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 “Writ of Mandamus” declaring the actions of the Respondents 2 to 10 in sending recovery agents to the residence of the Petitioner and threatening him with dire consequences if loans are not repaid as illegal, arbitrary and against Article 14, 19 & 21 of the Constitution of India and to consequently direct the Respondents No.2 to 10 to forthwith stop sending recovery agents to the Petitioner’s residence and follow procedure as contemplated by law to recover any loans that may be due to them.…”

2. The case of the petitioner is that he was offered loans and credit cards since long time from the Respondent Nos.2 to 10, which he availed and utilized. It is further case of the petitioner that he used to regularly pay the EMIs to the respondents without any default. However, due to COVID-19 pandemic and also various other factors like cheating by third parties, he incurred heavy loss in his business and lost all his money. It is further case of the petitioner that as his entire savings have been exhausted and since his monthly earnings are hardly sufficient for day to day living, he was unable to pay EMIs to the respondents from February, 2023 onwards and since then, the respondent Nos.2 to 10 are exerting pressure on him to clear the entire dues in one go, for which, he requested time to mobilize amounts and clear the dues but the respondents have employed recovery agents, who are trespassing into his house and threatening with dire consequences.

3. The grievance of the petitioner is that the respondents without following the procedure established under law, are using force to recover the overdue amount by sending recovery agents to his house and threatening with dire consequences.

4. The issues raised in this writ petition are no longer res integra. The Hon’ble Supreme Court in ICICI Bank Ltd. vs. Prakash Kaur and others1, while dealing with the similar issue 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.”

1 (2007) 2 SCC 711

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 others 2 , wherein the Hon’ble Supreme Court directed the Banks/Financial 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.

2 (2008) 7 SCC 532

7.