Bank recovery agents have been criticized as a “group of goons” for refusing to return a vehicle even after the loan settled. The agents’ conduct sparked outrage, raising concerns over aggressive recovery practices.
New Delhi: The Supreme Court condemned a bank’s recovery agent firm as a “group of goons” for failing to return a vehicle seized from a man despite a one-time settlement of the loan. The court ordered the West Bengal Police to file a charge sheet against the company within two months.
A bench comprising Justices Surya Kant and Ujjal Bhuyan also directed that compensation be paid to Debasish Bosu Roy Chowdhury, who had taken a loan of Rs 15.15 lakh to purchase a bus for operation in Kolkata.
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The court instructed the Bank of India to recover the compensation amount from the recovery agent.
In its recent order, the bench stated,
“Based on the observations of the high court and the arguments presented by the petitioners, it is evident that respondent No. 4, a recovery agent, essentially operates as a group of goons, using intimidation to harass borrowers on behalf of the petitioner bank.”
The court noted that an FIR had been filed against the recovery agent firm, M/s City Investigation and Detective, for failing to return the vehicle in proper condition.
The order further instructed,
“The Commissioner of Police in the relevant area is directed to ensure that the investigation of the FIR dated July 5, 2023, registered at Sodepur Police Station in West Bengal under Sections 406, 420, and 471 of the IPC, is completed without delay, and that a charge sheet is filed within two months.”
The recovery agent firm eventually returned the vehicle, but it was in a damaged condition, with altered chassis and engine numbers.
The bench remarked,
“The petitioner-bank is entitled to recover the compensation amount paid to respondent No. 1 (Chowdhury) from respondent No. 4 (the recovery agent firm) or any other individual responsible for the damage caused to the vehicle.”
The court further instructed that once the charge sheet filed, the trial court should take cognizance and proceed in accordance with the law.
Additionally, the bench directed,
“If respondent No. 4 has been granted any license or authorization by a competent authority to act as a recovery agent, the petitioner-bank is instructed to file a separate complaint with that authority, seeking the cancellation of such permission or authorization.”
The Supreme Court declined to intervene in the Calcutta High Court‘s May 16 order, which directed the bank to pay Rs 5 lakh as interim compensation to Chowdhury for failing to return his vehicle. The High Court had also granted Chowdhury the freedom to seek higher compensation through a civil court.
Chowdhury initially sought a loan of Rs 15.15 lakh from the bank, which was approved based on his credentials. The loan was to be repaid with interest over 84 equated monthly instalments of Rs 26,502, starting in December 2014, with the vehicle (a bus) used as collateral. However, the bank argued that Chowdhury began defaulting on payments in January 2018, leading to his account being classified as a Non-Performing Asset (NPA) on May 31, 2018. As of that date, the outstanding loan amount was Rs 10.23 lakh.
The Supreme Court noted that the bank had engaged M/s City Investigation and Detective, a so-called recovery agent, who, with the help of government authorities, seized Chowdhury’s vehicle on the bank’s behalf. In the High Court, the bank claimed that as of July 31, 2019, the market value of the vehicle was Rs 2.37 lakh, with a distress sale value of Rs 1.66 lakh.
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In March 2021, Chowdhury approached the bank with a One-Time Settlement (OTS) offer of Rs 1.8 lakh to clear the outstanding amount. The bank accepted this proposal, despite it being only 17.75 percent of the total outstanding dues.
The Supreme Court observed,
“For reasons known only to the bank’s officers, a one-time settlement (OTS) agreed upon between the bank and respondent No. 1 (loanee) for the meager sum of Rs 1,80,000. This amount was duly deposited by respondent No. 1 with the bank.”
Despite the bank’s obligation to release the vehicle after accepting the OTS, the court noted,
“The vehicle, however, was not returned to the loanee. After significant effort, the vehicle was eventually recovered, but by then, its chassis number and engine number had been altered, several spare parts were missing, and the vehicle was no longer in working condition.”