Lawful loan recovery and non-prejudicial judicial observations: banks must act fairly, and clarified remarks may remain on record.

Judicial observations made during a pending criminal investigation were left undisturbed because the court had already clarified that they would not prejudice the investigation or be relied on against the bank or its employees. The request to expunge the remarks was therefore refused, while the investigation was directed to proceed independently. The document also reiterates that loan recovery and vehicle repossession must be carried out only through lawful, fair and non-harassing methods under the SARFAESI framework, the Security Interest (Enforcement) Rules, RBI guidelines and the bank's code of conduct. Banks remain responsible for the conduct of recovery agents engaged by them.

---

---

Issues: Whether the observations made in the impugned order should be expunged or, alternatively, clarified so that they do not prejudice the ongoing criminal investigation; and whether banks may use extra-legal methods for recovery of loans or repossession of vehicles.

Analysis: The proceeding arose from observations made during a writ petition concerning allegations of harassment by recovery agents and a consequent suicide. The impugned remarks were made while investigation was still pending, and the High Court had already clarified that its observations were not to affect any proceedings against the bank or its employees. In that setting, the Court found that the appellant was not substantially prejudiced by the refusal to expunge, since the clarification ensured that the remarks would not be relied upon in the investigation. The Court also emphasized that loan recovery and seizure of vehicles must be carried out only by lawful means, and referred to the applicable SARFAESI framework, the Security Interest (Enforcement) Rules, RBI guidelines, and the bank code requiring fair, civil, and non-harassing recovery practices. Banks were reminded that they are responsible for the conduct of recovery agents engaged by them.

Conclusion: The request to expunge the observations was not accepted, but the clarification that the remarks would not influence the investigation was maintained. The appeal did not result in expunction or substantive relief in favour of the appellant.

Final Conclusion: The impugned observations remained on record with a protective clarification, the investigation was directed to proceed expeditiously, and the appellant was saddled with costs.

Ratio Decidendi: Observations made in a judicial order during a pending investigation may be left undisturbed if clarified as non-prejudicial, and banks must ensure that recovery and repossession are carried out only through lawful and fair procedures, for which they remain responsible even when acting through agents.

---