1 APHC010104822026 IN THE HIGH COURT OF ANDHRA PRADESH AT AMARAVATI (Special Original Jurisdiction) [3327] THURSDAY,THE TWELFTH DAY OF MARCH TWO THOUSAND AND TWENTY SIX PRESENT THE HONOURABLE SRI JUSTICE K SREENIVASA REDDY WRIT PETITION NO: 5917/2026 Between: 1. M/S SSRS ENTERPRISES, HAVING ITS OFFICE AT DOOR NO. 13- 163/12 GAYATRI NILAYAM, INDIRA NAGAR, GOPALAPATANAM VISAKHAPATNAM DISTRICT,530001,. REPRESENTED BY ITS PROPRIETOR, REDDY NAIDU BABU, S/O REDDY PAYDINAIDU ...PETITIONER AND 1. UNION OF INDIA, REP. BY ITS SECRETARY TO GOVERNMENT OF INDIA MINISTRY OF FINANCE, NEW DELHI. 110001. 2. RESERVE BANK OF INDIA, REP. BY ITS REGIONAL DIRECTOR, FORT GLACIS, NO. 16, RAJAJI SALAI, CHENNAI - 600 001. 3. THE COMMISSIONER OF POLICE, VISAKHAPATNAM COMMISSIONERATE OFFICE, SURYA BAGH, VISAKHAPATNA CITY, VISAKHAPATNAM DISTRICT, ANDHRA PRADESH.530001 4. THE INSPECTOR OF POLICE, GOPALAPATANAM POLICE STATION, VISAKHAPATNAM CITY, VISAKHAPATNAM DISTRICT, ANDHRA PRADESH.530001 5. NORTHERN ARC CAPITAL LTD, HAVING ITS OFFICE AT 10TH FLOOR, NT MADRAS RESEARCH PARK, 1 KANAGAM VILLAGE, TIRAMANI, CHENNAI, TAMIL NADU, 600113. 6. CHOLAMANDALAM INVESTMENT AND FINANCE LTD, HAVING ITS OFFICE AT 1ST AND 4TH FLOOR, DOOR NO. 59-14-2A, SHANTI PLAZA, BENZ CIRCLE, GAYATRI NAGAR 3RD LANE, NTR 2 DISTRICT, ANDHRA PRADESH-520008. 7. KINARA CAPITAL PVT LTD, HAVING ITS OFFICE AT 50, 2ND FLOOR, 100 FEET ROAD, HAL 2ND STAGE, INDIRANAGAR, BENGALURU, KARNATAKA-560038. 8. TATA CAPITAL LIMITED, HAVING ITS OFFICE AT PENINSULA BUSINESS PARK GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI, MAHARASHTRA-400013. 9. SHRI RAM FINANCE LIMITED, HAVING ITS STATE HEAD OFFICE AT D.NO.56-4-25, 4TH FLOOR, THYAGARAJAN COMPLEX, HIGH SCHOOL ROAD, PATAMATA, VIJAYAWADA, DISTRISCT, ANDHRA PRADESH - 520010. 10. ASHV FINANCE LIMITED, HAVING ITS STATE HEAD OFFICE AT DOOR NO. 52-1/1-4D RG TOWERS, 4TH FLOOR, REAR WING, VETERINARY COLONY, ELURU ROAD ABOVE SUZUKI SHOWROOM, OPPOSITE NOVOTEL, VIJAYAWADA DISTRICT,- 520008. 11. POONAWALLA FINCORP LTD, HAVING ITS OFFICE AT UNIT NO. 2401, 24TH FLOOR, ALTIMUS, DR G.M. BHOSALE MARG, WORLI, MAHARASHTRA 400018. ...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 to issue Writ, Order or Direction more particularly one in the nature of WRIT OF MANDAMUS declaring the action of the respondent Nos.5 to 11 in high handedly, arbitrarily and illegally trying to recover the amounts from the petitioner by not following Circular dated 12.08.2022 vide RBI/2022- 23/108,DOR.ORG.REC.65/21.04.158/2022-23 issued by respondent no.2 or any due process of law and the inaction of the respondent no.2 to legitimately protect the interest of the petitioner by the duly enforcing Circular dated 12.08.2022 vide RBI/ 2022-23/108,OR.ORG.REC. 65/21.04.158/ 2022-23 as illegal, arbitrary and unconstitutional for violating Art 14, 19 and 21 of the Constitutional of India, further direct the respondent nos.5 to 11 to follow Circular dated 12.08.2022 vide RBI/2022-23/108, DOR. ORG.REC.65/21.04.158/2022-23 issued by respondent no.2. direct the respondent no.2 to enforce the Circular dated 12.08.2022 vide RBI/2022- 23/108, DOR.ORG. REC.65/21.04.158/2022-23 to protect the interests of the 3 petitioner against the respondent nos.5 to 11 and further direct the respondent no.2 to take stringent action against the misbehaving officials of the respondent nos.5 to 11 in unlawfully, illegally and arbitrarily taking to recover the amounts from petitioner without following any due process of law and pass IA NO: 1 OF 2026 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 the respondent nos.5 to 11 not to take any coercive measures against the petitioner without following due process of law and mandatorily following Circular dated 12.08.2022 vide RBI/2022-23/108, DOR.ORG.REC.65/21.04.158/2022-23 issued by respondent no.2 pending disposal of the writ petition and pass Counsel for the Petitioner: 1. GINJALA VIJAYA KUMAR Counsel for the Respondent(S): 1. GP FOR HOME 2. 