The High Court · 2025

Fetilisn 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 respon,Cents No.4 to 7 and agents not to call or visit the house of the petitioner or any thini party or agents day by day subsequently and give two years time to repay the overdue amount to the respondents, pending the disposal of the present writ petition. Counsel for the Petitioner: SRI M. PRASHANT KUMAR Counsel fortheRespondent No. 1: GP FOR FINANCE PLANNING Counsel for the Respondent No. 2: SRI A. NEHRU i SC FOR CENTRAL GOVERNMENT Counsel for the Respondent No. 3 to 7: ---- The Court made the following: ORDER l THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAI(A ORDER: Aggrieved by the action of respondent Nos.4 to 7 inharassing the petitioner contra4r to norm of RBI Circular uide No.RBI/2019- 20 / L86 /DOR.No.BP.BC.472t.O4.O4S /2019-20, dated 27 .o3.2020, guidelines of RBI Rules, dated Ol.O7 .2OLS and Resolution dated

07.06.2019, the present writ petition is filed-

2. It is the case of petitioner that he availed personal loans from respondent Nos.4 to 7, who are the private bankers and financial institutions, and have been paying the EMIs regUlarly. It is further submitted that due to itl health and sudden demise of his family members, he could not make out his business and was unable to pay the EMI, which was not intentional. tt is also case of the petitioner t}.at respond.ent Nos.4 to 7 without following the guidelines of RBI, the representatives of respondent Nos.4 to 7 have been continrrously calling him, visiting his house and abusing him in filthy tanguage.

3. The grievance of the petitioner is that the respondents are entitled to recover the dues in terms of the credit facitities by following ttrgprocedure established under law and they are not having any right ) to rtcover the dues amount by using force. 2 4' The is'sues raised' in tJlis writ petition are no longer res integra as the Honble supreme court in rcrcr B,,nk Ltd.. .,s. prq.tc..sh r{aur and othersl, while dearing with the similar issues where the banks engaged the' services of recovery/ collection agents to recover the dues of credit cards, observed. as follows: "16' Bef6'7s ue part uith'this m.atter, ue wi.sh to make it clear tlnt we d.o not apprerciate the proedure a.dopted. bg the Bank in remouing the uehjcle from the possession of the wit petirtoner. The practice of hiring recouery agents, utho are muscremery. b deprecated. and, need.s to be d.bcouraged.. TLrc Bank'shoutd. resort to proedure reagnbed. bg raw tofakepossession of uehicles in cases u.tltere the borrouer may ltaue cornmitted. d.efautt in pagment of the instalments itlstead. of taking resort to strong-arrn tactics.,, 5' Aggres,sive recovery tactics adopted by the agents of Banks/ Financia-l lnstitutions lead to the landmark judgment in rcrcl Bank as. Shanti Deoi Shartnq. and. ofiters2, where the Honble Supreme Court directed the Banks/Financial Institutions to strictly follor' the guidelines issued by the Reserve Bank of India. 6 In the above referred jud.gments, the Honbre Supreme court condemned the proced.ure adopted by the Ba'ks/Financiar lnstitutions in employing recovery agents r,t ho a-re acting as middlemen f<rr securing possession of vehicles/ secured assets in cases where the borrower commits default. It rvas observed that Banks/ Finan<:ial Institutions instead of taking recourse to follorv the '1zooz; 2 scc 711 I (zoosl 7 scc s32 '$. : I J tJ proced.ure recognized by law for securing tlle possession of vehicles/secured asSets in cases where the borrower commits default in repa5rment of loan/loan account is declared as NPA, are resorting to strong-ar:rr tactics. The Honble Supreme Court delineated the guidelines issued by the Reserve Bank of tndia 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 ald strict action must be taken by the RBI in case of breach of such guidelines. 7 - It is apt and appropriate to extract the circular issued by the Reserve Bank of India on 27.O3.2O2O u,ith regard to rescheduling of pa5rments - Terrn loans and. working capital facilities, Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA), which read.s as follows: RBI/2O19-2O/244 DOR.No.BP. BC.7 I / 2 1 . O 4. a 48 / 2 o 1 9 -2 O Mog 23, 2O2O All bmmercial Banks (including Small Finane Bankq Local Area Regional Banks Banks) Att Primary (Urban) Co-operatiue Banks/ State Co-operatiue Banlcs/ Di.strict Banlcs Atl Att-India Financial tnstitutions, Alt Non-Banking Firwnctal Companies (irrcluding Housing Finance Companies) Co-operatiue Central Rural Madam/Dear Sir, @WD-79 - ReguLatory Packo,ge t. r1T I f Plea.sE refer to tle 4 9- and. Circular Pavments - renn r.oo,ns and. workins '3"frffiT#;:fri"of 2' In uiera of tLe ertension of rodcd.own artd. untinuing d.isruption on Qccount of cowD-(9, ail amm.erciar banksli.i"ai"g regionar ntrar banks, :;mall ftnance banrcs ona u*.t ar)a ianks), co-operatiue banks, Alt-lnd-ia Financiar tnsittutans, artd. won-nanking F-inancial Comparues (inctuding ttousig . fi\ony ampantesl (lending institutiorx") are p"riitt d. to ixtena the moraiorium by anotLrcr three montls i'e' from Jure 1, 2o2o to August-sl, zozo on pagment of all in:;talment:, i" ,g"p"i iy t"r* loans (inctud.ing agriatltural term loans, retail .and. Lrop Larus). Ayrdingly, the repayment schedule for such loans o'ol' the residuot i"ior, wilt be srifted. across the board. Interest shail antinue - ti accnte on the outstand'ing portton of the term loans during tlrc moratoriurn period. 3' In respect "f y"*iy_upitat facilities sanctioned in the forrn of cash crecttt/ouerdraft (.ccioo"i lendtug i;;i;;;""s are permitted to allow o deferment of another'irvee ;;"flra-f**.lun I, 2o2o to August 31, 2o2o, ?? recousw of interest:aiirui in respect of a, suchfacilities- Lending ilLstiitions or" p"rmii"d., at their d.iscretion, to conuen: the acanmurated. interest &oi fie d.efernrcnt period up to August 3 ,t ' 2o2o, -into a funded. interest term roan FI\L) which shatt be repayo:.ble not later tion Uarin 5.7, 2A21. (ii) EasinlT of working capita.l Ftnancing 4' ln respect of working.capitar facilities sancttoned in the form of cc/ oo to borrouters lacing "tr"! on a@unt of tLrc economic fartout of the pan'cemic, tenaing ittit"triro frdu, as a one-time measure, (i) Vecatanlale the ,d_r_o*ing pouter,, by reductng *e margins tt, Aupust 31, 2o2o- aowei"ri i att such cases where such o. temporary enhancement in drauing power is consid.ered., the I 1 I 5 margins shr,tt be restored. to tle original leuels by March 31, 2O21; and/or, (ii) reuieut the working capttal sanctioned limits upto March 31, 2O2 1, based on a rea.ssessmenf of tle working upital cgcte. 5 TIE aboue measures shnll be contingent on the lendittg irtstittttiorts satisfging tlrcm.selues tLlat the satle is necessitated on awurut of tle eonomic fallout from COVID-I9. FVrther, a@unts prouided relief under tte* instrurtions shall be *bject to subsequent superaisory reuieut with regard to tleir justifiability on amunt of the eanomic fallout from COWD-L9. 6. IEnd.W instittttions mag, acurdingly, put in place a Board approued policg to implement tle aboue mea-sures. ,llsset Cla,ssilftcation

