Civil Misc. Writ Petition No. 71057 of 2011. Case: Ram Umrao Vs Managing Director, IndusInd Bank Ltd. High Court of Allahabad (India)
| Case Number | Civil Misc. Writ Petition No. 71057 of 2011 |
| Counsel | For Petitioner: R. S. Umrao, Adv. and For Respondents: B. K. Srivastava, Anubhav Chandra, C.S.C. |
| Judges | Vineet Saran, J. and A. P. Singh, J. |
| Issue | Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (54 of 2002) - Section 13(4); Constitution of India - Article 226 |
| Citation | AIR 2013 All 5 |
| Judgement Date | February 09, 2012 |
| Court | High Court of Allahabad (India) |
Judgment:
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The petitioner had taken a loan of Rs. 11,30,000/- from the respondent-Bank for purchase of a truck. The said loan was granted by the bank on 2.2.2008 and was repayable in 48 monthly instalments ending on 07.01.2012. The petitioner committed default in payment of certain instalments and thus the Bank is said to have issued a notice dated 01.09.2011 to the petitioner mentioning that the sum of overdue instalments in the account of the petitioner was Rs. 2,22,031/- as on 01.09.2011. Besides that, additional finance charges of Rs. 99,915/- plus legal expenses of Rs. 1,000/- along with personal visiting charges of Rs. 1,000/-were also leviable and thus a total amount of Rs. 3,23,946/- was determined as payable by the petitioner. As per the said notice, the said amount was to be paid by the petitioner in seven days. When the same was not paid, on 20.09.2011 the possession of the vehicle of the petitioner which was financed, was taken from the petitioner allegedly through the recovery agent. Thereafter, on 24.09.2011 the "Final Notice After Repossession" was given to the petitioner calling upon him to pay a sum of Rs. 5,31,177/- as the settlement amount, within seven days and take possession of the vehicle. Challenging the said "Final Notice After Repossession" dated 24.09.2011 this writ petition has been filed. A further prayer has also been made for a direction in the nature of mandamus commanding the respondent-Bank to release the truck of the petitioner bearing registration No. U.P.-78-BT-1485.
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We have heard Sri R.S.Umrao, learned counsel for the petitioner as well as Sri B.K.Srivastava, learned Senior Counsel appearing for the respondent-Bank and perused the record. Pleadings between the parties have been exchanged and with consent of the learned counsel for the parties, this writ petition is being disposed of at the admission stage itself.
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The submission of the learned counsel for the petitioner is that the entire procedure of taking over possession of the vehicle of the petitioner was illegal inasmuch as due process of law has not been adopted by the respondent-Bank and it has resorted to taking forcible possession of his vehicle allegedly through its recovery agent, who was neither duly nor properly appointed by the Bank in terms of the guidelines issued by the Reserve Bank of India. According to his submission, the person taking possession of the vehicle was not even the agent who was appointed by the Bank but some other person. It is also contended by the learned counsel for the petitioner that the overdue amount found to be payable (as per the statement of account of the Bank itself issued on 26.08.2011) was only Rs. 1,11,864.33 paise whereas the overdue amount shown in the notice dated 1.9.2011 was Rs. 2,22,021/- and what is now being demanded by the respondent-Bank vide the impugned notice dated 24.09.2011 is an highly inflated amount of Rs. 5,31,177/- which is wholly arbitrary and cannot be justified in law.
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Sri B.K.Srivastava, learned Senior Counsel, justifying the action of the respondent-Bank, has submitted that the appointment of the recovery agent by the Bank was in terms of the "Repossession Agency Agreement" executed on 02.08.2011 between the respondent-Bank and one M/s. Baiswara Associates of Kanpur and thus the action of the Bank in taking possession of the vehicle through such agency was fully justified. It is further submitted that the respondent-Bank has validly included such other charges as were payable by the petitioner under the loan agreement executed by the petitioner with the Bank on 02.02.2008 and in case there was any dispute with regard to the amount sought to be recovered from or paid by the petitioner, the petitioner could have approached the Bank and the matter could have been settled between the parties.
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In the light of the aforesaid submissions made by the learned counsel for the parties, we are to examine the action and manner of the respondent-Bank in taking over possession of the vehicle of the petitioner which was financed by the Bank and also the determination of the overdue amount by the respondent-Bank as payable by the petitioner.
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Before proceeding any further, it would be relevant to mention that in view of increasing cases of harassment of the defaulting borrowers by recovery agents engaged by the Banks and to stop the eroding reputation of the Banking Sector as a whole, the Reserve Bank of India, on April 24, 2008, has also issued certain guidelines, some of which are as follows:-
(1) Banks should have a due diligence process in place for engagement of recovery agents in conformity with the earlier guidelines of Reserve Bank of India on outsourcing of financial services.
(2) Banks should inform the borrower the details of agency firms.
(3) Banks to ensure that agents carry with them copy of notice, authorization letter and identity card during recovery process.
(4) Whenever recovery agency is changed bank to notify the borrower of such change.
(5) The notice to borrower and the authorization letter of the agent should, among other details, to also include the telephone number of the recovery agency.
(6) Banks to ensure tape recording of the...
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