THE HON’BLE SRI JUSTICE C. V. BHASKAR REDDY WRIT PETITION No.23697 of 2024

ORDER:

This Writ Petition, under Article 226 of the Constitution of India, is filed by the petitioner, seeking the following relief:

“….to issue a Writ, Order or Direction more particularly one in the nature of a Writ of Mandamus declaring the action of respondent Nos.3 to 17 in sending recovery agents to the residence of the Petitioner and threatening him and his family with dire consequences if loans are not repaid as illegal arbitrary and against Articles 14, 19 and 21 of the Constitution of India and consequently to direct respondent Nos.3 to 17 to forthwith stop sending recovery agents to the Petitioners residence and follow procedure as contemplated by law to recover any loans that may be due to the them.…”

2. Considered the submissions of the learned counsel for the petitioner; Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India appearing for respondent No.1; Sri B. Ravindra Reddy, learned counsel for appearing for respondent No.5; Sri V. Santosh, learned counsel for appearing for respondent No.6; Sri N.B.Sudarshan, learned counsel for appearing for respondent No.12 and Sri R. Mangulal, learned counsel for appearing for respondent No.15.

3. It is the case of petitioner that he availed personal loan from respondent Nos.3 to 17, who are the private bankers and financial institutions and utilised the amounts and he has been prompt in repaying the same without fail. It is further case of the petitioner that ever since he obtained loan, he has been regularly paying the instalments in terms of the agreement and only from June, 2024 he could not pay the instalment. It is also case of the petitioner that respondent Nos.4 to 8 without following the guidelines of RBI, has been sending the loan recovery agents to his house and harassing to pay the amounts due as per the calculation of respondents.

4. The grievance of the petitioner is that the respondents are entitled to recover loan amount in terms of the loan agreements by following the procedure established under law and they are not having any right to recover the loan amount by using force.

5. The issues raised in this writ petition are no longer res integra as the Hon’ble Supreme Court in ICICI Bank Ltd. vs. Prakash Kaur and others, [(2007) 2 SCC 711], while dealing with the similar issues where the banks engaged the services of recovery/

collection agents to recover the loans, observed as follows:

“16. Before we part with this matter, we wish to make it clear that we do not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents, who are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognised by law to take possession of vehicles in cases where the borrower may have committed default in payment of the instalments instead of taking resort to strong-arm tactics.”

6. Aggressive recovery tactics adopted by the agents of Banks/ Financial Institutions lead to the landmark judgment in ICICI Bank vs. Shanti Devi Sharma and others, [(2008) 7 SCC 532], where the Hon’ble Supreme Court directed the Banks/Financial Institutions to strictly follow the guidelines issued by the Reserve Bank of India.

7. In the above referred judgments, the Hon’ble Supreme Court condemned the procedure adopted by the Banks/Financial Institutions in employing recovery agents who are acting as middlemen for securing possession of vehicles/ secured assets in cases where the borrower commits default. It was observed that Banks/Financial Institutions instead of taking recourse to follow the procedure recognized by law for securing the possession of vehicles/secured assets in cases where the borrower commits default in repayment of loan/loan account is declared as NPA, are resorting to strong-arm tactics. The Hon’ble Supreme Court delineated the guidelines issued by the Reserve Bank of India time