7. The anuersion of aertmulated interest into FITL, as pennitted in term.s of paragralth 3 aboue, and the changes in the credit terms permitted to the borcowers to specifically tide ouer economic fallout from COWD-L9 in terms of paragraph 4 aboue, wilt ncit be treated as clc,nressions granted due to financial difftcttlty of th.e botower, under Paragrapth 2 of t?w Annex to the Resente Bank of Indla Entd.ential Frumcuork for Resolution of Stressed Assetsl 7. 2079 ('Pntdential Dlrectlotts, 2079 will not result in assef Framcutork'), and onsequently, cla.s sifie-ation doung ra.de. dated June

8. In respect of amunts classifted as standard as on February 29, 2O2O, euen if ouerdue, tlrc morqtorium period, whereuer granted in respect of term loans, shall be excluded bg the tending institutions from tIE rutmfur of dags past-due for tlrc purpose of a.sset cta.ssifiution under the IRAC norrns- TLe asset clossification for such arc:clcrunts slwll be determined on the ba.sis of reuised due dates and t?e reuised repaAment sctrcdule.

9. Similarly, in respect of working capital facilities sanctioned in the fonry of u,sh qedit/ouerdrafi, (*CC/OD"), wh.ere the account is dassified as standard, ilrcluding SMA, as on Febntary 29, 2020, the deferm.ent period, ufitereuer granted in tenns of paragraph 3 aboue slwll be etccluded for t\e deternination of out of order stalus- i ) ) 6

10. All otlwr proui"sions of 2O2O c:nd. mntandrs.

27. t 77, 2A20 shatl remain apptimbte mutatis Iafis dntd. Mqrch Yours faith{utty, (Saurav;)inha) Chief Ge:neral M anag er_in_ Charg e 8' For the aforesaid reasons, this court deems it appropriate to direct the respondents, to ensure that the agents engaged by them for recovery of ':he loan amounts, shall strictly follow the guidelines and instructions issued by the Reserve Bank of India and also the judgments .f the Honble Supreme court in rcrcr B,.nk Ltd.. us. Praka.sh Kuuf s case (r supra) and rcrcr Bqnk us. shqnti Deui Shorrna.,s crtse (2 supra). 9 with the above direction, this writ pretition is disposed of There shall be no order as to costs. As a sequel thereto, misceflaneous apprications, if any, pending shall stand closed I I To,

4. 5 6 ,fTRUE COPY" 6 SECTION OFFICER I The Principat Secretary' Finance Detr '! ' lartment' Secretariat' State of ffififfifi*ffi* ' BKC' c 27'GBrock' Bandra Kuria [int$u#,:#TH#]fr.".'.al ir/jAnapur, HYderabad, Telang. ana T. prefiFinance, 2nd Fioor, Brock 2,My Home Hub, Hitech city Road, 8. one cc to sRl=t\r."iilhb"iaf!(uMAR, Alvocate [oPUCl e. Two ccs to Gp'FddiiirAr.rce p"rniliiinc, nish court foi tne state of ,o 3?I3E3i3 S-YX NEHRU SC FoR CENTRAL G.VERNMENT, Advocate loPUcl

11.Two CD CoPies MMT PSK <r l: i.. .--,#1,. ar!r. :*{*....,:.'...-}1r.' - HIGH CIf,URT DATED:09109/,2025 I I ORDER WP.No.ll2390 of 2025 /)(' r,; S'r4 ii: 27JAil2m z , t ti. t DISPOSING OF THE WRIT PETITON WITHOIJT COSTS \ o