The Hindu : National : Banks pulled up for using goondas to recover loans

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Monday, Jan 08, 2007
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Banks pulled up for using goondas to recover loans

Legal Correspondent

We are governed by a rule of law in the country: Supreme Court

NEW DELHI: The Supreme Court has pulled up commercial banks for resorting to muscle power, using goondas to recover loans from defaulters or seizing vehicles bought on loans.

A Bench comprising Justices K.G. Balakrishnan and D.K. Jain rejected the submission made on Friday by senior counsel Mukul Rohtagi appearing for the ICICI Bank that if force was not applied the defaulters would not repay.

The Bench told counsel that recovery of loans or seizure of vehicles could be done only through legal means. "We are governed by a rule of law in the country. How can someone take possession by force? You cannot employ goondas."

Mr. Rohtagi made a "mention" for an early hearing of an appeal filed by the bank against an order passed by the Allahabad High Court rejecting its plea to quash the criminal cases registered by the Uttar Pradesh Government against the managing director and top officials for allegedly using criminal force against a loan defaulter. The case was registered at the instance of the High Court on a complaint from a car owner that the bank sent musclemen to seize the vehicle for non-payment of loan instalments.

Mr. Rohtagi claimed that the senior bank officials did not owe any vicarious responsibility for actions purportedly done by lower rung personnel. The Bench shot back: "Re-possession by what means. Does it mean use of force by employing goondas."

Mr. Rohatgi said there was not a single person on earth who would give back the vehicle just like that and that the banks were bound to use "some sort of force" to take back the vehicle.

The Bench said that while the banks might have the right to seize the vehicle for default, it could not be done by using force. It, however, stayed the arrest of the bank officials pursuant to the registration of the case.

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