Vallala Akhil Teja v. Sansad Marg, New Delhi - 110001

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 an appropriale Writ, Order, or Direction, more particularly in the nature of Writ of Mandamus, declaring the action of respondent Nos. 3 to 09 in attempting to recover amounts from the petitioner in an arbitrary, illegal, and high- handed manner without following the due process of law and in blatant violation of the Reserve Bank of lndia Circular dated 12.08.2022 bearing No. RBll2022-231 -/-- 108, DOR.ORG.REC.65/21.04.15812022-23, and further declaring the inaction of respondent No. 2 in enforcing the said Circular as unconstitutional and violative of Articles 14, 19, and 2 1 of the Constitution of lndia, and consequently direct the respondent authorities to refrain from undertaking any coercive or unlawful recovery measures against the petitioner and to strictly comply with the due process of law and the aforesaid Circular in all recovery proceedings, and further restrain respondent Nos.3 to 09, their agents, recovery agents, executives, managers, or any person acting on their behalf from engaging in any acts of intimidation, harassment, humiliation, or intrusion into the privacy of the petitioner or his family members, referees or friends, including persistent or anonymous calls, threatening messages, or physical visits to the petitioner's premises, and further direct respondent No. 2 to enforce the said RBI Circular in letter and spirit and to initiate appropriate and stringent action against the errant officials of respondent Nos. 3 to 09 for violating legal norms, and pending disposal of the writ petition, direct the respondent Nos. 3 to 09 not to resort to any coercive measures against the petitioner except through lawful means and in strict adherence to the Circular daled 1 2.O8.2022 - Counsel for the Counsel for the Petitioner: Ms. THAKUR MANASWINI SINGH FOR SRI BONTHU LOKESH PHANINDRA REDDY Respondent No.1: Ms. B.KAVITHA YADAV, SC FOR CENTRAL GOVT Counsel for the Counsel for the Respondent No.4: SRI HARI BATHINA (NOT PRESENT) Respondent Nos.2,3,5 TO 9: -- The Court made the following: ORDER l-1r- THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA WRIT PETITION No.27192 of 2025 QEPPBi Heard Ms. Thakur Manaswini Singh, learned .cou-nsel representing Sri Bonthu Lokesh Phanindra Reddy, learned counsel. for thq petitioner and Mrs. B. Kavitha Yadav, learned Standing Counsel for Central Government for respondent No. 1. Despite service of notice, none appeared for respondent Nos.2 to 9. Perused the record-

2. When the matter is taken up for hearing, learned counsel for petitio4er submitted that the issue raised in this Writ Petition .is squareily covered by the order passed by this Court in W.P;No.52O0 i of 2A24, dated 25.04.2024 and therefore, the same order may be passed in this writ petition as u'cll. The operative portion of the said order reads as under: "8. For the aforesaid rcasons and as the procedure adopted by thc respondent Nos.4 to 7 for recovery of loan amount from the petitioner, amounts to violation ol the rights guarantced under Articles 14 and 2l of the Constitution of India, this Court deems it appropriate to direct the respondents, to ensure that thc agents engaged by them for recovery of thc loan amounts, shall strictly follow the guidelines and instructions issued by the Reservc Bank of ln<lia and also the judgments of the Hon'ble Supremc Court in ICICI Bank Ltd Vs. Prakash Kaur's case (l supra) and ICICI Bank Vs. Shanti Devi Sharma's casr: (2 supra). 9. With thc abovc said dircction, the writ ( ( ./ 2 petition is disposed of."

3. Learned Counsel for the respondents did not dispute the submissions of learned counsel for the petitioner

4. [n terms of the order passed by this Court in W.P.No.520O of 2024, clated 25.04.2024, and for the reasons alike, this w;it petition is disposecl of directing the respondent authorities to scrupulously follou, the guidelines/instructions in the RBI Circular dated

