The High Court · 2025

City Rd, Arunodaya Colony, Sri Sai Nagar, Madhapur, Hyderabad, Telangana 500081

7. SBI Cards and Payments Services Limited, (SBl Card). Rep. by its Chief Manager, DLF Cyber City, Tower C, Block 2, Building 3 DLF lnfinity Towers, '12th Floor, Gurugram, HR - 122002. Petition under Article 226 of lhe Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased 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 7 in ...RESPONDENTS 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. RBI/2O22-231 108, DOR.ORG.REC.65121.O4.15812022-23, and further declaring the inaction of respondent No. 2 in enforcing the said Circular as unconstitutional and violative of Articles 14, 19, and 21 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 7, 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 7 for violating legal norms, and pending disposal of the writ petition, direct the respondent Nos. 3 to 7 not to resort to any coercive measures against the petitioner except through laMul means and in strict adherence to the Circular dated 12.O8.2022. Counsel for the Petitioner: SRI NAKKA KIRAN KASH Counsel for the Respondent No.1: SRI N. BHUJANGA RAO Deputy Solicitor General of lndia The Court made the following: ORDER THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA o Heard Sri N.Kiran Kash, learned counsel for the petitioner, sri N'Bhujanga Rao, learned Deputy Solicitor General of India, for respondent No. 1. 2 Despite service of notice, none appeared for remaining respondents 3' When the matter is taken up for hearing, learned counsel for petitioner submitted that the issue raised in this Writ petition is squarely / covered by the order passed by this Court in W.p.No.S2OO of 2o24,dated I' 25-04.2024 and therefore, the same order may be passed in this writ petition as well. The operative portion of the said order reads as under: "8. For "the aforesaid reasons and as the procedure adopted by the respondent Nos.4 to z for.."or.fu of loan amount from the petitioner, amounts to violation of ihe rights guaranteed under Articles 14 and 2L of the constitution of lndia, this court deems it appropriate to direct t].e respondents, to ensure that the agents engaged by them for recovery of the loan amounts, shall striitly iollow t].e guidelines and instructions issued by the Reslrve Bank of India and also the judgments of the Hon'lcle supreme court in rcrcr Bank Ltd vs. prakash Kaur's case (1 supra) and ICICI Bank Vs. Shanti Devi Sharmars case (2 suprai. 9. with the above said direction, the writ petition is disposed of."

4. Learned Deputy Solicitor General of Ind.ia, for respondent No.1 has no objection.

5. Accordingly, in terms of the order passed by this court in 2 ..1 W.P.No.5200 of 2024, dated 25.04.2024, and for the reasons alike, this writ petition is disposed of directing the respondent authorities and their agents to scrupulously follow the guidelines/ instructions issued by the Reserve Bank of India in its Circular dated 12.08.2022 artd also the judgments of Hon'ble Supreme Court in ICICI Bank Ltd. v. Prakash Kaut'rs case and ICICI Bank v. Shanti Devi Sharma'2s case, while recovering the loan amounts from the petitioner. No costs. 1(200712 SCC 711 2(200817 SCC s32 //TRUE COPYII SD/. A. JAYASREE STANT REGISTRAR SECTION OFFICER To,

1. The Secretary, Union of India, Ministry of Finance, New Delhi 2. The Chief General l\ilanager, Reserve Bank of lndia (RBI), 6, Sansad Marg, New Delhi - 110001

3. The Chief Manager Hero Fincorp Ltd, 407, 408 86 409, 4 Floor. Ashoka IMv Home Chambers, Chamb^e^r_Commercial Complex, Sindhi Coloriy, gegump6t, Hyderabad, Telangana 500003 +. Ihq chief.M_anager, KRAzy BEE services private Limited, The Rovar stone Park, No.100, Above Honda Showroom, Sakshi Nagii, irai't_dvoril'-'-'-"" Bannigana Hali, Karnataka- 560016

