New Delhi, May 15 : In a landmark judgement today, the Supreme Court reiterated its earlier stand that banks cannot deploy musclemen for recovery of loans from defaulters, forcing them to end their lives. “We deem it appropriate to remind banks and other financial institutions that we live in a civilised country and are governed by the rule of law,” a bench comprising Justices Tarun Chatterjee and Dalveer Bhandari said.
Dismissing a plea by ICICI Bank, the court refused to delete the Delhi High Court’s remarks that held the bank and its musclemen responsible for abetting a youth to commit suicide by humiliating him and taking away his motorcycle financed by the country’s largest private sector bank. It also asked ICICI Bank to to pay Rs 25,000 as cost of this litigation to the respondents within three weeks and directed the Delhi Police to conclude the investigation against the bank expeditiously within three months, keeping in view the gravity of the allegations. The court also directed the concerned deputy commissioner of police to submit the investigation report in the Delhi High Court.
According to the apex court, complaints received by the Reserve Bank of India (RBI) regarding violation of guidelines and adoption of abusive practices by banks’ recovery agents would be viewed seriously. Reiterating the RBI Guidelines on Engagement of Recovery Agents, the court said, “The Reserve Bank of India (RBI) may consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period. In case of persistent breach of the above guidelines, the RBI may consider extending the period of ban or the area of ban.”
“The RBI had expressed its concern about the number of litigations filed against the banks in the recent past for engaging recovery agents who have purportedly violated the law,” Justice Bhandari, writing the verdict for the bench, stated. In a letter accompanying its April 24, 2008, Guidelines, the RBI had stated that it might consider imposing a ban on a bank from engaging recovery agents in a particular area, either jurisdictional or functional, for a limited period.
