DRAT Chennai: Bank Cannot Exercise Lien on Third-Party Deposits Without Due Process; Interim Relief Must Align With Main Plea

February 13, 2026 : The Debts Recovery Appellate Tribunal, Chennai has held that a bank cannot attach or exercise lien over deposits during the pendency of recovery proceedings unless the statutory procedure under the Recovery of Debts and Bankruptcy Act, 1993 is strictly followed. The Tribunal further clarified that interim relief cannot travel beyond the scope of the main relief sought in the original application.

The ruling was delivered by Justice G. Chandrasekharan (Chairperson) while dismissing an appeal filed by HDFC Bank Limited against an order of the Debts Recovery Tribunal-III, Chennai.

Background

The dispute arose from financial facilities extended to Right Health Platter Pvt. Ltd. beginning June 2021. The borrower entered into a Memorandum of Understanding with Zetwerk Manufacturing SG Pte. Ltd. for supply of organic dairy products. Based on invoices raised on the Zetwerk entity, the bank extended foreign bill discounting facilities.

According to the bank, 19 invoices amounting to USD 44,06,616 remained unpaid, leading to the filing of a recovery application seeking approximately ₹52.08 crore against the borrower and other defendants.

During the pendency of the original application, the bank sought permission to exercise lien over fixed deposits and cash flows of Zetwerk Manufacturing Businesses Pvt. Ltd. (Respondent No. 8). The DRT initially granted a status quo order but later recalled it after hearing all parties, noting that no substantive recovery relief had been sought against the said entity.

Key Findings

The Appellate Tribunal upheld the DRT’s order and laid down the following principles:

1. Interim relief cannot exceed main relief
The Tribunal found that the original application sought recovery only against Respondents 1 to 6. As regards Respondents 7 and 8, the only relief sought was lifting of the corporate veil, without any consequential prayer for recovery.
In such circumstances, granting interim relief such as lien over deposits of those parties was impermissible.

2. No attachment without statutory procedure
The Tribunal clarified that attachment before judgment under Section 19(13) of the RDB Act cannot be ordered directly.
A show cause notice must first be issued directing the defendant to furnish security. Only upon failure to comply can attachment be effected. This mandatory procedure had not been followed.

3. Lien over third-party deposits not automatic
Even though banks have general lien rights, the Tribunal held that exercising lien over deposits of a third party—whose liability is yet to be adjudicated—is not permissible, especially when the debt itself is disputed.

4. Disputed liability cannot justify coercive interim measures
The Tribunal noted that the claim was based on disputed invoices and had not yet been adjudicated. In such a scenario, permitting coercive action against a third party’s deposits would be legally untenable.

Outcome

The Appellate Tribunal dismissed the appeal and upheld the DRT’s decision recalling the earlier status quo order. It reaffirmed that procedural safeguards and pleadings in the main application strictly govern the scope of interim relief.

Case Title: HDFC Bank Limited v. Right Health Platter Private Limited & Ors.
Case No.: M.A. No. 47 of 2024 (I.A. No. 1733 of 2024 in O.A. No. 281 of 2024, DRT-III Chennai)
Coram: Justice G. Chandrasekharan, Chairperson