5. The Chief Manager, DMI Finance private Ltd, g-10, 4th Floor: Exoress srran zarai uarg, Bitirir.-iiiarti, vixia. "r.rlg""i"N;; Buitd.ing, Delhi, 110002. ^B^ahaarir o"rni, 0 In" Chief Manager INDUSIND Bank Limited, CgVp plus eVB. Hitech Citv Rd,Arunodaya Colony, Sri Sai Nagar, IVladhapur, HV6e?iOiO, ieil;;;"' 500081

7. The chief Manager, SBr cards and payments Services Limited, (SBr card). DLF Cyber city,iower c, Bto;kr, Buitdinf e-oIF'rnrnity ioGi)lrih Fil;6;, Gurugram, HR - 122002.

8. One CC to Sri Nakka Kiran Kash, Advocate [OPUC] 9. One CC to Sri N. Bhujanga Rao, Deputy Solicitor General of lndia [OPUC] 10.Two CD Copies (Along with the Copy of Court Order dt:2510412024 in W.P.No. 5200 ot 2024) TJ GJP 1 I HIGH COURT I I DATED:2 411112025 o Eti WP.No.33479 ot 2025 / iHE i; r,.: k j) j i 'L: EEB DISPOSING OF THE WRIT PETITION OUT COSTS Lt THE HON'BLE SRI JUSTICE C. V. BIIASKAR REDDY ORDER: N This writ petition, under Articre 226 of the constitution of India, is filed by the petitioner, seeking the fortowing relief: "..--to issue writ, ord.er or Direction more particurarrg one in the nature of Wit of Mandamus: a) Decrartng the.,.actio-n of the respond.ent Nos.4 to 7 in high rw.nd.ed.tg, arbttrarilg and.ittegailg trytng to recouer the amounts from the petitioner by not foilowing Circuli iated tz.oa.ioiZ""ii"" ney2o22_2s/ rol, D,R',RG-REC.6'/2t-o4-IsB/ 2022-23 zssuea ;; rh; Respondent No.2 or any due process of raw and. the inaction ol tite iespond.ent No.2 to legitimatelg protect the interest of the p.tiao,nir-'bg duly enforcing Cirqttar dated 1 2.08.2022 uiae pEI/ zozb_Zs/ t Os, oon OnC.ne C.6S/ 21'04' 158/2022-23 as iltegal, arbitrary and. unconstittttionalfor uiolating Article 14, 19 and 2r of thi constitutiin oymatii,- is-id; b!-Di.r99t Respond-ent^yo_s.1 to 7 to fonou circular d.ated. 12.o8.2o22 uid.e RBr/2022-23/ 1oB, DoR.oRG.REi.ost 21.o4.tse/ iozz_23 issued bg Respondent No.2, c) Direct the Respond-ent No-2 to d.utg enforce the circurar d.ated 12.08.2022 uide RBl/2022_23/ 108, OOp.Ono.nBC.OSt 21.O4.158/ 2022'23 to protect the interests of the pedtiriirigi""t the Respondent No.4; d) Direct the Respondent No.2 to take stringent action against the errant officiat of Respondent Nos.4 to 7 in "ry1iy"ug, iuig"iig and arbitrar,g taking to recouer the amounts from petitioier iiitiit i"u*frng ang due process of laut;...."

2. It is the case of petitioner that he availed-personal loan from respondent Nos. 4 to T, 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 roan, 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 fromSeptember,2023.Itisalsocaseofthepetitionerthat respondentNos.4toTwithoutfollowingtheguidelinesofRBl, has been sending the loan recovery agents to his house and harassingtopaytheamountsdueasperthecalculationof 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 any right to recover the loan amount by using force'

