THE HON’BLE SRI JUSTICE C. V. BHASKAR REDDY

WRIT PETITION No.19078 of 2025

ORDER:

This Writ Petition, under Article 226 of the Constitution of

India, is filed by the petitioner, seeking the following relief:

“….to issue Writ, Order or Direction more particularly one in the nature of

Writ of Mandamus:

a) Declaring the action of the respondent Nos.3 to 5 in high handedly, arbitrarily and illegally trying to recover the amounts from the petitioner by not following Circular dated 12.08.2022 vide RBI/2022-23/108, DOR.ORG.REC.65/21.04.158/ 2022-23 issued by the Respondent No.2 or any due process of law and the inaction of the Respondent No.2 to legitimately protect the interest of the petitioner by duly enforcing Circular dated 12.08.2022 vide RBI/2022-23/108, DOR.ORG.REC.65/ 21.04.158/2022-23 as illegal, arbitrary and unconstitutional for violating

Article 14, 19 and 21 of the Constitution of India, 1950;

b) Direct Respondent Nos.3 to 5 to follow Circular dated 12.08.2022 vide RBI/2022-23/108, DOR.ORG.REC.65/21.04.158/2022-23 issued by

Respondent No.2,

c) Direct the Respondent No.2 to duly enforce the Circular dated 12.08.2022 vide RB1/2022-23/108, DOR.ORG.REC.65/21.04.158/ 2022-23 to protect the interests of the petitioner against the Respondent

No. 3 to 5;

d) Direct the Respondent No.2 to take stringent action against the errant official of Respondent Nos.3 to 5 in unlawfully, illegally and arbitrarily taking to recover the amounts from petitioner without following any due

process of law;.…”

2. It is the case of petitioner that he availed loan from respondent Nos.3 to 5, 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 till June, 2025. Due to her current financial constraints and lack of stable source of income, she is now facing several financial hardship and consequently unable to continue making further payments towards the EMI loan amount. It is also case of the petitioner that respondent Nos.3 to 5 without following the guidelines of RBI, have been sending the loan recovery agents to his house and harassing to pay the amounts due as per the calculation of respondents.

3. 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.

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:

1 (2007) 2 SCC 711

“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 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.

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