Recovery suit of Bank dismised due to fault of Bank Official : Restored in interest of public exchequer

Delhi High Court Restores Union Bank's Dismissed Suit with Conditions. Negligence by Bank Officers Leads to Cost and Inquiry; Public Exchequer's Interest Protected

In a significant decision, the Delhi High Court has restored a loan recovery suit filed by the Union Bank of India against M/s Shabd Enterprises, which was earlier dismissed due to negligence and non-appearance by the bank's officers. The restoration comes with stringent conditions, including a cost to be deposited by the petitioner bank and a detailed inquiry to fix responsibility on the erring officer.

The case was initially adjourned sine die in July 2024 after the defendants were untraceable. Despite the revival of the suit in February 2025, the petitioner bank failed to file an application for substituted service of summons, resulting in the dismissal of the suit in April 2025. The bank's repeated absence at subsequent hearings led to further dismissals of their restoration applications in July 2025.

Justice Girish Kathpalia, presiding over the matter, noted the negligent conduct of the bank's officers and emphasized the involvement of public money in the litigation. The court stated that if the petition was not allowed, the public exchequer would ultimately suffer. Therefore, the suit was restored in the interest of safeguarding public funds.

The court ordered the Union Bank of India to deposit a cost of Rs. 25,000 with the Delhi High Court Legal Services Committee within two weeks. Additionally, the bank is required to conduct a thorough inquiry to determine whether the negligence was intentional or a mere oversight. The cost imposed must be recovered from the salary of the officer responsible for the litigation, ensuring accountability and recompense to the exchequer.

The inquiry, as directed by the court, must be concluded within one month, with a report submitted in the form of an affidavit by the bank's General Manager to the trial court. This move is aimed at ensuring compliance and preventing future lapses in cases involving public funds.

The Union Bank of India is scheduled to appear before the trial court on October 29, 2025, for further proceedings. Pending applications related to the matter have also been disposed of.

This judgment underscores the judiciary's commitment to protecting public interests and holding individuals accountable for negligence in handling cases involving public money. It serves as a stern reminder to financial institutions to exercise due diligence and responsibility in litigation processes.

Bottom Line:

Conduct of petitioner bank found lethargic and negligent - Suit restored in interest of public exchequer, subject to cost to be deposited by petitioner bank and inquiry to fix responsibility on erring officer for negligence or deliberate inaction.

Statutory provision(s):  

• - Restoration of dismissed suit  
• - Conduct of petitioner bank found lethargic and negligent  
• - Inquiry to fix responsibility on erring officer

Union Bank of India v. M/s Shabd Enterprises, (Delhi) : Law Finder Doc Id # 2796490