• Harassment by bank

I am woman residing in Delhi and recently I have been getting threatening calls from HDFC bank asking about a 8 year old loan on my brother's name. My brother has since been absconding and is living somewhere in Nepal, however the bank has now started to harass me and my family members about a loan that we were not even informed about. Not only this, I recently got married so they are now reaching to my in laws and their family members as well, which I believe is not ethical and is a matter of great social embarassment. This is even causing a stress on my marriage as they think my family has committed some fraud.

We have not been in touch with my brother for years(due to family dispute) and though I want to help the bank, I am unable to do so. I tried conveying the same to the bank but they have outrightly mentioned that I either help them get it resolved by repaying the loan on his behalf else they can't guarantee that the calls would stop. I am currently in great mental anxiety and desperately seeking for legal advice on how to proceed here
Asked 2 years ago in Civil Law from New Delhi, Delhi
1)record the calls

2) lodge police complaint against HDFC bank and the caller for criminal intimidation under section 506 of IPC

3)recovery agents of bank cannot harass you as no loan has been taken by you 

4) complain to RBI against the bank

5) please note that claim of bank is barred by limitation 
Ajay Sethi
Advocate, Mumbai
44472 Answers
2585 Consultations

5.0 on 5.0

CRIMINAL APPEAL NO. OF 2008. [Arising out of SLP (Crl.) No. 4935 of 2006] ICICI Bank .. Appellant
Shanti Devi Sharma & Others .. Respondents JUDGMENT
Dalveer Bhandari, J.
1. Leave granted.
2. This appeal is directed against the order dated 13th July, 2006 passed by the High Court of Delhi in Writ
Petition (Criminal) No. 576 of 2006 and order dated 11th August, 2006 1
passed in Crl. M. A. Nos. 8093-94/2006 in W.P. (Crl.) No. 576 of 2006.
3. The question that arises in this case in narrow compass: Should part of the impugned judgment be
expunged so that it may not adversely influence on an ongoing criminal investigation? The respondent filed a
criminal writ petition number 576 of 2006 with the Delhi High Court. Vide this writ petition, the respondents
sought a writ of mandamus that would direct the Commissioner of Police to take action against the appellant
bank. Respondent no.1 alleged that her son committed suicide as a result of the manner in which the bank's
recovery agents had repossessed her son's motorcycle. In the first information report (F.I.R.) dated
29.11.2005, the respondent alleged that on 16th October, 2005 at about 1.00 p.m., two recovery agents
(referred to as "goons") forcibly entered her son's bedroom and started harassing and humiliating him for the
loan payments that were overdue on his two wheeler and on his personal loan.
4. According to respondent no. 1, they repossessed the vehicle taken in the presence of his friends who
ridiculed him for having lost the motorcycle. It is further mentioned in the FIR that the deceased had used his
motorcycle to get vegetables for his small restaurant. It is also alleged that the deceased had to carry the
vegetables on his back in the absence of his motorcycle. Upon finding the deceased carrying vegetables on his
back, members of the neighborhood allegedly made snide comments. The deceased finally broke down before
his wife and allegedly stated that he had never faced such a humiliation and disgrace in his entire life. On that
very day, while his wife was washing clothes, the deceased went inside the small inner room and hung himself
to death. We reiterate that this version of the events is found in the FIR and is thus an allegation at this time.
5. To ascertain the veracity of these assertions, the High Court ordered the Police to file reports as to the status
of the investigation against the bank. The High Court later reviewed the 3
two status reports that were filed by the Police. It found them unsatisfactory and accordingly, the High Court
directed the Investigating Officer to:
"conclude the investigation into the matter as expeditiously as possible and take necessary action against those
who may be found guilty of abetting the deceased to commit suicide."
Icici Bank vs Shanti Devi Sharma & Others on 15 May, 2008
In addition, the High Court stated that: "Para 1: "... the vehicle for which the loan was taken was repossessed
by the musclemen employed by ICICI Bank.
Para 3: "...the proximate cause of death of the deceased that led him to commit suicide was on account of
humiliation caused by the Bank people from where loan was taken by him."
Para 4: "The modus-operandi employed by the banks like ICICI for realization of their loan amount and for
recovering the possession of the vehicle against which loans are given is extra legal and by no stretch of
imagination they can be permitted to employ musclemen and goons for recovery of their dues even from a
defaulting party."
6. The appellant bank claimed that it was aggrieved by the observations made by the High Court in paragraphs
1, 3 & 4 of 4
the impugned order. The bank asked the High Court to clarify or delete paras 1, 3 and 4. It did so by way of an
application for impleadment as well as an application for clarification/deletion/modification under section 482
(saving of inherent power of High Court) of the Criminal Code of Procedure, 1973. According to the appellant
bank, the observations made by the High Court were unjustified and unnecessary for deciding the case.
7. In an order dated 11.8.2006, the High Court declined to expunge the impugned observations because it had
made them "... consciously and there are no reasons to expunge the same." Nevertheless, the High Court
clarified the matter by stating as under:
"However, it is clarified that any observation made against ICICI Bank in the order passed by this Court on
13.07.2006 shall not influence or affect the proceedings, if any, taken against the said bank or its employees."
8. Given that the investigation had not been completed, the High Court could have prefaced its observations
by stating that 5
the facts were alleged. It did, however, note that "... perusal of the complaint would reveal that the proximate
cause of death ... was on account of humiliation caused by the Bank people ... ." Reference to the "complaint"
implies that its contents contain allegations, not facts. Moreover, the investigation was ongoing. Thus, it
should have been understood that the High Court was referring to alleged facts. That said, the court could
have been more careful to note that the facts that it discussed were alleged. Recognizing as much, the court
clarified that its observations were not to influence or affect the proceedings.