12.08.2022, and also the judgments of Honble Supreme Court in ICICI Bank Ltd Vs. Prakash Kaur and othersl and ICICI Bank Vs. Shanti Devi Sharma and others2. Pending miscellaneous applications, if any, shall stand closed. No costs 12 (22 007) 2 SCC 711 008) 7 scc 532 Sd/-A.JAYASREE SISTANT REGTSTRAR //TRUE COPY// SECTION OFFICER To New Delhi - 110001 1 . The Secretary, Union of lndia, Ministry of Finance' N.ew Delhi 2 il;6;i"icirieiat tvtanagJi, heiewdaant or lndia (RBl)' 6' sansad Marg' a in"'c"nliii rtraniger, HDFC Bank Limited, No 1/10/60/3' Survodava' - Beoumoet, Hvde-rabad, Telangana 500016 , ;XXt;iJilrLr".i loFi'FrREi'BANk' Ground Floor, veer chambers' No 1- - i ift 3ii n, ;JpoJii"'snoppers Stop, Chikoti Gardens' Besumpet' Hvderabad,Telangana 50001 6 5 i(; ahi; ti"""rgEi (oink MAHINDRA BANK, Jewel Pawani " i"*"r,6ir ibsiliiicz, Somajiguda' Hvderabad' Telanoana 500082 o iiJ6ni"r'v""iirg.,,iAr-itxiytil\i Liiilt"J, iitn erooi rower A., Peninsula - eriineii piit, daripatrao Kadam Marg, Lower Parel' Mumbai' Maharastra - 4000'13. z frre Cnier tulanager, NAVI FINSERV Limited, 2nd Floor, Vaishnavi Tech Sqr"r".luriru v]rrage, Begur Hobli' Bengaluru.. Karnataka 560102' n iri" cni.r urnaoer.-KitAzYtiEe Servicei Pvt Ltd, The Royal Stone Park' - No 100, Sakshi-Nagar, Pai Layout, Bennigana Halli, Bengaluru' KarnataKa - 560016. s ih" Chief Manager, Oxyzo Financial Services P4 Ltd, 1st Floor' Tower-A' " or'ooii brtintsifa*, lilehrauli-Gurgaon Road' Sector 26' Gurugram' I r---.--^ i n ^.nn I

10. One CC to SRI tsONTHU LOKESH PHANINDRA REDDY, Advocate [OPUC] '1 1.One CC to SMT. B.KAVITHA YADAV, SC FOR CENTRAL GOVT IOPUC] 12. One CC to SRI HARI BATHINA, Advocate IOPUC] 1 3. Two CD Copies (Along with the copy of order in W.P.No.520Ol2O24 dated 251412024) PSK. PMK y- / I I HIGH COURT DATED:1411012025 ORDER WP.No.27192 of 2025 1 \ -,/' I I t i5 PATC it' *- I DISPOSING OF THE WRIT PETITION WITHOUT COSTS n\ u) 1 t, THE HON'BLE SRI JUSTICE C. V. BHASKAR REDDY WRIT PETITION No.S2OO of 2024 ORDER: This Writ Petition, under Article 226 of the Constitution of India, is frled by the petitioner, seeking the following relief: ". ... ro issue Wit, Order or Direction more partianlarlg one in the nature of Writ of Mandanus: a) Dectaing the action of the respondent Nos.4 to 7 in high handedly, arbitrailg and illegallg tryi.ng to recouer the amounts from the petitioner bg ,l,ot follouing Ctratlar dated 12.08.2022 uide RBU2O22-23/1O8, DOR.ORG.REC.65/ 21.04.158/ 2O22-23 issued bA the Respondent No.2 or ong due process of lana and the inaction of the Respondent No.2 to legitinlatelA protect the interest of tlg petitioner bg dulg enforcing Ciranlar d.ated 12.08.2022 uide RBI/2O22-23/ 108, DOR.ORG.REC.65/ 2 1 .04.158/ 2022-23 as illegal, arbitrary and. unconstitutionaL for uolating Atticle 14, 19 an-d 21 of the Constitution of India, 195O; b) Direct Respond.ent Nos-4 to 7 to follow CirclLlar dated 12.08.2022 utde RBI/2022-23/ 108, DOR.ORG.REC.65/ 21.04.158/ 2022'23 issued bg Respondent No.2, c) Direct tlle Respondent No.2 to dulg enlorce the Ctdilar dated 12.08.2022 uide RBl/2O22-23/ 1O8, DOR.ORG.REC 65/ 21.0-1.t58/ 2022-23 to protect tlle interests of the petitioner against tlv Re-spoadenl No. 4: d) Direct th.e Respond.ent No.2 to take stringent actton agoinst the enant olficial of Respondent Nos.4 to 7 in unlawfutlg, itlegatly and arbitrariLg taking to recouer tfle amounts from petitioner without folloratrg any due process of lanu;,..."

