Disposed

Tallam Sravan kumar v. The Union of India

Telangana HC12 Sept 2024WP/23272/2024

Case brief

AI extract

What is this about?

High Court of Telangana disposed of a writ petition alleging that banking/financial institution recovery agents employed by respondents harassed the petitioner. The Court, citing Supreme Court precedents and RBI circulars, directed respondents to ensure agents strictly follow applicable guidelines prohibiting intimidation and harassment.

What did the court decide?

Respondents directed to ensure recovery agents strictly follow RBI guidelines and Supreme Court judgments to prevent intimidation and harassment.

Tallam Sravan kumar Vs The Union of India — Consumer Protection | Telangana HC (2024)

¶1

[^32e6 ]

¶2

HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction)

¶3

THURSDAY, THE TWELFTH DAY OF SEPTEMBER TWO THOUSAND AND TWENTY FOUR

¶4

PRESENT

¶5

THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY

¶6

wRlT PETITION NO: 23272 OF 2024

¶7

Between:

¶8

Tallam Sravan kumar, S/o Tallam Srinivas, Aged. 29years, R/o H.No. 2913841118 Road no.6 West deendayal nagar, Ramakrishna puram, Hyderabad56.

¶9

.,.PETITIONER

¶10

AND /

¶11

1. The Union of India, Rep by its Secretary Ministry of Finance New Delhi. 2. The Reserve Bank of lndia, Rep by its Chief General Manager, 6 Sansad Marg New Delhi 1 10001 .

¶12

The lClCl BANK, Rep by its Chief Manager C59 Bandra Kurla Complex B andra East Mumbai Maharashtra 400051

¶13

The Aditya Birla Finance Limited, O/o 18th Floor, Tower 1, One World Center, Jupiter Compound. 841, Senapati Bapat Marg, Elphinstone Road Mumbai 400013 5. The Axis Bank Ltd, Olo, C-2, Wadia lnternational Centre, Pandurang Budhkar Marg' worli' lvlumbai - 4ooo25'

¶14

...RES'.NDENTS

¶15

Petition under Article 226 of the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue a Writ or Order or direction more particularly one in the nature Writ of Mandamus declaring the action of the Respondent No. 3 to 5 in trying to collect the loan amounl in a threatening manner by engaging anti-social elements and threatening the petitioner and his family with dire consequences for payment loan amounts, as berng illegal, arbitrary, violation of principles of natural^justice and is in violation of Articles 14 and 21 of the Constitution of lndia.

¶16

lA NO: 1 OF 2024

¶17

Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct the the nature Writ of Mandamus declaring the action of the Respondent No. 3 to 5

¶18

in trying to collect the loan amounl in a threatening manner by engaging anti-social elements and threatening the petitioner and his family with dire consequences for payment loan amounts, pending disposal of the above writ petition.

¶19

Counsel for the Petitioner: SRI G.ESWARAIAH Counsel for the Respondent No.1: SRI DADI RADHA KRISHNA, SC FOR CENTRAL GOVT.

¶20

Counsel for the Respondent Nos.2 TO 5: --

¶21

The Court made the following: ORDER

¶22

THE HON'BLE SRI JUSTICE^{C. V' BHASKARREDDY}

¶23

WRIT PETITION No.23272^{of 2024}

¶24

ORDER:

¶25

This Writ Petition, under Article^{226 of the Constitutionof} India, is hled by the petitioner,^{seeking the following reliefi}

¶26

"....ro issue^{wit or Order or directionnore pqtticularlgonein the} nqture of Writ of Mandamus^{declaing the actionof tle} Respondent /vos-3 to 5 in trying^{to collect the loanaiaunt in a} threatening manner bg engaging^{anti-socialelement's and} threatening the^petitioner and^his familg^{with dire cottsequences} for^{pqymenlof loan amounts, as being illegal,grbitrary,uiolatioue} of principtes of aatural^{justice and in uiolationoJ Articles 14 and} 2 1 of the Constitution of^{India .. ."}

¶27

Heard learned counsel for the^{petitioner and} Mr. Dadi Radhakrishna,^{learned StandingCounsel appearing} for respondent No. l. Despite^{serviceof notice,there is no} representation for respondent^{Nos.2 to 5 nor any counter} affidavit is filed on their^behalf.

