APHC010340742025 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) ■I r. FRIDAY, THE EIGHTEENTH DAY OF JULY TWO THOUSAND AND TWENTY FIVE PRESENT THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION No: 18065 OF 2025 Between: Koppisetti Prasanth Kumar, S/o. Srinivas, aged about 31 years, unemployee D.No.7-43, Kancharline, near Ramalayam, Dowlaiswaram, Rajahmundry Rural, East Godavari District ...PETITIONER AND 1. The Union of India, Rep by its Secretary Ministry of Finance New Delhi. 2. The Reserve Bank of India, Rep. by its Chief General Manager 8 Floor, Central Office Building, Shahid Bhagat Singh Road, Mumbai- 400001. 3. Flipkart Axis Bank Credits cards. Rep.by its Chief General Manager/Authorized representative, 'P.B. Marg, Worli 400028. 4. Amazon Pay ICICI Bank Credit Card, Rep.by its Chief General Manager/Authorized representative, ICICI Bank Ltd., ICICI Phone Banking Center, ICICI Bank Tower, 7'^ Floor, Survey No. 115/27, Plot No. 12, Nanakramguda, Serilingampally, Hyderabad. 5. YES Bank Credit Card, Rep.by its Chief General Manager/Authorized representative. Yes Bank Tower, IFC-2, 15*^ Floor, Senapati Bapat Marg, Elphinstn Rd(W), Mumbai, 400013. th Mumbai- 6. One Card Credit Card, Rep.by its Chief General .Manager/Authorized representative, One HQ, Survey No. 127, Seasons Road, Opposite Sarjaa, Aundh, Pune, Maharastra - 411007. 7. State Bank of India Credit Cards, Rep.by its Chief General Manager/Authorized representative, DLF Infinity Towers, Tower C, 12 Floor, Block-2 Building 3, DLF Cyber City, Gurugram-122002 (Haryana). 8. Hero Fin Corp Ltd Prefr, Rep.by its Chief General Manager/Authorized representative, 2"^^ Floor, Block 2, My Home Hub, Hitech City, Hyderabad. 9. SMFG Gramashakthi Bank, Rep.by its Chief General Manager/Authorized representative. Corporate office at 10'^ Floor, Office No. 101, 102 & 103, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. Slice Credit Card, Rep.by its Chief General Manager/Authorized representative, 1®* Floor, Ashford Park View, indiqube, 80 Feet Rd, 3 Block Koramangala 1A Block, Koramangala 3 Block, Koramangala Bengaluru, Karnataka 560034. th 10. rd ...RESPONDENTS Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue Writ Order or Direction more particularly one in the nature of WRIT OF MANDAMUS declaring the action of the Respondent No.2 in not legitimately protecting the interest of petitioner by duly enforcing its Circular, dated 12/08/2022 vide RBI/2022-23/108 DOR ORG REC'65/ 21.04.158/2022- 23 against Respondent Nos.3 to 10 who are resorting to high-handed measures to recover money without following the Circular dated 12/08/2022 vide RBI/2022-23/108 DOR ORG REC 65/ 21.04.158/2022-23 issued by Respondent No.2 and Consequently direct the Respondent No. 2 to take stringent action against the errant official of the Respondent Nos. 3 to 10 in unlawfully illegally and arbitrarily taking to recover the amounts from petitioner without following Circular, dated 12/08/2022 vide RBI/2022- 23/ 108 DOR ORG REC 65/ 21.04.158/2022-23. lA No: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to direct Respondent No.2 to instruct the respondent Nos. 3 to 10 not to harass the petitioner while recovering the amounts from petitioner and to follow the Circular, dated 12/08/2022 vide RBI/2022-23/108 DOR ORG REC 65/ 21.04. 158/2022-23 pending disposal of the above Writ Petition. Counsel for the Petitioner: SRI L.RAMESH KUMAR Counsel for the Respondent No.1: SRI PASALA PONNA ROA, DEPUTY SOLICITOR GENERAL OF INDIA Counsel for the Respondent No.2: Counsel for the Respondent Nos.3 to 10: The Court made the following order: APHC010340742025 SilS rWi- IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3329] FRIDAY,THE EIGHTEENTH DAY OF JULY TWO THOUSAND AND TWENTY FIVE PRESENT THE HONOURABLE SRI JUSTICE VENKATESWARLU NIMMAGADDA WRIT PETITION NO: 18065/2025 Between: 1.KOPPISETTI PRASANTH KUMAR, S/0 SRINIVAS, AGED ABOUT 31 YEARS, UNEMPLOYEE RAMALAYAM, DOWLAISWARAM, RAJAHMUNDRY RURAL, EAST GODAVARI DISTRICT D.NO. 7-43, KANCHARLINE, NEAR ...PETITIONER AND 1. 7-43, KANCHARLINE, NEAR ...PETITIONER AND 1. THE UNION OF INDIA, REP BY ITS SECRETARY MINISTRY OF FINANCE NEW DELHI. 