HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD THE HON’BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITION No.35055 of 2025 DATE OF ORDER:- 16.12.2025 BETWEEN:

Muthyala Raju, S/o.M.Malla Reddy, Karimnagar. … Petitioner AND Union of India represented by its Secretary, Ministry of Finance, New Delhi & 5 others … Respondents ORDER:-

1. This Writ Petition is filed under Article 226 of the Constitution of India seeking the following relief:-

“.. … … to issue an appropriate Writ, Order or Direction more particularly in the nature of Writ of Mandamus declaring the action of respondent Nos.3 to 6 in attempting to recover amounts from the petitioner as illegal and arbitrary and in violation of Reserve Bank of India Circular bearing No.RBI/2022-23/108, DOR.ORG.REC.65/21.04.158/2022-23 dated 12.08.2022 and further declaring the inaction of respondent No.2 in enforcing the said circular as unconstitutional and violative of Article 14, 19 & 21 of the Constitution of India.

2. Heard Sri Papaiah Peddakula, learned counsel for the petitioner; Sri N.Bhujanga Rao, learned Deputy Solicitor General of India representing respondent No.1; Sri M.P.Kashyap, learned counsel for respondent No.5-Axis Bank and Sri R.Mangulal, learned counsel for respondent No.6.

3. The case of the petitioner is that he availed personal loan from respondent Nos.3 to 6, who are the private bankers and financial institutions and utilized 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 had been regularly paying the installments till October, 2025 and due to severe hardship which ruined the financial stability, he could not pay the remaining installments from November, 2025. It is also the case of the petitioner that respondent Nos.3 to 6 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 1 (2007) 2 SCC 711 3 CVBR, J Wp_5200_2024 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 st