Banks must end goondagardi: SC

NEW DELHI: Taking a serious view on the use of muscle power by banks and financial institutions for recovering loans, the Supreme Court on Friday observed that they cannot engage " goondas " to harass people.

There is a rule of law that must be adhered to by banks while recovering loans, the apex court said. It was hearing an ICICI Bank appeal seeking removal of certain observations by the Delhi High Court while ruling on the case of a defaulter who had allegedly committed suicide due to harassment by banks.

A Bench comprising Justice Tarun Chatterjee and Justice Dalveer Bhandari said though banks have a right to recover their money, they cannot engage goondas to harass people.

"There is a rule of law in this country. Banks and financial institutions are not immune from the rule of law," remarked Justice Bhandari. The court has fixed October 1 for ruling on the case.

Advocate Surat Singh, on behalf of the complainant—the mother of the deceased, said loan recovery should follow a process of law. Banks cannot be allowed to hire musclemen for the purpose, said Mr Singh.

However, ICICI Bank, through its counsel UU Lalit, sought expunging of certain observations made by the high court.

The high court had observed that the proximate cause of death (suicide) of a young man was humiliation by the bank from where he had taken loan.

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