Manager, ICICI Bank Ltd v Prakash Kaur

• The respondent took a loan from the Allahabad branch of ICICI Bank to buy a truck and defaulted on instalments. On 13 July 2006 the truck was taken by force by M/s Kartik Associates, acting as the bank's agents. She filed a petition in the Allahabad High Court, which on 7 December 2006 directed the Senior Superintendent of Police, Allahabad to ensure registration of a case and its investigation. The bank appealed.

1. Whether a bank may recover loans or repossess financed vehicles by force through recovery agents.

• The dispute was essentially civil. The High Court order was set aside, and any FIR registered under it was quashed. On the bank's offer, the truck was to be released on deposit of Rs 50,000; after reconciliation of accounts the balance principal was payable in six equal monthly instalments, and the bank was to forgo interest. The Court deprecated the practice of hiring recovery agents who are musclemen: banks must use procedure recognised by law to repossess vehicles, not strong-arm tactics. In a concurring opinion, Lakshmanan J discussed recovery agents and the RBI guidelines of 2005.

A bank must recover its dues through procedure recognised by law. Repossessing a vehicle by force through hired musclemen is not permitted. Where the dispute is essentially civil, criminal proceedings arising from it may be quashed.