9. We reiterate the same. They will have no bearing on the ongoing investigation. Given this clarification, we
do not feel that the appellant bank has been substantially aggrieved. Nor do we believe that expunging the
impugned observations would have much of an effect. Under either scenario, having the observations
expunged or having them clarified, no one can rely on the observations.
10. As mentioned, the investigation is ongoing. Neither the High Court's order nor the observations made
herein are to influence the investigation, save the time period in which it must be completed. Nevertheless, it
is appropriate to remind financial institutions that they are bound by law. The recovery of loans or seizure of
vehicles can only be done through legal means.
11. The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002
("SARFAESI") and the Security Interest (Enforcement) Rules, 2002 ("SIER") framed thereunder provide
some of the procedures by which security interests may be recovered. In addition to SARFAESI and SIER,
the Reserve Bank of India ("RBI") has promulgated Guidelines on the subject. The RBI 
Practices Code for Lenders dated 5.5.2003 provides at (v)(c) that: "In the matter of recovery of loans, the
lenders should not resort to undue harassment viz. persistently bothering the borrowers at odd hours, use of
muscle power for recovery of loans, etc." 7
12. A more comprehensive version of these Guidelines was recently released on April 24, 2008. The
Guidelines expressly reference the 5.5.2003 Guidelines at (i)(x) with regard to the methods by which recovery
agents collect on security interests. In addition, the April 24, 2008 Guidelines further referred paragraph 6 of
the "Code of Bank's Commitment to Customers" (BCSBI Code) pertaining to collection of dues. The BCSBI
Code at para 6 inter alia provides: "All the members of the staff or any person authorized to represent our
bank in collection or/and security repossession would follow the guidelines set out below:
1. You would be contacted ordinarily at the place of your choice and in the absence of any specified place at
the place of your residence and if unavailable at your residence, at the place of business/occupation.
2. Identity and authority to represent would be made known to you at the first instance.
3. Your privacy would be respected.
4. Interaction with you would be in a civil manner.
5. Normally our representatives will contact you between 0700 hours and 1900 hrs, unless the special
circumstances of your business or occupation require otherwise.
6. Your requests to avoid calls at a particular time or at a particular place would be honored as far as possible.
7. Time and number of calls and contents of conversation would be documented.
8. All assistance would be given to resolve disputes or differences regarding dues in a mutually acceptable and
in an orderly manner.
9. During visits to your place for dues collection, decency and decorum would be maintained.
10. Inappropriate occasions such as bereavement in the family or such other calamitous occasions would be
avoided for making calls/visits to collect dues.
As noted above, this Code as well as others has been incorporated into the April 24, 2008 Guidelines: "(ix) A
reference is invited to (a) Circular DBOD.Leg.No.BC.104/ 09.07.007 /2002-03 dated May 5, 2003 regarding
Guidelines on Fair Practices Code for Lenders (b) Circular DBOD.No.BP. 40/ 21.04.158/ 2006-07 dated
November 3, 2006 regarding outsourcing of financial services and (c) Master Circular DBOD.FSD.BC.17/
24.01.011/2007- 08 dated July 2, 2007 on Credit Card Operations. Further, a reference is also invited to
paragraph 6 of the 'Code of Bank's Commitment to Customers' (BCSBI Code) pertaining to collection of dues.
Banks are advised to strictly adhere to the guidelines / code 9
mentioned above during the loan recovery process." [emphasis supplied].
13. RBI has expressed its concern about the number of litigations filed against the banks in the recent past for
engaging recovery agents who have purportedly violated the law. In the letter accompanying its April 24th,
2008 Guidelines on Engagement of Recovery Agents, RBI stated: "In view of the rise in the number of
disputes and litigations against banks for engaging recovery agents in the recent past, it is felt that the adverse
publicity would result in serious reputational risk for the banking sector as a whole." RBI has taken this issue
Icici Bank vs Shanti Devi Sharma & Others on 15 May, 2008
seriously, as evidenced by the penalty that banks could face if they fail to comply with the Guidelines. The
relevant portion of the Guidelines formulated by RBI is set out as under: "3. Banks, as principals, are
responsible for the actions of their agents. Hence, they should ensure that their agents engaged for recovery of
their dues should strictly adhere to the above guidelines and instructions, including the BCSBI Code, while
engaged in the process of recovery of dues.
4. Complaints received by Reserve Bank 10
regarding violation of the above guidelines and adoption of abusive practices followed by banks' recovery
agents would be viewed seriously. Reserve Bank may consider imposing a ban on a bank from engaging
recovery agents in a particular area, either jurisdictional or functional, for a limited period. In case of
persistent breach of above guidelines, Reserve Bank may consider extending the period of ban or the area of
ban. Similar supervisory action could be attracted when the High Courts or the Supreme Court pass strictures
or impose penalties against any bank or its Directors/ Officers/ agents with regard to policy, practice and
procedure related to the recovery process.
5. It is expected that banks would, in the normal course ensure that their employees or agents also adhere to
the above guidelines during the loan recovery process."
14. We deem it appropriate to remind the banks and other financial institutions that we live in a civilized
country and are governed by the rule of law.
15. Looking to the gravity of the above allegations, we expect that the matter will be investigated as
expeditiously as possible and, in any event, it must be concluded within a period of three months and,
thereafter, the concerned Deputy Commissioner of Police is directed to submit the report of the investigation
in the 11
High Court.
16. In the facts and circumstances of this case we direct the appellant to pay costs of this litigation to the
respondents which is quantified as Rs.25000/-. The costs be paid within three weeks. We direct that the matter
be listed before the High Court after the report of the Deputy Commissioner of Police is filed.
17. This appeal is accordingly disposed of. ...............................J.
(Tarun Chatterjee)
(Dalveer Bhandari)
New Delhi;
May 15, 2008
Ajay Sethi
Advocate, Mumbai
44472 Answers
2585 Consultations

