Disposed

Haripal Singh v. State of U.P. and Another

Allahabad HC11 Dec 2018WRIC/36893/2018

Case brief

AI extract

What is this about?

The court examined the legality of private recovery agents appointed by the State Bank of India under RBI guidelines. It held the appointment lawful but, due to a factual dispute regarding the loan amount, directed the bank to provide a detailed statement of account for the petitioner to clear dues via installments.

What did the court decide?

The respondent-bank was directed to provide the petitioner's account statement within four weeks to enable him to deposit the outstanding amount via installments; recovery proceedings were kept in abe

Haripal Singh Vs State of U.P. and Another — Banking and Recovery | Allahabad HC (2018)

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Court No. - 7

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Case :- WRIT - C No. - 36893 of 2018

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Petitioner :- Haripal Singh Respondent :- State Of U.P. And Another Counsel for Petitioner :- Bal Krishna Pandey Counsel for Respondent :- C.S.C.,Pankaj Kumar Ojha,Satish Chaturvedi,Vivek Mishra

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Hon'ble Saumitra Dayal Singh,J.

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Grievance of the petitioner appears to be three fold. In the first place, it has been submitted that at present, recovery is being enforced against the petitioner by private recovery agents appointed by the respondentbank for which it had no authority. Therefore, it has been submitted that the recovery proceedings are wholly without jurisdiction. Second, it has been submitted that in any case, the petitioner had obtained an agricultural loan of Rs. 2,99,000/- for purchase of a tractor in the year 2008 and that the petitioner had made full repayment of that loan though with some delay for which, additional interest had been paid by the petitioner. In such circumstances, the demand of Rs. 1,88,501/- plus interest etc. made by the recovery agent of the respondent-bank vide notice dated 10.08.2018 is wholly illegal. Third, it has been submitted that no prior notice was issued to the petitioner before and after appointment of the recovery agent.

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Sri Pankaj Kumar Ojha, holding brief of Sri Vivek Mishra, learned counsel for the respondent-bank on the other hand submits that appointment of the recovery agent is wholly in accordance with law inasmuch as the Reserve Bank of India has exercised its power under Section 35(A) of the Banking Regulation Act, 1949 and issued guidelines of binding force dated 01.07.2015 vide letter No. RBI/2015-16/95. Clause 2.6.1 read with 2.6.2(i), 2.6.2(ii) & 2.6.2(iii) of those guidelines provide for appointment of agencies engaged by the bank or their agents/employees.

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It has therefore been submitted, there is no illegality in the appointment of recovery agent by the respondentbank in view of the fact that the guidelines issued by the Reserve Bank of India are mandatory and have therefore to be necessarily complied with.

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As to the amount of recovery being pursued against the petitioner, it has been submitted that the same is wholly in accordance with law after giving benefit of all amounts that have been deposited by the petitioner. However, statement of account of the petitioner is not on record.

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Having heard learned counsel for the parties, in the first place, there does not appear any illegality in the appointment of the recovery agent by the respondentbank inasmuch as undisputedly, the State Bank of India is a banking company bound by the directions issued by the Reserve Bank of India under Section 35(A) of the Banking Regulation Act, 1949. Inasmuch as the provision of appointment of the recovery agent under Clause 2.6 of the guidelines dated 01.07.2005 are clearly referable to the power of the Reserve Bank of India to issue directions upon its satisfaction that such appointments would be in the interest of the banking policy as recovery of money is inherently linked to an important aspect of the banking activity, no defect either jurisdictional or on other legal count appears to exist in the appointment of private person as an agent. The fact that the bank claims that such private agents have been duly empanelled and they are mostly retired employees of the bank, may not be a factor to determine the illegality of engagement of recovery agents. Further in view of the fact that the term agent has been defined under the guidelines issued by the Reserve Bank of India under Clause 2.6.2 to be such as may include agencies engaged by the bank and the agents/employees of such agency, the challenge raised by learned counsel for the petitioner as to appointment of private recovery agent is devoid of merit and must fail.

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As to the other limb of the arguments in this regard, that no prior notice was issued to the petitioner before and after appointment of the recovery agent so as to bring to the knowledge of the petitioner that appointment of the private recovery agent is a wholly superfluous objection and bank is not obliged to inform the details of the person who would be entrusted to carry out the task of the recovery. Insofar as the person who has issued notice to the petitioner and who had thus visited the petitioner was fully authorised in accordance with law to issue such recovery notice and make demand of money from the petitioner, the objection raised by the petitioner is of no consequence. It is accordingly rejected.

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As to the last submission advanced by learned counsel for the petitioner that the petitioner has fully discharged its

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liabilities and no amount is due from him, there does appear to exist a factual dispute. To that extent, the present writ petition is disposed of with the following observations:

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(i) subject to the petitioner filing a proper application in that regard before respondent no.2 along with a certified copy of this order within a period of four weeks from today, the respondent no.2 shall make available to the petitioner forthwith, the statement of the account of the petitioner disclosing the total amount of the loan availed; total repayments made by the petitioner; total interest accrued month wise together with its break up and; the total outstanding amount as determined by the bank. In this regard, learned counsel for the bank may inform the respondent no.2 about this order before hand so that the petitioner may be handed over the statement no sooner he makes the application for the same;

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(ii) upon such statement available to the petitioner, the petitioner undertakes to deposit the outstanding amount by means of four equal quarterly installments beginning 28.02.2019 onwards;

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(iii) subject to the aforesaid compliance being made by the petitioner, recovery proceedings may be kept in abeyance so long as the petitioner continues to comply with this order;

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(iv) in the event of petitioner committing default the protection under this order shall stand vacated and recovery proceedings shall commence from that stage only and the balance amount as may be outstanding may be recovered without any reference to this Court.

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Order Date :- 11.12.2018 Abhilash

Haripal Singh v. State of U.P. and Another

Case brief

What is this about?

What did the court decide?

Haripal Singh v. State of U.P. and Another

Case brief

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