Delhi court rejects bank's suit for recovery against a dead man

New Delhi [India], November 17 : A Delhi court rejected the suit for recovery filed by the State Bank of India (SBI) against a person who had already passed away two years prior to filing the suit. While rejecting the suit, the court said that under Indian law, a dead man cannot be sued.
The suit was filed for the recovery of Rs 13,51,973 along with interest at a rate of 11.10 per cent annually. The suit was filed against Siya Nand.
District Judge (Commercial) SS Rathi of Karkardooma Court said that the suit is liable to be rejected as under Indian laws, a dead man cannot be sued and the cause of action with the bank to sue a loan defaulter comes to an end with the death of the person.
The court added that, however, under the law, his or her legal heirs as per the Indian Succession Act, the Hindu Succession Act, or other personal laws can be sued by the Bank if they inherit the estate of the deceased borrower
The court also clarified that the flaw in this suit cannot be corrected by moving Order 22 Rule 4 Civil Procedure Code (CPC) applications since such applications can be moved only if a defendant dies during the pendency or trial of a suit.
"Any bank, especially SBI, being the leading bank in our country, is expected to take proactive steps to ascertain whether the people being sought to be sued by it are dead or alive," said the court in judgement on November 2, 2023.
The court ordered that a copy of this order be sent to the Secretary (Finance), Ministry of Finance, Banking Division, Government of India, and Chairman, Indian Bank Association, for information and necessary corrective action, if any, on their part, under intimation to this Court.
At the stage of taking cognizance of the matter on July 20, 2023, the Court noted that the Plaintiff Bank Branch is of Kamla Nagar, Central Delhi, and the Defendant is a resident of Ghaziabad, UP, but still a suit was filed in Shahdara District on the pretext that he serves under East MCD, Shahdara.
The Court had also directed the plaintiff bank to ascertain if the defendant is still in the jurisdiction of this Court so that the territorial jurisdiction of the Court can be ascertained.
The court noted that upon enquiry carried out by the plaintiff bank under Court's orders, Court came to know that defendant Siya Nand is no more and expired on August 7, 2021 itself, around two years prior to filing the suit.
The court issued a notice under Section 340 Cr.PC to branch manager Sharad Srivastava for swearing a false affidavit that defendant is still serving with East MCD and as to why proceedings for commission of 'Offence of Perjury' are punishable under the Indian Penal Code titled 'False Affidavit and Offence against Public Justice' including the offence of giving a false affidavit punishable under Section 193 IPC, using evidence known to be false punishable under Section 196 IPC and using a true certificate known to be false punishable under Section 198 IPC, be initiated against him.
Considering that he has tendered an unconditional apology for his failure to ascertain the facts of defendant Siya Nand, who is sought to be sued in this case, before filing the suit, the court has discharged the notice.
The court has also issued notice to the General Manager (Law, Recovery and Litigation) of the SBI to explain why the SBI decided to sue a dead man contrary to the Law of the Nation.
In response, SBI has accepted its mistake and has assured the Court that they are taking appropriate action against the erring officials for non-compliance with an existing internal circular or SOP in this regard.
The court noted that the perusal of the two SOPs nowhere shows that it casts any binding duty on the Chief Manager to ascertain whether the defendant sought to be sued is dead or alive.
"It does say, 'If Borrower/Guarantor dies before filing a civil suit...' but there is nothing provided as to how it has been ascertained in the first place. A bank is not expected to sit and wait for information in this regard and if no information is received, proceed to sue a dead man," the court pointed out.
During the hearing, the SBI also accepted the suggestion of this Court that the Litigation Office of the SBI shall try and obtain access to the database of "Chief Registrar of Births and Deaths, Government of India" through the National API Exchange Platform (NAPIX) of the NIC, Government of India and its API Setu App.