4. The issues raised in this writ petition are no longer res integraas the Hon'ble Supreme Court in ICICI Bank Ltd' as' Prrrkash Kaur and. otherst, while dealing *nt' the similar issues where the banks engaged the services of recovery/ collection agents to recover the loans, observed as follows: " 16. Before ue part uith this matter, u)e wish to make it clear that rte do not appreciate the procedure ddopted' bg the Bank in t (zootl zsccttt 3 CVBR, J Wp_520O_2024 remouing the uehicle from the possession of the writ petitioner. The practice of hiring recouery agents, who are musclemen, is deprecated and needs to be d.iscouraged.. The Bank shoutd. resort to procedure recognised bg law to take possessron of uehicles in cases uhere the borrower maa haue committed d.efault 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 rcrcl Bo,nk us. shcnti Devi sharma and others2,where the Honble supreme court directed the Banks/Financial Institutions to strictly follow the guidelines issued by the Reserve Bank of India. In the above referred judgments, the Hon,ble supreme

6. 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 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 '(zooa) 7 scc s32 4 CVBR, 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' The Honble 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. It is apt and appropriate to extract latest guidelines 7. issued by the Reserwe 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. ORG. REC. 65/ 2 1.04. 1 58/ 2022'2s August 12,2022 Madam/ Sir, Autsourcing of Financial Seraices - Responsibilities of regulated entities emploging Recooery Agents The Reserue Bank of India has from time to time aduised regulated. entities (REs/ that the ultimate responsibility for their outsourced actiuities uesfs uith them and theg are, therefore' ....,,1!Lil[r,. . -;i5ltt!f*:,, '.;mErc&*-. 7 5 CVBR, J Wp_5200_2024 responsible for the actions of their seruice prouid.ers inctuding Recouery Agents (hereafier referred to as ,agents'). 2. It has been obserued that the agents emploged. bg REs haue been deuiating from the extant instructions gouerning the outsourcing of financial seruices. In uieut of concerns arising from the acttuities of tlrcse agents, it i^s aduised" that the REs shalt strtctlg ensure that they or their agents do not resort to intimidation or harassment of any kind., either uerbal or phgsical, against ana person in their debt collection efforts, including acts intended to humiliate publictg or intrude upon the priuacg of the debtors' family members, referees and. friend.s, sending inappropiate messages either on mobile or through social media, making threatening and/or anonamous calls, persistentlyl catting the bonower and/or calling tLrc bonouter before g:oo a.m. and afier 7:oo p-m. for recouery of ouerd.ue loans, making false and. misle ading representatio ns, etc. 3. The instructions contained in para 2 aboue shail supplement and be read in conjunction with the existing guidelines/ directtons issued bg the Reserue Bank of India, as amendedfrom time to time, including those tabulated. in Annex. 4. seriouslg. Applicabilitg 5. (a) Att commercial Banks (including Locar Area Banks, Regional Rural Bonks, and. small Finance Banks) excruding pagments Banks; (b) All All-India Financial Institutions (uiz. Exim Bank, NABARD, NHB, SIDBI, and NaBFID); (c) All Non-Banking Financial companies including Housing Finance Companies; AnA uiolation in this regard. by REs will be uiewed. This circalar shall applA to the following REs: 6 CVBR, J Wp_5200_2024 (d) Att pimary (Urban) Co-operatiue Banks, State Co-operatiue Banks,andDtstrictCentralCo-operatiueBanks;and (e) Att Asset Reconstruction Companies' 6. Thts circular shall not apply to microfinance loans couered n-Re, India March 14' 2022' Yours faithfullY' (Sunit T' S' Nair) Chief General Manager" B. 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 of the rights guaranteed under Articles L4 and2L 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 amounts, sha1l strictly follow the guidelines and instructions issLred by the Reserve Bank of India and also the juiigments of the Honb1e Supreme Court in ICICI Bank Ltd. us. Pr1;,kash Kquf s case (1 supra) and ICICI Bank us. Shanti Deui Shorrrr'lq.'s case (2 suPra)' 7 CVBR, J Wp_52O0_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 pending shall stand closed. petitions, if &Dy,

25.o4.2024 C.V. BHASI(AR REDDY, J