ORDER:

Heard learned counsel for the petitioners, Ms.N.Rajya Lakshmi, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, appearing for respondent No.1 and learned Assistant Government Pleader for Home appearing for respondent Nos.5 to 9.

2. It is the case of petitioners that respondent No.13, who is the brother of petitioner No.1, had availed financial assistance from respondent Nos.3 and 4 during the time of corona and due to Covid-19 he lost his business and left from Hyderabad. It is the further case of the petitioners that respondent Nos.10 to 12 came to their house and questioned about the whereabouts of respondent No.13 and when they informed that they do not know the whereabouts of respondent No.13 till, immediately, respondent Nos.10 to 12 have abused them in filthy language and also created nuisance.

3. The grievance of the petitioners 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.

4. 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 others1, 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.”

5. Aggressive recovery tactics adopted by the agents of Banks/ Financial Institutions lead to the landmark judgment in ICICI Bank vs. Shanti Devi Sharma and others2, where the Hon’ble Supreme Court directed the Banks/Financial

1 (2007) 2 SCC 711 2 (2008) 7 SCC 532 Institutions to strictly follow the guidelines issued by the Reserve Bank of India.

6. 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 and again on the fair conduct by lenders, with reference to usage of services of recovery agents. It also stated that the banks should be reminded of the rule of law and strict action must be taken by the RBI in case of breach of such guidelines.

7. It is apt and appropriate to extract latest guidelines issued by the Reserve Bank of India on 12.08.2022 with regard to outsourcing of Financial Services –Responsibilities of regulated entities employing Recovery Agents, which reads as follows:

“RBI/2022-23/108 DOR.ORG.REC.65/21.04.158/2022-23 August 12, 2022 Madam/ Sir, Outsourcing of Financial Services - Responsibilities of regulated entities employing Recovery Agents The Reserve Bank of India has from time to time advised regulated entities (REs) that the ultimate responsibility for their outsourced activities vests with them and they are, therefore, responsible for the actions of their service providers including Recovery Agents (hereafter referred to as ‘agents’).

2. It has been observed that the agents employed by REs have been dev