MANAGER, ICICI BANK LTD . versus PRAKASH KAUR AND ORS.

Citation: [2007] 3 S.C.R. 253 · Decided: 26-02-2007 · Supreme Court of India · Bench: AR. LAKSHMANAN · Disposal: Appeal(s) allowed

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Judgment (excerpt)

MANAGER, ICICI BANK LTD . 
A 
..;.-
v. 
PRAKASH KAUR AND ORS. 
FEBRUARY 26, 2007 
[DR. AR. LAKSHMANAN AND AL TAMAS KABIR, JJ.] 
B 
Banks/Banking: 
Recovery agents-Hiring of-For recovery of loan/possession of c 
vehicle-Held: (Altamas Kabir, J) : Practice of hiring recovery agents/ 
musclemen, deprecated--Banks must resort to procedure recognized by law 
to take possession of vehicles where borrower defaults in payment of 
instalments instead of taking resort to strong arm tactics-Held: (Dr. AR 
Lnkshmanan, J): Suggestions to Banks not to resort to goondas to take 
possession of vehicle by force-Disputes between customers and Banks- D 
Suggested to be referred to Lok Adalats. 
The respondent had obtained loan from ICICI Bank for purchase of 
" 
truck. She defaulted in payment of instalments and the Bank forcibly took 
possession of truck through their agents. 
E 
On 25.7.2006, the respondent wrote to the agents to provide the details 
of the instructions given to them to seize the truck. She also sent legal notice 
to the recovery agent, which was refused. According to the respondent, the 
Bank and its officials had conspired to cheat her by advancing the loan for 
purchase of truck and accordingly, she wrote to the police authorities on 
F 
3/4.9.2006 to register the FIR. No steps were taken by police. Aggrieved 
.. -
respondent filed writ petition before High Court praying for directions to 
register FIR against the police officials and for recovery of truck illegally 
taken from her possession and for direction to Union of India for cancellation 
of licence of the Appellant-Bank. High Court directed the SSP to register 
the case and hold investigation. 
G 
\ 
In appeal to this Court, appellant-Bank conveyed willingness to 
compromise the matter by forgoing the interest which was payable on the 
outstanding dues and that if the respondent makes payment of an initial sum 
of Rs.50,000/-, the truck could be returned to her and upon final account.ing 
253 
H 
254 
SUPREME COURT REPORTS 
(2007] 3 S.C.R. 
A the balance principal amount found payable by her could be paid off in suitable 
instalments. 
Allowing the appeal, the Court 
HELD: Per Altamas Kabir, J 1. The appellant's suggestion is accepted 
B and accordingly it is directed that upon deposit of a sum of Rs.50,000/- only, 
the Bank shall forthwith release to the respondent-writ petitioner or her agent 
the truck, which had been seized from the writ petitioner's possession. The 
writ petitioner assisted by her agent, will sit with the Bank officials for the 
purpose of reconciling the accounts and in the event it is found that she had 
not been given credit for certain payments made by her, such payments are to 
C be taken into account and the balance principal amount will then be paid by 
the writ petitioner-respondent to the Bank in six equal monthly instalments, 
the last instalment being for any broken amount, if any. The writ petitioner-
respondent undertakes not to encumber or dispose of the truck till the final 
accounting is completed and all dues are cleared. In case of default in payment 
D of subsequent instalments, if any, the Bank will be entitled to re-possess the 
vehicle in accordance. with law. The Bank shall forego the interest said to be 
payable by the writ petitioner and the writ petitioner will also not be entitled 
to make any claim on account of any damage and wear and tear that may have 
been caused to the writ petitioner's vehicle while in the custody of the Bank 
and its officials. [Paras 13, 1411259-D, E, F, G] 
E 
2. The practice of hiring recovery agents, who are m usclemen, 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 instalments instead of taking 
F resort to strong arm tactics. (Para 16] (260-A-B] 
Per Dr. AR. lakshmanan, J. (supplementing): 
1. The recovery of loans or seizure of vehicles could be done only 
through legal means. The Banks cannot employ goondas to take possession 
G by force. (Para 15] (267-G] 
2. The entrance of the multi national banks into the country has spread 
the culture of Credit Cards, Loans on an unimaginable level. Inadequate 
information on the Credit Card application, Loan Applications, Advertisements 
or even while meeting the bankers in person in respect of the lending rates 
H and hidden charges, leads to this class of people being lured into 

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