Recently, some of our readers asked us the following questions on Twitter:

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Could they an FIR against harassment by Airtel recovery agents under the Indian Penal Code? Also, what would happen if everyone who has suffered at the hands of or cheated by Airtel files an IPC 420 in the local police station?

Recovery Agents Arrested - looking at the criminal law implications

We decided to dig into this issue of recovery agents, which has been a menace in the banking industry for long. As harmless as the term “recovery agents” may sound, they are really wolves in sheep’s clothing.  Polite to the point of sounding subservient and sugar coated in their approach while selling a loan to a customer, your bank can suddenly take on the avatar of a ruthless Shylock, after your pound of flesh, in the form of these Recovery Agents.

Practice picking up in telecom sector as well

Of late, this practice has started picking up in the telecom sector as well. The complaints against recovery agents are the same: thick headedness, threats of legal action, making pesky calls, and sometimes even calling your friends and relatives and telling me them that you hadn’t paid your balance amount.

Our understanding is that most of the big telecom companies have started selling bad debts to third parties for a discounted price and don’t really care about what happens after that. Of course, it is obvious that most customers end up blaming the company and the company’s brand suffers.

Anyway, back to your rights as a consumer.

Consumer law and criminal aspects

There are two aspects to this issue of harassment by recovery agents.

Firstly, you can approach a consumer forum for relief against a company for engaging recovery agents. This article discusses this aspect in greater detail. Even if there was some confusion about telecom disputes being heard by consumer forums, we are sure that a case regarding a recovery agent would definitely be heard by a consumer forum even if it involves a telecom company.

Secondly, you could consider taking criminal action, as our readers asked us. Let us examine that in more detail below.

Well, apart from the fact that the RBI has set strict guidelines on the issue, the judiciary too is aware of and clearly disdains the strong arm tactics of recovery agents that are taking a toll on borrowers driving them to extreme measures (even suicide! – see Loan agents held for abetment to suicide) to escape the shame and  embarrassment that these ‘ thugs’ can cause to them.

The Delhi High Court has shown its disapproval over use of coercive measures in the Standard Chartered Bank vs Yogesh Sharma case where Sharma whose brother had died in unfortunate circumstances had a harrowing time with the Bank hounding him to pay up the exorbitant amount of Rs.70,000 outstanding on his dead brother’s credit card, claiming they had the order of the judicial magistrate to extract payment. Many threats, abuses over the phone and assaults later, Sharma filed an FIR under Section 506, IPC which reads thus

Whoever commits, the offence of criminal intimidation shall be punished with imprison­ment of either description for a term which may extend to two years, or with fine, or with both;

If threat be to cause death or grievous hurt, etc.—And if the threat be to cause death or grievous hurt, or to cause the destruction of any property by fire, or to cause an offence punishable with death or ¹[imprisonment for life], or with imprisonment for a term which may extend to seven years, or to impute, unchastity to a woman, shall be punished with imprisonment of either description for a term which may extend to seven years, or with fine, or with both.

In the course of the investigation by the police, Section 387, IPC (Punishment for Extortion) was also charged. Ultimately, the Court rejected the Bank’s appeal and added that it was vehemently against the use of such arm twisting methods to effecting recoveries.

Another similar case is that of Shibi Francis vs State of Kerala and anor, Shibi Francis had taken a loan from a finance company to purchase an Innova car. But she missed paying two installments due to a financial crunch. The finance company sent her a legal notice asking for the money within seven days. But even before the seven days were over, Shibi’s husband who had driven the Innova to town got the shock of his life when four thugs snatched his keys and drove away leaving him high and dry. Shibi then filed a complaint with the police, but the police failed to take action.

The Kerala High Court taking cognizance of the issue stated that since the financier’s agreement says that he can repossess the vehicle in case of non-payment, he can do so but cannot at any point, resort to forceful, threatening methods. It gave directions to the police to investigate the complaint and redeem the car.

Conclusion: 5 practical tips

What is disappointing is that despite all the sound and fury on the issue, even the Court’s directives are at best paper tigers. The menace continues unabated. During our research, we didn’t come across any successful prosecutions of recovery agents under the Indian Penal Code.

But it definitely helps to know your rights when a ‘recovery agent’ hounds you with menacing phone calls. You should consider:

1. Filing an FIR at your nearest police station (see All you wanted to know about filing an FIR);
2. Understanding the sections you could book them under;
3. Gathering as much evidence as possible against them; or
4. File a complaint at the district consumer forum against the Company (see our No Non-sense Guide to Filing a Consumer Complaint), seeking compensation for the mental stress and agony caused (see also our Frequently Asked Questions about Consumer Complaints).
5. Try to reach out to senior executives in the brand – sometimes it is possible to get them to listen to your plight and get the wolves off your back.

Parting note: class action law suits are not allowed in India, and a general PIL may be difficult to file in this matter – though of course it is a matter which will require more research. We’ll leave that for another day.

You got the better of a recovery agent?! Please do share your thoughts and comments with us.

Image source – IBN Live 

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