Telangana High Court
Yemshetty Srikanth vs The State Of Telangana on 9 September, 2025
Author: Nagesh Bheemapaka
Bench: Nagesh Bheemapaka
THE HON'BLE SRI JUSTICE NAGESH BHEEMAPAKA
WRIT PETITION No.22390 of 2025
ORDER:
Aggrieved by the action of respondent Nos.4 to 7 in harassing the petitioner contrary to norm of RBI Circular vide No.RBI/2019- 20/186/DOR.No.BP.BC.4721.04.048/2019-20, dated 27.03.2020, guidelines of RBI Rules, dated 01.07.2015 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 ill 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. It is also case of the petitioner that respondent Nos.4 to 7 without following the guidelines of RBI, the representatives of respondent Nos.4 to 7 have been continuously calling him, visiting his house and abusing him in filthy language.
3. The grievance of the petitioner is that the respondents are entitled to recover the dues in terms of the credit facilities by following the procedure established under law and they are not having any right to recover the dues amount by using force.
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4. The issues raised in this writ petition are no longer res integra as the Hon'ble Supreme Court in ICICI Bank Ltd. vs. Prakash Kaur and others 1, while dealing 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. Before we part with this matter, 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 recognised by law to take possession of vehicles in cases where the borrower may have 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 vs. Shanti Devi Sharma and others 2, where the Hon'ble 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 Hon'ble Supreme Court condemned the procedure adopted by the 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 1 (2007) 2 SCC 711 2 (2008) 7 SCC 532 3 procedure recognized by law for securing the possession of vehicles/secured assets in cases where the borrower commits default in repayment of loan/loan account is declared as NPA, are resorting to strong-arm tactics. The Hon'ble 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 the circular issued by the Reserve Bank of India on 27.03.2020 with regard to rescheduling of payments - Term loans and working capital facilities, Classification as Special Mention Account (SMA) and Non-Performing Asset (NPA), which reads as follows:
RBI/2019-20/244 DOR.No.BP.BC.71/21.04.048/2019-20 May 23, 2020 All Commercial Banks (including Small Finance Banks, Local Area Banks and Regional Rural Banks) All Primary (Urban) Co-operative Banks/State Co-operative Banks/ District Central Co-operative Banks All All-India Financial Institutions, All Non-Banking Financial Companies (including Housing Finance Companies) Madam/Dear Sir, COVID-19 - Regulatory Package 4 Please refer to the Circular DOR.No.BP.BC.47/21.04.048/2019- 20 dated March 27, 2020 and Circular DOR.No.BP.BC.63/21.04.048/2019-20 dated April 17, 2020 announcing certain regulatory measures in the wake of the disruptions on account of COVID-19 pandemic and the consequent asset classification and provisioning norms. As announced in the Governor's Statement of May 22, 2020, the intensification of COVID-19 disruptions has imparted priority to relaxing repayment pressures and improving access to working capital by mitigating the burden of debt servicing, prevent the transmission of financial stress to the real economy, and ensure the continuity of viable businesses and households. Consequently, the detailed instructions in this regard are as follows:
(i) Rescheduling of Payments - Term Loans and Working Capital Facilities
2. In view of the extension of lockdown and continuing disruption on account of COVID-19, all commercial banks (including regional rural banks, small finance banks and local area banks), co-operative banks, All-India Financial Institutions, and Non-banking Financial Companies (including housing finance companies) ("lending institutions") are permitted to extend the moratorium by another three months i.e. from June 1, 2020 to August 31, 2020 on payment of all instalments in respect of term loans (including agricultural term loans, retail and crop loans). Accordingly, the repayment schedule for such loans as also the residual tenor, will be shifted across the board. Interest shall continue to accrue on the outstanding portion of the term loans during the moratorium period.
3. In respect of working capital facilities sanctioned in the form of cash credit/overdraft ("CC/OD"), lending institutions are permitted to allow a deferment of another three months, from June 1, 2020 to August 31, 2020, on recovery of interest applied in respect of all such facilities. Lending institutions are permitted, at their discretion, to convert the accumulated interest for the deferment period up to August 31, 2020, into a funded interest term loan (FITL) which shall be repayable not later than March 31, 2021.
(ii) Easing of Working Capital Financing
4. In respect of working capital facilities sanctioned in the form of CC/OD to borrowers facing stress on account of the economic fallout of the pandemic, lending institutions may, as a one-time measure,
(i) recalculate the 'drawing power' by reducing the margins till August 31, 2020. However, in all such cases where such a temporary enhancement in drawing power is considered, the 5 margins shall be restored to the original levels by March 31, 2021; and/or,
(ii) review the working capital sanctioned limits upto March 31, 2021, based on a reassessment of the working capital cycle.
5. The above measures shall be contingent on the lending institutions satisfying themselves that the same is necessitated on account of the economic fallout from COVID-19. Further, accounts provided relief under these instructions shall be subject to subsequent supervisory review with regard to their justifiability on account of the economic fallout from COVID-19.
6. Lending institutions may, accordingly, put in place a Board approved policy to implement the above measures. Asset Classification
7. The conversion of accumulated interest into FITL, as permitted in terms of paragraph 3 above, and the changes in the credit terms permitted to the borrowers to specifically tide over economic fallout from COVID-19 in terms of paragraph 4 above, will not be treated as concessions granted due to financial difficulty of the borrower, under Paragraph 2 of the Annex to the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions, 2019 dated June 7, 2019 ('Prudential Framework'), and consequently, will not result in asset classification downgrade.
8. In respect of accounts classified as standard as on February 29, 2020, even if overdue, the moratorium period, wherever granted in respect of term loans, shall be excluded by the lending institutions from the number of days past-due for the purpose of asset classification under the IRAC norms. The asset classification for such accounts shall be determined on the basis of revised due dates and the revised repayment schedule.
9. Similarly, in respect of working capital facilities sanctioned in the form of cash credit/overdraft ("CC/OD"), where the account is classified as standard, including SMA, as on February 29, 2020, the deferment period, wherever granted in terms of paragraph 3 above shall be excluded for the determination of out of order status. 6
10. All other provisions of circulars dated March 27, 2020 and April 17, 2020 shall remain applicable mutatis mutandis.
Yours faithfully, (SauravSinha) Chief General Manager-in-Charge
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 the loan amounts, shall strictly follow the guidelines and instructions issued by the Reserve Bank of India and also the judgments of the Hon'ble Supreme Court in ICICI Bank Ltd. vs. Prakash Kaur's case (1 supra) and ICICI Bank vs. Shanti Devi Sharma's case (2 supra).
9. With the above direction, this Writ Petition is disposed of. There shall be no order as to costs.
As a sequel thereto, miscellaneous applications, if any, pending shall stand closed.
____________________________ NAGESH BHEEMAPAKA, J Date: 09.09.2025 Nsk