2. THE RESERVE BANK OF INDIA, REP. BY ITS CHIEF GENERAL MANAGER 8TH FLOOR, CENTRAL OFFICE BUILDING, SHAHID BHAGAT SINGH ROAD, MUMBAI-400001 3. FLIPKART AXIS BANK CREDITS CARDS, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE MARG, WORLI, MUMBAI - 400028 P.B. 4. AMAZON PAY ICICI BANK CREDIT CARD, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE, ICICI BANK LTD., ICICI PHONE BANKING CENTER, ICICI BANK TOWER, PLOT NO. 12, 7TH FLOOT. SURVEY NO. 115/27 NANAKRAMGUDA, SERILINGAMPALLY, HYDERABAD 5. YES BANK CREDIT CARD, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE, YES BANK TOWER, IFC-2, 15TH FLOOR, SENAPATI BAPAT MARG, ELPHINSTN ( 2 RD(W), MUMBAI, 400013. 6. ONE CARD CREDIT CARD, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE, ONE HQ, SURVEY NO. 127, SEASONS ROAD, OPPOSITE SARJAA, AUNDH, PUNE, MAHARASTRA-411007 7. STATE BANK OF INDIA CREDIT CARDS, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE, DLF INFINITY TOWERS. TOWER C, 12TH FLOOR,BLOCK 2 BUILDING 3, DLF CYBER CITY, GURUGRAM-122002 (HARYANA) 8. HERO FIN CORP LTD PREFR, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE, 2ND FLOOR, BLOCK 2, MY HOME HUB, HITECH CITY, HYDERABAD 9. SMFG GRAMASHAKTHI BANK, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE. CORPORATE OFFICE AT 10TH FLOOR, OFFICE NO. 101, 102 AND 103, 2 NORTH AVENUE, MAKER MAXITY, BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI - 400 051 10.SLICE CREDIT CARD, REP.BY ITS CHIEF GENERAL MANAGER/AUTHORIZED REPRESENTATIVE, 1ST FLOOR, ASHFORD PARK VIEW, INDIQUBE, 80 FEET RD, 3RD BLOCK KORAMANGALA 1A BLOCK, KORAMANGALA 3 BLOCK, KORAMANGALA, BENGALURU, KARNATAKA 560034 ...RESPONDENT(S): Petition under Article 226 of the Constitution of India praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased topleased to issue Writ Order or Direction more particularly one in the nature of Writ of Mandamus declaring the action of the Respondent No.2 in not legitimately protecting the interest of petitioner by duly enforcing Circular, dated 12/08/2022 vide RBI/2022-23/ 108 DOR ORG 21.04.158/2022-23 against Respondent Nos. 3 to 10 who are resorting to high-handed measures to its REC recover money without following the Circular dated 12/08/2022 vide RBI/2022-23/ 108 DOR ORG REC 65/ 21.04.158/2022-23 issued by Respondent No. 2 and Consequently direct the Respondent No. 2 to take stringent action against the errant official of the Respondent Nos. 3 to 10 in unlawfully illegally and arbitrarily taking to 65/ recover 3 the amounts from petitioner without following Circular, dated 12/08/2022 vide RBI/2022- 23/108 DOR ORG REC 65/21.04.158/2022-23 and pass lA NO: 1 OF 2025 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased .pleased to direct Respondent No. 2 to instruct the respondent Nos. 3 to 10 not to harass the petitioner while recovering the amounts from petitioner and to follow the Circular, dated 12/08/2022 vide RBI/202223/ 108 DOR ORG REC 65/ 21 04 158/2022-23 pending disposal of the above writ petition and pass Counsel for the Petitioner: 1.RAMESH KUMAR.L Counsel for the Respondent(S): / 1. The Court made the following: 4 y- THE HON’BLE SRI JUSTICE VENKATESWARLU NIMMAGADDA . ---f WRIT PETITION NO: 18065/2025 ORDER:- This writ petition is filed under Article 226 of the Constitution of the India seeking the following reliefs:- “issue an appropriate writ order or direction particularly one in the nature of writ of Mandamus declaring the action of the Respondent No. 2 in not legitimately protecting the interest of petitioner by duly enforcing Circular, dated 12.08.2022 vide RBI/2022-23/108 DOR ORG REC 65/21.04.158/2022-23 against Respondent Nos. 3 to 10 who are resorting to high-handed measures to recover money without following the Circular dated 12.08.2022 vide RBI/2022-23/108 DOR ORG REC 65/ 21.04.158/2022-23 issued by Respondent No. 2 and Consequently direct the Respondent No. 2 to take stringent action against the errant official of the Respondent Nos. 3 to 10 in unlawfully illegally and arbitrarily taking to recover the amounts from petitioner without following Circular, dated 12.08.2022 vide RBI/2022-23/108 DOR ORG REC 65/21.04.158/2022-23 and to pass such other order or orders...” The case of petitioner is that he availed the credit card facility 2. offered by Respondent Nos.3 to 10, who are the private & public bankers and utilized the amounts. He has been prompt in repaying the same without fail. The further case of the petitioner is that he has been regularly paying the installments in terms of the agreement for quite some time and thereafter he could not pay the installments. It is also case of the petitioner that respondent Nos.3 to 10 without following the guidelines of RBI, has been sending the loan recovery agents to his house and harassing to pay the amounts due as per the calculation of respondents. 