In the case of Suman Srivastava vs Union Bank of India & Ors., the Delhi High Court examined the legal implications of recovery proceedings initiated against the legal heirs of a deceased mortgagor. The petitioner, Suman Srivastava, challenged the orders of the Debt Recovery Tribunal (DRT) and Debt Recovery Appellate Tribunal (DRAT) which had dismissed her appeals on the ground of non-compliance with the mandatory pre-deposit requirement under Section 21 of the Recovery of Debts and Bankruptcy Act, 1993 (RDB Act).

The matter arose from a loan granted by Union Bank of India to M/s Green World International Pvt. Ltd., wherein the petitioner’s late husband, Mr. Prakash Srivastava, had mortgaged his residential property located at South City-I, Gurgaon, as security. Mr. Srivastava passed away shortly after the mortgage was created, and the property was subsequently inherited by the petitioner and her two sons. When the borrower company defaulted, its loan account was declared a Non-Performing Asset. Recovery proceedings followed, leading to the issuance of a notice under Section 13(2) of the SARFAESI Act in 2016.

The petitioner contended that neither her late husband nor she or her sons received any such notice, and that proceedings were unlawfully initiated against a deceased person. She further claimed that she became aware of the proceedings only in July 2024, upon receiving a sale proclamation notice for the mortgaged property. Objections and appeals filed by her to challenge the DRT’s order were dismissed on the ground of non-deposit under Section 21 of the RDB Act.

She challenged this requirement by arguing that she was neither a borrower nor a guarantor and hence, not liable to make such a deposit. She asserted that the recovery proceedings, initiated without proper impleadment of legal heirs, were a nullity, and any subsequent actions lacked legal sanctity. She further referred to case law that supported the contention that actions taken without impleading legal heirs of a deceased defendant were not maintainable.

The respondent bank, however, contested these claims, presenting service affidavits and photographs indicating that the petitioner and her sons had been served with relevant notices at their residence. It was also argued that the petitioner deliberately concealed material facts and failed to inform the bank about the death of her husband, despite being fully aware of the ongoing proceedings. The bank emphasized that the mortgaged property was jointly inherited by the petitioner and her sons, who continued to occupy it, and as such, they were liable for the outstanding debt to the extent of the estate inherited.

The High Court observed that the statutory precondition of pre-deposit under Section 21 of the RDB Act is mandatory and cannot be waived. It referred to binding precedents including Kotak Mahindra Bank v. Ambuj A. Kasliwal and Narayan Chandra Ghosh v. UCO Bank, which affirmed that the right to appeal under the Act is a statutory remedy and subject to compliance with statutory conditions, including the deposit of a portion of the determined debt amount.

The Court further held that the petitioner had failed to approach the Court with clean hands. Despite inheriting the mortgaged property and being fully aware of the proceedings, the petitioner did not notify the bank about her husband’s death and allowed proceedings to continue without proper representation. Additionally, her sons, who were co-owners of the property and parties to the DRT proceedings, failed to disclose the death of Mr. Srivastava or raise objections at the appropriate stage.

Rejecting the argument that the absence of personal notice to the petitioner invalidated the proceedings, the Court noted that the estate of the deceased was adequately represented by her sons in the recovery process. It clarified that the petitioner, as a legal heir and inheritor of the mortgaged asset, could not escape the implications of a recovery decree obtained on the basis of that property.

The Court also took into account the fact that the bank had subsequently issued a fresh notice under Section 13(2) of the SARFAESI Act upon learning of the death of Mr. Srivastava, thereby providing the petitioner with a renewed opportunity to comply.

In conclusion, the Delhi High Court found no merit in the petitioner’s arguments and dismissed the writ petition. It held that there was no illegality in the DRAT’s order requiring a pre-deposit and found no exceptional circumstances warranting interference under Article 226 of the Constitution. The judgment serves as a reaffirmation of the principle that statutory remedies, especially in matters involving financial recovery, are to be exercised strictly in accordance with the law and cannot be diluted by procedural evasions or concealment of material facts.