2. It is the case of petitioner that he availed personal loan from respondent Nos.4 to 7, 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 2 CVBR, J Wp 5200_2024 regularly paying the instalments in terms of the agreement and due to losses in his business, he could not pay the instalments from September, 2023. It is also case of the petitioner that respondent Nos.4 to 7 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. 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 anlz right to recover the loan amount by using force

4. The rsstres raised in this writ petition are no longer res integlra as thc Honble Supreme Court in ICICI Bo,nk Ltd. as. Prakash Kaur and otherst, whiie dealing with the similar issues rvhere the banks engaged the services of recovery/ collection agents to recover the loans, observed as follows: " 16. Before Lue part Luith this matter, we utish to make it clear that tue do rrot appreciate the procedure adopted bg the Bank in ' 1zoot1 z scc ttt 3 CVBR. J Wp_5200_2024 remouing *Le uehicle fiom the possessioz of the uit petitioner. The practice of hiring recouery agents, u.tho are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognised bg lau.t to fake possession of uehicles in cases where the borrouer maA Llaue 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 us. Shanti Devi Sharrna and others2. where the Honble 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 Honble Supreme Court condemned the procedure adopted by Banks/Financial Institutions in employing recovery agents rvho are acting as middlemen for securing possession o[ 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 CASCS ' 1zoos1 z scc s:z 4 CV8R, J Wp_5200_2024 where the borrower commits default in repayment of loan/loan account is declared as NPA, are resorting to strong-arm tactics. Thc Hon'Lrle Supreme Court delineated the guidelines issued by the Reserve Bank of India 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 and strict action must be taken by the RBI in case of breach of such guidelines.

7. It is apt and appropriate to extract latest guidelines issued by the Reserve Bank of India on 12.08.2022 with regard to outsourcing of Financial Services -Responsibilities of regulated entities employing Recovery Agents, which reads as follows: "RBI/ 2022 23/ 108 DOR.ORA. REC.65/ 21 .O4. 158/ 2022 23 August 12,2022 Madam/ Sir, Outsol.lrcilag of Financial Seruices ResponsiDllittes o;f regulated entities emploging Recoaery Agents The Reserue Bank of India has from time to time advised regulated entities (REs) that the ultimate responsibilitg for their outsourced actiuities uests taith tllem and tlag are, therefore, ,- T 7 5 CV8R, J Wp_52OO_2024 responsible for the actions of their seruice prouiders including Recouery Agents (hereafter referred to as 'agents'). 2. It has been obserued tfat the agents emploged. bg REs haue been d.euiating from the ertant in structions gouerning the outsourcing of financial seruices. In uieut of concerns arising from the octiuities of these agents, it is aduised that the REs shall strictly ensure that tlleA or their agents do not resort to intimidation or harassment of ang kind, eitler uerbal or physical, against anA person in their debt collection effofts, including acts intended to humiliate publiclg or intrud.e upon the priuacg of the debtors' familg members, referees and fietuls, sending inappropriate messages eitlrcr on mobile or through social media, making threatening and/ or anongmous calls, persistentlg 1 calling the borrotaer and./ or calling the bonouer before 8:OO a.m. and afier 7:OO p.m. for recouery of ouerdue loans, making false and misle ading r e p r e se ntations, etc. The instructions contained in para 2 aboue shall 3. supplement and be read in @njunction uith the eisting guidelines/ directtons issued by the Reserue Bank of India, as amended from time to time, including tlnse tabulated in Annex. 4. seiouslg. Applicabilitg 5. {a) All Commerctal Banks (including l,ocal Area Bonks, Regional Rural Banks, and Small Finance Banks)' excluding PaAments Ang uiolation in this regard bg REs u.till be uieu.ted Ihis circulor shall applA to tlrc follousing REs: Banks; (b) All All-lndia Ftnancial Institutions (uiz. Eim Bank, NABARD, NHB, SIDBI. ond NaBFID); (c) All Non-Banking Financial Companies including Housing Finance Companies; 6 CVBR, J W p _52OO_2024 (d) All Primary (Urban) Co-operatiue Banks, State Co-operatiue Banks, and Distict Central Co-operatiue Banks; and (e) All Asset Reconstruction Companies. 6. This circular shall not apply to microf.nance loans couered" under 'Master Direction - Reserue Bank of lndia (Requlatoru Framework for Microfinance Loans Drectio ns. 2O22'. dated March 14,2022 Yours faithfully, (Sunil T. S. Nair) Chief General Manager"

8. For the aforesaid reasons and as the procedure adopted by the respondent Nos.4 to 7 for recovery of loan amount from the petitioner, amounts to violation o[ the rights guaranteed under Articles 14 and 21 of the Constitution of India, this Court deems it appropriate to direct the respondents, to ensure that the agents engaged by them for recovery of the loan arnounts, shal1 strictly follow the guidelines and instructions issued by the Reserve Bank of India and also the judgments of the Hon'lrle Suprcme Court in ICICI Bank Ltd. us. Prakrrsh Kaufs case (1 supra) and ICICI Bo,nk os. Sha,nti Deoi Shcrma's case (2 supra) 7 CVBR, J Wp 52OO 2024

9. With the above direction, this Writ Petition is disposed of. There shall be no order as to costs.

10. As a sequel thereto, miscellaneous petitions, if any, pending shall stand closed.

25.O4.2024 C.V. BHASKAR REDDY, J