5 3. Further the grievance of the petitioner is that the respondents entitled to recover loan amount/loan amounts on credit cards in terms of the agreements by following the procedure established under law and they are not having any right to recover the said loan amounts by using force. Hence, the Writ Petition. are 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 ^, while dealing with the similar issues where the banks engaged the services of recovery/collection agents to recover the loans, 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 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.” 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^, where the Hon’ble Supreme Court directed the Banks/Financial Institutions to strictly follow the guidelines issued by the Reserve Bank of India. (2007) 2 see 711 ^ (2008) 7 see 532 6 In the above referred judgments, the Hon’ble Supreme Court 6. 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 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. It is apt and appropriate to extract latest guidelines issued by the 7. Reserve 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.65/21.04.158/2022-23 August 12, 2022Madam/ Sir, Outsourcing of Financial Services - Responsibilities of regulated entities employing Recovery Agents 7 The Reserve Bank of India has from time to time advised regulated entities (REs) that the ultimate responsibility for their outsourced activities vests with them and they are, responsible for the actions of their service providers including Recovery Agents (hereafter referred to as ‘agents’). therefore, 2. It has been observed that the agents employed by REs have been deviating from the extant instructions governing the outsourcing of financial services. In view of concerns arising from the activities of these agents, it is advised that the REs shall strictly ensure that they or their agents do not resort to intimidation or harassment of any kind, either verbal or physical, against any person in their debt collection efforts, including acts intended to humiliate publicly or intrude upon the privacy of the debtors' family members, referees and friends, sending inappropriate messages either on mobile or through social media, making threatening and/or anonymous calls, persistently calling the borrower and/or calling the borrower before 8:00 a.m. and after 7:00 p.m. for recovery of overdue loans, making false and misleading representations. etc. 3. The instructions contained in para 2 above shall supplement and be read in conjunction with the existing guidelines/directions issued by the Reserve Bank of India, amended from time to time, including those tabulated in as Annex. 4. Any violation in this regard by REs will be viewed seriously. Applicability 5. This circular shall apply to the following REs: (a) All Commercial Banks (Including Local Area Banks, Regional Rural Banks, and Small Finance Banks) excluding Payments Banks; (b) All All-India Financial Institutions (viz. Exim Bank, NABARD, NHB, SIDBI, and NaBFID); (c) All Non-Banking Financial Companies including Housing 8 Finance Companies; (d) All Primary (Urban) Co-operative Banks, operative Banks, and District Central Co-operative Banks; and (e) All Asset Reconstruction Companies. 6. This circular shall not apply to microfinance loans covered under ‘Master Direction - Resen/e Bank of India (Regulator/ Framework for Microfinance Loans) Directions. 2022’, dated State Co- March 14. 2022. Yours faithfully. (Sunil T. S. Nair) Chief General Manager” For the aforesaid reasons and as the procedure adopted by the respondent Nos.1 to 5 and 7 for recovery of loan amount from the petitioner, amounts to violation of the rights guaranteed under Articles 14 and 21 of the Constitution of India. 