APHC010223862024 IN THE HIGH COURT OF ANDHRA PRADESH :: AMARAVATI (Special Original Jurisdiction) MONDAY, THE SECOND DAY OF FEBRUARY TWO THOUSAND AND TWENTY SIX [3459] PRESENT THE HON'BLE SMT. JUSTICE SUMATHI JAGADAM WRIT PETITION Nos.11606, 14940 & 14993 OF 2024 Between: WRIT PETITION No.11606 OF 2024 M/s. Pranav Infra Projects, Rep. by its Proprietor, Darapuneni Narayana, S/o. Chennakesavulu, Aged 57 Years, R/o.Maple-122, Raintree Park, Dwaraja Krishna, Opp:Nagarjuna University, Namburu, Guntur District. --- Petitioner and 1. The Union of India, Ministry of Finance, Department of Economic Affairs, 15, Safdarjung Road, New Delhi. 2. The State Bank of India, Rep. by its Zonal Manager, Labbipet, MG Road, Vijayawada, Krishna District. 3. The State Bank of India, Rep. by its Branch Manager, SME Besant Road Branch, R/o. D.No.27-19-42 & 27-06-106, Gravity Towers, Ground Floor, Prakasam Road, Vijayawada 4. M/s. Ratnam Services, R/o. Khanna Nagar, Beside New Modern Super Market, JS,J WP Nos.11606, 14940 & 14993/2024 2 Benz Circle, Vijayawada, Krishna District. --- Respondents WRIT PETITION No.14940 OF 2024 M/s. Pavuluri Corporation, Rep. by its Proprietor, Pavuluri Subrahmanya Swamy, Flat No.308, Vasanth Residency, Lakshmi Narasimha Swamy Colony, Amaravati, Mangalagiri. --- Petitioner and 1. The Union of India, Ministry of Finance, Department of Economic Affairs, 15, Safdarjung Road, New Delhi. 2. The State Bank of India, Rep. by its Zonal Manager, Labbipet, MG Road, Vijayawada, Krishna District. 3. The State Bank of India, Rep. by its Branch Manager, SME Besant Road Branch, R/o. D.No.27-19-42 & 27-06-106, Gravity Towers, Ground Floor, Prakasam Road, Vijayawada 4. M/s. Ratnam Services, R/o. Khanna Nagar, Beside New Modern Super Market, Benz Circle, Vijayawada, Krishna District. --- Respondents WRIT PETITION No.14993 OF 2024 M/s. Pavuluri Developers, Rep. by its Managing Partner, Pavuluri Subrahmanya Swamy, Flat No.502, D.No.59A-21/4-3, Gayatri Nilayam, Dasarivari Street, Vijayawada, Krishna District. --- Petitioner and 1. The Union of India, JS,J WP Nos.11606, 14940 & 14993/2024 3 Ministry of Finance, Department of Economic Affairs, 15, Safdarjung Road, New Delhi. 2. The State Bank of India, Rep. by its Zonal Manager, Labbipet, MG Road, Vijayawada, Krishna District. 3. The State Bank of India, Rep. by its Branch Manager, SME Besant Road Branch, R/o. D.No.27-19-42 & 27-06-106, Gravity Towers, Ground Floor, Prakasam Road, Vijayawada 4. M/s. Ratnam Services, R/o. Khanna Nagar, Beside New Modern Super Market, Benz Circle, Vijayawada, Krishna District. --- Respondents Counsel for the petitioner/s : Battula Sanjaiah Gandhi Counsel for the respondents : S. S. N. Moorthy, Dhara Satyanarayana & Venkateswarlu Gundiboina The Court made the following: JS,J WP Nos.11606, 14940 & 14993/2024 4 COMMON ORDER: Heard Sri Battula Sanjay Gandhi, learned counsel for the petitioners, and Sri S. Satyanarayana Moorthy, learned Standing Counsel, appearing on behalf of the respondents – Bank, and perused the material available on record. 2. Since the issue arises in these 3 Writ Petitions and the parties are the same, these 3 Writ Petitions are taken up for disposal by way of this common order. 3. The petitioners have filed these Writ Petitions challenging the actions of the third respondent, the Bank, in relation to three loans taken for vehicle purchases. After completing all necessary formalities, the Bank sanctioned a loan of Rs. 6,00,00,000/- each to the petitioners in W.P. Nos. 11606 and 14940 of 2024 on 13th October 2022, and a loan of Rs. 2,00,00,000/- on 7th January 2023 to the petitioner in W.P. No. 14993 of 2024. Due to irregular loan instalment payments, the Bank issued separate legal notices requiring the petitioners to regularise their respective loan accounts. Subsequently, the Bank, through its branch, communicated with the borrowers and guarantors regarding acknowledgements by Recovery Agents for vehicle repossession on 02.05.2024 in W.P. No. 11606 of 2024, and on 10.07.2024 in W.P. Nos. 14940 and 14993 of 2024. Aggrieved by these actions, the petitioners have filed the present Writ Petitions. JS,J WP Nos.11606, 14940 & 14993/2024 5 4. The learned counsel for the petitioners‟ states that the petitioners are civil contractors engaged in transporting gravel, soil, and