New Delhi

High-handedness of debt recovery agencies on the rise

There is a need to make people aware of the court guidelines on the issue, says Devesh K. PANDEY

The recent arrest of a repossession agency owner and his henchmen on charges of forcibly taking away a financed vehicle after abducting its occupants in South-West Delhi should serve as a warning for those in the debt recovery business as well as the financial institutions.

A number of repossession and debt recovery agencies have come up in the Capital in recent years in view of the growing number of people availing of loan facilities to purchase things. The idea behind setting up such agencies was to make "quick" recovery of non-performing assets and outstanding dues through "coercive" means as going to court would be a long drawn process.

This is perhaps the main reason why many financial institutions pay hefty amounts to recovery agencies for reclaiming outstanding dues. And most of these agencies will go to any extent to get their job done at the earliest.

In the South-West Delhi case, a bank had hired the repossession agency to seize a Maruti Wagon-R car. The agency's "goons" allegedly intercepted the vehicle in which a woman was on her way to office. They forced their way into the vehicle and, when she tried to contact her relatives, the recovery agents snatched her mobile phone and drove the vehicle to the bank's godown. The old woman was completely petrified by the incident.

It was one of the few cases in which the matter got reported to the police and the accused were booked. But there are instances in which people who are unable to repay loans in time even for genuine reasons are harassed by repossession agents.

In one such case reported last year at Srinivaspuri, Himanshu Dev Sharma committed suicide after being humiliated by "musclemen" hired by a bank. They seized his motorcycle for non-payment of some loan amount. In its July 13 order in that case, the High Court directed the police to speed up the probe into Himanshu's suicide allegedly abetted by strong-arm tactics adopted by the bank and passed strong observations against the "new generation financial institutions" for employing musclemen to recover their loans.

There have also been cases where people have received threat calls from debt recovery agents hired by credit card and private phone connection service providers. The most common modus operandi of these agents is to pose as police officers while threatening their targets to clear the dues as early as possible. They even claim that non-bailable warrants have been issued against the person. In several cases, even innocent people are targeted by these agents and harassed for no reason.

Taking cognisance of such cases of harassment, the Delhi High Court has from time to time issued directives making it clear that no violent methods can be adopted to affect re-possession and that prior intimation about the reclamation should be given to the local police. Before resorting to such a measure, the company concerned should also issue notices to the person in question.

While the court guidelines on the issue are very clear, consumer welfare organisations feel there is a need to make people aware of these directives so that they are not harassed by unscrupulous recovery agents. They also suggest that there should be a provision to prosecute and initiate legal proceedings against firms that take the services of such agencies.

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