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High Court directs the Chairman of ICICI Bank to file a personal affidavit explaining the rationale behind engaging recovery agents despite the Supreme Court's prohibition and justifying the civil suit against the complainant/borrower.
Allahabad High Court Bench of Justice Prashant Kumar observed the wrongful actions of ICICI Bank and its officers against the complainant/borrower, who had repaid his loan in full. The ICICI Bank's continued listing of the complainant as a defaulter and engagement of recovery agents despite full loan repayment and a Supreme Court directive prohibiting such practices was unlawful, warranting personal accountability of the bank's Chairman. The High Court's direction to the bank’s Chairman highlights the serious nature of the bank's misconduct, emphasizing the need for accountability and adherence to legal procedures in dealing with loan repayments and defaulter listings.
Brief Facts:
Complainant-borrower, an American citizen and Overseas Citizen of India (OCI) cardholder, took a home loan of Rs. 7,80,000 from ICICI Bank Ltd., Noida Branch, on October 29, 2002. Before leaving India, Singh repaid the loan in full along with interest and foreclosure charges by May 1, 2007. Despite this, the bank erroneously continued to list him as a defaulter in his CIBIL credit rating, leading to significant harassment and reputational damage.
Legal Dispute:
Despite having repaid the loan, Singh faced continuous harassment from ICICI Bank. The bank created false demands, made harassing calls, and employed recovery agents who visited Singh’s ancestral home, causing social embarrassment and damaging his reputation. Furthermore, the bank filed a civil suit against Singh, despite knowing that the loan had been fully repaid. This prompted Singh to file a criminal complaint (Complaint No. 84363 of 2022) under various sections of the IPC, including defamation (Section 500). The Metropolitan Magistrate took cognizance of the complaint and issued summons to the applicants (ICICI Bank officers).
High Court Observations:
The High Court noted that Singh had fully repaid his loan, and it was unjustifiable for the bank to continue showing him as a defaulter. The court was particularly critical of the bank’s use of recovery agents, which was in direct violation of the Supreme Court’s directive in ICICI Bank Limited v. Prakash Kaur and Others, REEDLAW 2007 SC 02001, prohibiting banks from employing such agents for loan recovery. The court recognized the deliberate and harassing actions of the bank officers, which included filing a baseless civil suit and persistently damaging Singh's credit rating and reputation.
High Court Directions:
The High Court directed the Chairman of ICICI Bank to file a personal affidavit explaining the rationale behind engaging recovery agents despite the Supreme Court's prohibition and justifying the civil suit against the complainant/borrower. The Chairman was also required to clarify why the complainant continued to be listed as a defaulter and to account for the harassment the complainant/borrower faced. The Chairman was made a party to the application as Applicant No. 5. The case was scheduled for the next hearing on July 10, 2024, to allow for further submissions and clarifications.
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