¶28

It is the case of petitioner^{that he availed loans from} respondent Nos.3 to 5,^{who are the privatebankers and utilised} the amounts and he^{has been promptin repaying the same} without fail. It is further^{case of the petitionerthat due to} financial constraints, he could not^{pay theinstalments} regularly. lt is also the case of^{the petitioner is that respondent}

¶29

¶30

CVBR, J w p_23272 _2024

¶31

Nos.3 to 5 without following the guidelines of RBI, have been sending the loan recovery agents to his house and harassing to pay t]le amount due as per the calculation of respondents.

¶32

The grievance of the petitioner is that the respondents are entitled to recover loan amount in terms of the loal agreements by following the procedure established under law and they are not having any right to recover the loan imount by using force.

¶33

The issues raised in this writ petition are no longer res integra as the Honble Supreme court in rcrcl Bank Ltd. os. Prakash Kaur and othersr, while dealing with the similar issues where the banks engaged the services of recovery/ collection agents to recover the loans, observed as follows:

¶34

"16. Before ue part ulith this matter, LUe u.tish to make it clear that ue d.o not appreciate the proced.ure adopted bg the Bank in remouing the uehicle from the po.ssession of the tDit petitioner. TlLe practice of hiring recoueru agents, tuho are musclemen, is deprecated and. needs to be discouraged_ The Bank should resort to proccdure reagnised bg tau to la&e possession of uehicles in cases utttere the borrouer may haue committed_ d.efault in pagnent of the in_stalments instead. of taking resort to strong_arm tactics.'

¶35

'1zoo;1 z scc zrr

¶36

CVBR, J wp_23272_2024

¶37

¶38

)

¶39

Aggressive recovery tactics^{adopted by the agents of} Banks/ Financial Institutions^{led to the landmarkjudgment in} ICICI Bank us. Shanti Deui^{Shannrr and othet9, wherethe} Hon'ble Supreme Court^{directedtheBanks/ Financial} Institutions to strictly^{follow the guidelinesissuedby the} Reserve Bank of India.

¶40

7 . In the above referred^judgments, .the^{Hon'bleSupreme} the Court condemned the^{procedure adopted by} Banks/Financial Institutions^{in employing recovery agents who} are acting as middlemen^{for securing possession of vehicles/} secured assets in^{cases rvhere the borrowercommits default' It} was observed that^{Banks/ FinancialInstitutions instead of} taking recourse to lollow^{the procedure recognized by law for} securing the^{possessionof vehicles/ secured assets in cases} where the borrower^{commitsdefaultin repayment of loan/loan} account is declared^{as NPA, are resortingto strong-arm tactics'} The Hon'ble Supreme^{Court delineated the guidelines issued by} the Reserve Bank^{oOf lndia time and again on the fair conduct}

'(zooa)^{z scc s:z}

CVBR, J Wp 23272 2024

¶45

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.

¶46

It is apt and appropriate to extract latest gr.ridelines issued by the Reserve Bank of India on 12.Og.2O22 with regard to outsourcing of Financial Service! _ Responsibilities of regulated entities employing Recovery Agents, which reads as follows:

