PADRIWALE Contact us

Court Decisions

ICICI fined Rs.50 lakh for using goons for loan recovery
07 November 2007


There have been many cases in the recent past when consumer commissions and courts have deplored the practise of using force to recover loans, and in fact, the Supreme Court has given strictures against such a tendency by finance companies. There is a process in law to recover assets, and it may be seemingly slow, but that is the same pace of justice as for other parts of the law. There is no provision in the law to forcibly recover the car or other asset that is bought using the loan amount, and certainly not at all to actually injure or otherwise harm the person. Refer the judgment: "NEW DELHI: The Delhi Consumer Commission fined ICICI bank a whopping fine of Rs 50 lakh for employing “goons” to recover loan and deplored the practice of the banks intimidating consumers to pay the installments. In the significant judgement, the Commission deprecated the “audacity and impunity” with which the banks have been effecting forcible possession of vehicles and ordered ICICI also to pay Rs 5 lakh to a consumer, who was mercilessly beaten by the recovery agents while they snatched a loaned car from him. While taking to task the leading bank, it vented its anger on ICICI for flouting the apex court’s direction that restrained all the financial institutions from employing musclemen to recover a loan amount or possession of a vehicle." In such cases, it is also important to also have a police case as all such forcible snatches are illegal. Such police cases have in the past become embarrassing for the finance company in question, and have moved them to become more careful. The finance companies and banks use the argument that doing the legal process is cumbersome, and encourages people to willingly default on their loans. The companies may be right in this regard, but they have themselves got into the business of providing loans where there is greater risk of default. They need to get away from the concept of free-for-all loans that they seemed to indulge in, and give loans after far more investigation to avoid default risk. It is also a very puzzling reflection on the state of law in the country that a company can actually hire recovery agencies who they know use force to recover loans, including using actual violence where necessary; and that they have no worry about the police intervening to enforce the law.

Source : a
  

In the News

view more

Knowledge Based

view more

Court Decisions

view more

Useful Links

view more

Calculators

view more