If you are stuck in such a situation, here is what to do.
Mr. Rohan, a resident of a small town named Mirzapur, decided to help his close friend, Mr. Sameer, by taking out a loan in his own name. The loan, obtained from a financing company called ‘QuickCredit Finance’, was used to purchase a new laptop and a smartphone for Sameer. The understanding was that Sameer would be responsible for paying the monthly EMIs. Initially, Sameer made the payments, but for the last few months, he has defaulted. Consequently, Rohan, who is the official borrower, started receiving calls from the finance company. Recently, Rohan lost his job and has been unemployed for two months, making the situation even more stressful. Now, recovery agents from QuickCredit Finance have started showing up at his house, often at odd hours, using intimidating language and causing distress to him and his family. This situation highlights the legal risks of taking loans for others and the illegal methods sometimes used by recovery agents.
Advice in such cases
Review Loan Agreement: Carefully read the terms and conditions of the loan agreement you signed. This document is the foundation of your legal obligations and the lender’s rights. Understand the clauses related to default and the recovery process.
Communicate with the Lender: Do not ignore the lender. Write to the bank or finance company, explaining your situation (e.g., job loss, the arrangement with your friend). Request a moratorium, loan restructuring, or a reasonable settlement plan. Keep a record of all communication.
Document Everything: Maintain a detailed record of all interactions with recovery agents. Note down the date, time, agent’s name (if they provide it), and the nature of the conversation. If they harass you, record the calls (after informing them) or save threatening messages. This documentation is crucial evidence.
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Applicable Sections of Law
While defaulting on a loan is a civil matter, the harassment by recovery agents can constitute a criminal offense. The following legal provisions are relevant:
Bharatiya Nyaya Sanhita (BNS), 2023: This new penal code has provisions that can be invoked against coercive recovery tactics.
- Section 351 (Criminal Intimidation): If agents threaten you or your family with injury to person, property, or reputation, it is a punishable offense.
- Section 316 (Extortion): If agents put you in fear of injury to compel you to pay, it can amount to extortion.
- Section 334 (Wrongful Restraint): If agents physically prevent you from leaving your home or any place, they can be charged under this section.
If you are the complainant
If you are the one who has taken the loan and are now being harassed, you are the complainant. Here are the steps you should take:
File a Police Complaint: Go to your nearest police station and file a written complaint detailing the harassment, threats, and intimidation by the recovery agents. Mention specific incidents, dates, and times. If the police are hesitant to file an FIR, you can send the complaint to a senior police officer (like the Superintendent of Police) by registered post.
Lodge a Complaint with the RBI: You can file a complaint against the bank or financial institution with the RBI Ombudsman, citing a violation of the Fair Practices Code. This is an effective mechanism that can lead to action against the lender.
File a Complaint in Consumer Court: Harassment by recovery agents can be considered a deficiency in service. You can file a case in the District Consumer Disputes Redressal Commission seeking compensation for the mental agony and harassment caused.
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
If you are the victim
As the victim of harassment, your primary focus should be on protecting yourself and asserting your rights.
Know Your Rights: Remember that no recovery agent has the right to threaten, abuse, or humiliate you. They cannot visit you before 7 AM or after 7 PM. They cannot discuss your debt with your neighbors, colleagues, or relatives to shame you.
Do Not Be Intimidated: Stay calm but firm. Inform the agents that you are aware of your rights and that their actions are illegal. Tell them to direct all future communication through official channels like email or letters.
Gather Evidence: Your phone is your best tool. Record conversations, save threatening messages, and if possible, install a CCTV camera or use your phone to record their visits. This evidence is vital for any legal action.
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation of come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
How the police behave in such cases
Police response can be mixed. Often, they may initially dismiss the issue as a “civil dispute” between a borrower and a lender. They might advise you to settle the matter with the bank. However, if you provide clear evidence of criminal acts like threats (criminal intimidation under BNS 351) or extortion (BNS 316), they are legally bound to register an FIR. The intervention of a lawyer often makes the police take the matter more seriously and register a case under the appropriate sections of the law.
FAQs people normally have
What evidence is required?
To build a strong case against harassing recovery agents, you should collect the following evidence:
Audio recordings of threatening phone calls.
Screenshots of abusive or threatening text messages, WhatsApp chats, or emails.
Video recordings of the agents’ visits, especially if they are aggressive or trespassing.
Details of the agents, such as their names, the agency they work for, and their contact numbers, if possible.
Statements from family members or neighbors who witnessed the harassment.
A copy of the police complaint you have filed.
How long will the investigation take?
The duration of an investigation varies greatly. After filing an FIR, a police investigation under the BNSS can take anywhere from a few weeks to several months, depending on the complexity of the case and the evidence available. A complaint to the RBI Ombudsman is generally resolved more quickly, often within 30 to 90 days. A consumer court case might take longer, potentially a year or more. The timeline is influenced by the cooperation of the parties involved and the workload of the respective authorities.
Advocate Sudhir Rao, Supreme Court of India