A Delhi Court earlier this month pulled up the State Bank of India for trying to recover money from a dead person. The court was hearing the bank's plea seeking to recover dues amounting to more than Rs. 13.5 lakhs. However, the bank did not know the individual had died when it filed a suit against the person.
Dismissing the bank’s plea, the court advised bank officials to access the national births and deaths database to first ascertain whether the individual they were seeking money from was alive or dead. The advice followed the bank’s admission that it mistakenly filed a suit seeking the recovery of more than Rs. 13.5 lakhs along with interest against Siya Nand, who died two years ago in 2021.
“Any Bank especially SBI being the leading Bank of our country is expected to take proactive steps to ascertain the people being sought to be sued by it are Dead or Alive,” District Judge Surinder Rathi said in his November 2 order.
“It is reiterated that State Bank of India is the leading Nationalized Bank in our country and shall lead the Banking Industry as Torchbearer of efficiency, professionalism, transparency and ethics,” the court said.
BOOM recaps what the case is about.
Suit for recovery two years after individual’s death
The State Bank of India in July 2023 filed a plea before Delhi’s Karkardooma court seeking to recover more than 13.5 lakhs from Siya Nand, an official with the Municipal Corporation of Delhi (East). At the time, the bank did not know that Nand had died in August 2021.
The lapse came to light during the proceedings of the case.
According to the existing laws, one cannot recover dues from a dead person. However, the bank can recover money from a legal heir if they inherit the estate under the Indian Succession Act, the Hindu Succession Act, or other personal laws with the condition that the borrower dies during the pendency of the trial.
What happened next?
SBI “accepted its mistake” and told the court that action would be taken against the erring bank official for non-compliance of existing protocols.
The bank further informed the court that the incumbent guidelines have been amended to the extent that before filing the suit against the Borrower, “Branch Manager has to ascertain if the concerned parties against whom suit is being proposed is/are alive/living”.
The amended guidelines have also been circulated pan-India. “The amendments in the SOP casts a duty on the Branch Manager that before filing a civil suit he/she shall ascertain whether the defendants sought to be sued are dead or alive,” the order read.
The SBI also accepted the court’s suggestion that its officials would 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 NIC, Government of India and its API Setu App.