8. When the Court examined the writ petition and considered the controversy raised in the petition, a conspicuous aspect surfaced that the writ petition was filed against the Company-Respondent Nos.6, 8, 9, 10. Admittedly, Respondent Nos.6, 8. 9, 10 are Companies registered under the Companies Act, 1956. They neither answer the definition of “State” within meaning of Article 12 of the Constitution, nor the transaction between the petitioner and Respondent Nos.6, 8, 9, 10 could be said to be involving any public function or could be said to be in the public realm. Also Respondent Nos.6, 8, 9, 10 are not discharging any function which has the trapping of sovereign function. 9. 9 Respondent Nos.6, 8, 9, 10 are Private Companies registered under the law. It is not a “State”. Once the above position is clear, this writ petition would not lie against the Respondent Nos.6, 8, 9, 10. 10. It is further observed that the binding nature of the orders and actions of respondent Nos.6, 8 to 10 are confined to its account holders and borrowers and to its employees only. Therefore, respondent Nos.6, 8 to 10 did not fall within the purview of the ‘state’ or its instrumentality under Article 12 of the Constitution of India. 11. For better understanding Article 12 of the Constitution of India is extracted hereunder: 12. Definition In this part, unless the context otherwise requires, "the State" includes the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India." 12. In view of the facts and circumstances as stated above and perusal of Article 12 of the Constitution of India, this Court deems it appropriate to direct the respondent Nos.1 to 5 and 7, 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 on 10 A Bank Ltd. vs. Prakash Kaur’s case (1 supra) and ICICI Bank Shanti Devi Sharma’s case (2 supra). However, if the petitioner has against respondent Nos.6, 8 to 10/finance companies, it is open to the petitioner to avail appropriate legal remedy before the appropriate forum, in accordance with law, including approaching the Ombudsman of the RBI. vs. any grievance With the above direction, this writ petition is disposed of. There 13. shall be no order as to costs. Miscellaneous petitions, if any pending, in this case, shall stand closed. Sd/- M. SRINIVAS ASSISTANT REGISTRAR SECTION OFFICER //TRUE COPY// To, 1. The Secretary, Union of India, Ministry of Finance New Delhi. Chief General Manager, Reserve Bank of India, Floor, Central 2. The Office Building, Shahid Bhagat Singh Road, Mumbai-400001. Chief General Manager/Authorized represen,tative, Flipkart Axis 3. The Bank Credits cards, P.B. Marg, Worli, Mumbai-400028. 4. The Chief General Manager/Authorized representative, Amazon Pay ICICI Bank Credit Card. ICICI Bank Ltd., ICICI Phone Banking Center, Plot No. 12, Floor, Survey No. 115/27, th ICICI Bank Tower, 7 Nanakramguda, Serilingampally, Hyderabad. 5. The Chief General Manager/Authorized representative,YES Bank Credit IFC-2, Floor, Senapati Bapat Marg, Card, -Yes Bank Tower, Elphinstn Rd(W), Mumbai, 400013. 6. The Chief Genera! Manager/Authorized representative, One Card Credit Card, One HQ, Survey No. 127, Seasons Road, Opposite Sarjaa, Aundh, Pune, Maharastra - 411007. 7. The Chief General Manager/Authorize,d representative. State Bank of India Credit Cards, DLF Infinity Towers, Tower C, 12*^ Floor, Block-2 Building 3, DLF Cyber City, Gurugram-122002 (Haryana). 8. The Chief General Manager/Authorized representative, Hero Fin Corp Ltd Prefr, 2"^ Floor, Block 2, My Home Hub, Hitech City, Hyderabad. 9. The Chief General Manager/Authorized representative, SMFG Gramashakthi Bank, Corporate office at 10*'' Floor, Office No. 101, 102 & 103, 2 North Avenue, Maker Maxity, Bandra Kurla Complex, Bandra (East), Mumbai - 400 051. 10. The Chief General Manager/Authorized representative. Slice Credit Card, 1®‘ Floor, Ashford Park View, Indiqube, 80 Feet Rd, 3^'* Block Koramangala 1A Block, Koramangala 3 Block, Koramangala, Bengaluru, Karnataka 560034. , 11. One CC to Sri L. Ramesh Kumar, Advocate [OPUC] 12. One CC to O/o. Additional Solicitor General of India, High Court of Andhra Pradesh. [OPUC] 13. Two CD Copies. ssb HIGH COURT DATED: 18/07/2025 ORDER WP No.18065 OF 2025 ^ . Current Section DISPOSING THE WRIT PETITION WITHOUT COSTS