  2. Deposit of ₹25,000 as cost with DHCLSC within two weeks.
  3. The Union Bank of India must:

Conduct a detailed internal inquiry to identify the officer/manager responsible for negligence or possible collusion.

Recover the cost amount from the salary of the erring officer if found at fault.

File an affidavit of the concerned General Manager before the trial court within one week after completing the inquiry.

Copy of the order was directed to be sent to the Chairman and Managing Director of Union Bank of India for compliance.

The bank was directed to appear before the trial court on 29.10.2025 at 10:00 a.m. for further proceedings.


Outcome:

Petition allowed; loan recovery suit restored subject to cost and disciplinary inquiry.

CM(M) 2016/2025, CM APPL. 65427/2025 & 65426/2025

Court: High Court of Delhi at New Delhi

Coram: Hon’ble Mr. Justice Girish Kathpalia