¶47

"RBI/2022-23/ 108

¶48

DOR.ORG.REC. 65/ 2 1.O4. 1 58/ 202 2-2 s August 12, 2O22

¶49

Madam/ Sir,

¶50

Outsolzrclrng oJ FlnaaLclat Seruices Responsibilittes o.,;t regulated. entltles emplogtng Recouery Agents The Reserue Bank of India has from time to time arjuised. regulated entities (REs) that the ultimate responsibttity Jbr their outsourced actiuities uests u.ttth them and. they are, therefore, responsible for tle action-s of their seruice prouiders inctud.ing Reauery Agents (hereafier referred to as ,agents,). 2. It has been obserued. that the ogents emploAed bg RDs haue been deuiating from the ertant in_structions gouemiw the outsourcing of financial serujces. In uiew of concerns ari_sing from th&.aatiuities of these agents, it is adulsed that the REs sha/l

¶51

¶52

CVBR, J wp_23272-2024

¶53

(

¶54

¶55

strictll en-sure^{that they or their agentsdo tatresortto} intimidationorftarassmenrofanykind,eitheruerbalorphgsical' against ang^{person in their debtallectionefforts' including ads} intended to^{luLmitic;tepublicly or intnld'e uponthe piuacy of tte} debtors' family^{members, referees and fiends'sending} inappropiate^{messageseither on mobile or through social media'} mnking threotening^{and/ or ononAmouscaLls' persistentlg1 calling} tle borrou.ter^{and/ or calling the borrower before 8:00 a'm' and} qfrer 7:OO p.m- for recouery of^{ouerdue loans' making false and} mi.sleod.ing rePresentattons,^etc'

¶56

Tte irctructions^{containedin para 2} aboue shall s'upplement^{and be reod inconjunction tttith} he existing guidelines/ directions^{issuedby the ReserueBank of India'as} afiEnded from^{time to time, includingthose tabuloted in Annex'} 4. Ang uiolation in^{this regardby REs tuill be} uieu.ted seriouslg.

¶57

ApplicabtlttY

¶58

This circular^{shntl applg to the} foltowing^REs:

¶59

(a) All Commerciat^{Bank^s (includingLocalAreaBo.nks' Regional} Rural Banks, and Small^{Finance Banks) excludingPagments} Banks; p) AA NLlndia Finonciat^{/nstilutions(uiz' Eim BanlgNABARD'} NHB, SIDBI,^{and NaBFID);}

¶60

\ \

¶61

¶62

(d) All Primary^{(lrban)Co-operatiueBonks'State Co-operatiue} Banks, and.^{DistictCentralCo operatiue Banks; and}

¶63

(e) All Asset Reconsttuction^Companies'

¶64

This ciralar^{shall not apptA to microftnanceloans couered-} under 'Mater^Dtrection -^{ReserueBankof India}

I I I I I

<br>

CVBR, J Wp_23272_2e24

¶69

or NS 2022 dated 14 2 Yours faithfultg, (Sunil T. S. Nair) Chief General Manager,

¶70

In view of the above circulars, this Court deems it appropriate to direct the respondents, to ensure that the agents engaged by them for recovery of the loan arnounts, shall strictly follow the guidelines and instructiorrs issued by the Reserve Bank of India and a-lso the judgments of the Hon,ble Supreme Court in pro,kash Kaufs case (1 supra) and Sho.nti Devi Sharmc,s case (2 supra).

¶71

10 With the above direction, this Writ petition is disposed of. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed. There shall be no order as to cos tS

¶72

SD/- T. JAYASREE ASSISTANT REGISTRAC //TRUE COPY// / To sEclJN oFFtcER I Ii: 3f;iJi33;"'J,'"ri#'lg",.Ministry^{or FinanceNew Derhi} Delhi 110001. ager, Reserve gank of tndia.6 Saniad Marg New : i1",3:iflyl,T:gi[;i?ftJoP#^' cse Bandra Kurra comprex B andra East ' .iJr:,:l'3fi?33IJ:ilftlr1ted, Q/o^{18th Froor. rower} 1, o-ne worrd center, 4000j3 . uenapati Bapat Marg Etphinstone Ho-a;.Mr.,il;;,,, 5 The Axis Bank Ltd. O/o.

¶73