4 The Court made the following Order: This Writ Petition is filed under Article 226 of the Constitution of the India seeking the following relief : “...to issue an appropriate writ, order or direction more particularly one in the nature of writ of Mandamus declaring the action of Respondent Nos.5 to 11 not following the Circular dated 12.08.2022 issued vide RBI/2022-23/108, DOR.ORG.REC.65/21.04.158/2022-23 by respondent No.2 and not adhering to due process of law as illegal, arbitrary, unconstitutional, being violative of Articles 14, 19 and 21 of the Constitutional of India and consequently direct the respondent nos.5 to 11 to strictly adhere to and follow Circular issued by respondent No.2, direct the Respondent No.2 to enforce the said circular to protect the interests of the petitioner against the respondent Nos.5 to 11 and further direct the Respondent No.2 to take stringent action against the misbehaving officials of the respondent Nos.5 to 11 in unlawfully, illegally and arbitrarily taking to recover the amounts from petitioner without following any due process of law and pass....” 2. Heard the learned counsel for petitioner and the learned Government Pleader for Home appearing for the respondents. 3. Grievance of the petitioner is that the petitioner utilized credit facilities from respondents 4 to 10, and since it defaulted in repayment of the same, recovery staff of respondents 5 and 6, along with recovery staff of respondents 7 to 11, began visiting home and workplace of the deponent of the writ affidavit, and starting to harass and humiliate him, and they are calling him and his family members, abusing them in filthy 5 language and threatening to see their end. Learned counsel for the petitioner submits that the respondents 5 to 11 are entitled to recover loan amount in terms of the loan agreements by following the procedure established under law and they are not having any right to recover the loan amount by using force. 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 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 2, wherein the Hon’ble Supreme Court directed the Banks/Financial Institutions to strictly follow 1 (2007) 2 SCC 711 2 (2008) 7 SCC 532 6 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 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 latest guidelines issued by the Reserve Bank of India on 12.08.2022 with regard to outsourcing of Financial Services – Responsibilities of regulated entities employing Recovery Agents, which read as follows: “RBI/2022-23/108 DOR.ORG.REC.65/21.04.158/2022-23 August 12, 2022 Madam/ 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, therefore, responsible for the actions of their service providers including Recovery Agents (hereafter referred to as „agents‟). 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, as amended from time to time, including those tabulated in 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, State Co- 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 – Reserve Bank of India (Regulatory Framework for Microfinance Loans) Directions, 2022‟, dated March 14, 2022. Yours faithfully, (Sunil T. S. Nair) Chief General Manager” 8. For the aforesaid reasons and as the alleged procedure adopted by the respondents 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, 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. In view of the foregoing discussion, the respondents are directed to ensure that the agents engaged by them for recovery of the loan amounts shall strictly adhere to the guidelines and instructions issued by the 2nd respondent and as held by the Hon’ble Apex Court as stated supra. 9 10. With the above direction, this Writ Petition is disposed of. There shall be no order as to costs. Miscellaneous petitions, if any pending, in this case, shall stand closed. ________________________ K. SREENIVASA REDDY, J Date:12.03.2026 TM 10 HON’BLE SRI JUSTICE K. SREENIVASA REDDY Writ Petition No.5917 of 2026 Date:12.03.2026 TM