other materials to contract sites using their lorries and machinery. The petitioner in W.P. No. 11606 of 2024 has repaid 34 of 57 loan instalments, while the petitioner in W.P. No. 14940 of 2024 has paid 38 of 57 instalments up to November 2025, demonstrating substantial repayment for both loans. Conversely, the petitioner in W.P. No. 14993 of 2024 has paid 32 of 81 instalments up to November 2025. Despite this, the third respondent, without prior notice, appointed recovery agents to seize the vehicles, in violation of the Fair Practices Code and the Reserve Bank of India‟s guidelines on recovery agents. Furthermore, the petitioners' counsel cites the Supreme Court judgment in ICICI Bank Limited v. Prakash Kaur and others1, which holds that forced repossession is illegal and that lenders must follow proper legal procedures. 5. Respondent No. 3, while acknowledging the petitioners' claims, states that although separate legal notices were issued to the petitioners for rescheduling and repayment of the outstanding loans on three accounts, the petitioners failed to comply. As a result, the respondent bank issued repossession notices on 02.05.2024 and 10.07.2024, authorising the 4th respondent to repossess the petitioners' vehicles. Additionally, the learned counsel argued that while engaging an agent is permissible, unethical practices should be avoided. 1 (2007) 2 SCC 711 JS,J WP Nos.11606, 14940 & 14993/2024 6 6. It is admitted that the respondent Bank approved three separate loans to the petitioners for purchasing vehicles. It is also admitted that the Bank issued legal notices, which the petitioners did not respond to. As the petitioners‟ loan accounts were declared Non-Performing Assets (NPAs), the Bank sent letters dated 02.05.2024 and 10.07.2024 from its branch, informing the borrowers and guarantors of the hiring of Recovery Agents to recover the vehicles. Further, the RBI vide Circular in DOR.ORG.REC.65/21.04.158/2022-23, dated 12.08.2022, has specifically issued instructions advising the Regulated Entities with regard to engaging the Agents for recovery of loans, which reads 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 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 JS,J WP Nos.11606, 14940 & 14993/2024 7 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 Page No. 4 of 6 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 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 JS,J WP Nos.11606, 14940 & 14993/2024 8 „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” 7. Banks have the right to recover loans, provided they do so fairly, transparently, and lawfully. Recovery agents are not permitted to use threats, intimidation, or public humiliation. The Hon‟ble Supreme Court, in ICICI Bank v. Shanthi Devi Sharma2 and Prakash Supra (1st supra), emphasised that banks must recover loans legally, without resorting to harassment. 8. In this case, the agent had not issued any notice. The internal letter from the 3rd Respondent Bank is being challenged in these Writ Petitions. Moreover, the petitioners have neither responded to the legal notices nor provided any evidence that their bills are still pending with the Government. They also did not file any complaints against the 3rd Respondent Bank regarding harassment by agents appointed by the Bank. A Writ Petition requires a cause of action, meaning a concrete illegal act that has already occurred. As the petitioners have not shown that the Recovery Agents approached them or caused harassment, there is no illegal act to challenge. The Court does not issue a Writ based on fears of agents arriving or on the Bank‟s right to engage Recovery Agents. Furthermore, as the petitioners have not proved that the Bank violated any mandatory 2 (2008) 7 SCC 532 JS,J WP Nos.11606, 14940 & 14993/2024 9 RBI guidelines in appointing Recovery Agents, and as they are merely objecting to the appointment, these Writ Petitions are premature and should be dismissed. 9. Accordingly, with the above observation, these three Writ Petitions are dismissed. No order as to costs. 10. Interim orders, granted earlier in these Writ Petitions, shall stand vacated. Consequently, Miscellaneous Applications pending, if any, shall stand closed. __________________________ JUSTICE SUMATHI JAGADAM Date:02.02.2026 DSH