5.0 on 5.0

You are not liable for the debts contracted by your brother unless you stood as a guarantor to the loan advanced to him. This is a common ploy by the banks to recover the money but it is illegal. The next time you receive a call from the bank you should record it and then visit the nearest police station to lodge a FIR for criminal intimidation. The calls would stop for sure once you register the criminal complaint.
Ashish Davessar
Advocate, Jaipur
22966 Answers
631 Consultations

5.0 on 5.0

1) debt is more than 8 years old 

2) your brother has not made any payment fr 8 years 

3) bank ought to have taken legal proceedings like filing summary suit against your brother to recover the outstanding dues within period  of 3 years 

4) bank cannot move court now to recover loan against your brother 

5) bank cannot harass family members of borrower . 

6) you are under no obligation to make any payment to bank 
Ajay Sethi
Advocate, Mumbai
44472 Answers
2585 Consultations

5.0 on 5.0

Why are you worried about the debt being time barred or not when there is no liability resting on your shoulders? File a police complaint for criminal intimidation against them including branch manager and this will stop. 
Ashish Davessar
Advocate, Jaipur
22966 Answers
631 Consultations

5.0 on 5.0

We have not been in touch with my brother for years(due to family dispute) and though I want to help the bank, I am unable to do so. I tried conveying the same to the bank but they have outrightly mentioned that I either help them get it resolved by repaying the loan on his behalf else they can't guarantee that the calls would stop. I am currently in great mental anxiety and desperately seeking for legal advice on how to proceed here

The bank cannot make calls to you demanding the repayment of loan availed by your brother.  This is a high handed criminal activities of bank deserves to be condemned as well as reportable to the RBI for violating the terms of RBI in this regard.  Next time when the bank calls you or your relatives, ask them to tell their name so that you can lodge a police complaint against them for harassing you   A complain with the police and subsequent enquiry by police shall make them to curb their such unpleasant and undesirable activities. 
T Kalaiselvan
Advocate, Vellore
34587 Answers
373 Consultations

5.0 on 5.0

Please let me know how should I revert to them now if they send me the documents on the loan. 

How can I stop them from calling my in laws who are not at all involved or even directly related to my brother..Please advise

The question of time barred debt or anything of that sort will not arise in this regard because you are not the borrower, it is the botheration of the borrower when he may confront the bank at a later stage.  As far as you are concerned, you are a third person with no liability towards loan availed by somebody.  He is brother by relation that does not means that you have an obligation to settle all his debts anywhere or elsewhere.
You should not entertain the call anymore, you can warn them to not to call you anymore in the future if they do not listen, you may lodge a complaint against the in the local police.  Your in laws also can adopt a similar action against the rowdy bankers.
T Kalaiselvan
Advocate, Vellore
34587 Answers
373 Consultations

5.0 on 5.0

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