recover by banks without due processof law
M Ravinder Babu Advocate Parka
(Querist) 28 September 2010
This query is : Resolved
Judgement Dated: 4/16/2009 7:07:00 PM
:
- Section:
Head note: Banks Recovery of loans or seizure of vehicles can only be done through legal means- Banks not to resort to use of muscle power for recovery of loans and persistently bothering borrower at odd hours
Judgement: ICICI BANK Vs. SHANTI DEVI SHARMA & ORS: SUPEREME COURT: TARUN CHATTERJEE, DALVEER BHANDARI j.j., dated 15/05/2008 [Arising out of SLP (Crl.) No. 4935 of 2006] Recovery of loans or seizure of vehicles can only be done through legal means- Lenders/Banks not to resort to use of muscle power for recovery of loans and persistently bothering borrower at odd hours - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Security Interest (Enforcement) Rules, 2002 - RBI Guidelines on Fair Practices Code for Lenders dated 5.5.2003 - Guideline (v)(c) - Guidelines on Engagements of Recovery Agents dated 24.4.2008. Prosecution case was that son of respondent committed suicide as a result of harassment and humiliation caused to him by the appellants bank recovery agents. The respondent filed a writ petition seeking for directions to the Commissioner of Police to take action against the appellant-bank. High Court ordered the Police to file reports as to the status of the investigation against the bank. The High Court later reviewed the two status reports that were filed by the Police. It found them unsatisfactory and accordingly, directed the Investigating Officer to conclude the investigation into the matter as expeditiously as possible and take necessary action against those found guilty of abetting the deceased to commit suicide. In addition, the High Court stated the proximate cause of death of the deceased that led him to commit suicide was on account of humiliation caused by the Bank people from where loan was taken by him; and the modus-operandi employed by the banks for realization of their loan amount and for recovering the possession of the vehicle against which loans are given was not legal. The appellant bank filed applications for impleadment as well as for clarification/deletion/modification under s.482 Cr.P.C. According to the appellant bank, the observations made by the High Court were unjustified and unnecessary for deciding the case. In an order dated 11.8.2006, the High Court declined to expunge the impugned observations on the ground that they were made consciously, however clarified the matter by stating that any observation made against appellant Bank would not influence or affect the proceedings, if any, taken against the said bank or its employees. Appellant-Bank filed the present appeal.
s.subramanian
(Expert) 28 September 2010
That's good Mr.Ravinder.
Guest
(Expert) 29 September 2010
Yes true... this news regarding ICICI bank harassing its borrowers through illegal means was all over the news in 2008. Thank you for the judgment.
Advocate. Arunagiri
(Expert) 30 September 2010
Please see similar judgments by Supreme court and NCDRC.
A) NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION NEW DELHI
REVISION PETITION NO. 737 OF 2005. Order dated the 27th July , 2007
Citicorp Maruti Finance Ltd. Vs. S. Vijayalaxmi
Judgement
In a democratic country having well established independent Judiciary and having various laws it is impermissible for the money lender/financier/banker to take possession of the vehicle for which loan is advanced, by use of force. …. Such type of ‘instant justice’ cannot be permitted in a civilized society where there is effective rule of law. Otherwise, it would result in anarchy, that too, when the borrower retorts and uses the force….. Such a behaviour is required to be prohibited and the process of repossession is required to be streamlined so as to fit in cultural civilized society. Let the rule of law prevail and not that of jungle where might is right.
B) SUPREME COURT OF INDIA (2007) 2 SCC 711
CASE NO.: Appeal (crl.) 267 of 2007. DATE OF JUDGMENT: 26/02/2007
PETITIONER: I.C.I.C.I. BANK LTD. RESPONDENT: PRAKASH KAUR & ORS
JUDGMENT:
The subject matter of the writ petition relates to a loan taken by the writ petitioner from the…… It appears that the writ petitioner defaulted in payment of the installments …. writ petitioner’s truck was taken possession of by the bank authorities by use of force… we wish to make it clear that we do not appreciate the procedure adopted by the Bank in removing the vehicle from the possession of the writ petitioner. The practice of hiring recovery agents, who are musclemen, is deprecated and needs to be discouraged. The Bank should resort to procedure recognized by law to take possession of vehicles in cases where the borrower may have committed default in payment of the installments instead of taking resort to strong arm tactics.
