If you are stuck in such a situation, here is what to do.

Mr. Alok Sharma, a resident of the city of Vikaspur, found himself in a difficult financial position after his business, “Sharma Textiles,” suffered significant losses. He had taken a personal loan of approximately 20 Lakhs from a private finance company, “Reliable Financers,” to support his business. The mounting pressure of this debt became overwhelming. A few days ago, Mr. Sharma left his home without informing his wife, Priya, or his son, Rohan, who is currently pursuing his higher education. His phone has been switched off since, and his whereabouts are unknown.

The family, already distressed by his disappearance, promptly filed a missing person complaint at the local Vikaspur police station. Their situation worsened when recovery agents from Reliable Financers visited their rented accommodation. The agents were aggressive, using intimidating language and threatening Priya and Rohan with dire consequences if the loan amount was not repaid within a week. The Sharma family, with no assets to their name and living on a modest income, is now caught between the emotional trauma of a missing family member and the fear instilled by the lender’s coercive tactics.

Advice in such cases

Facing such a dual crisis can be paralyzing. It is crucial to act calmly and strategically to protect your family’s rights and safety.

• Prioritize Safety: If you feel threatened, ensure your family is safe. Do not engage in heated arguments with recovery agents.
• Document Everything: Keep a detailed record of every interaction with the lenders or their agents. Note down the date, time, names of the agents (if they provide them), and the nature of the threats. If possible and safe to do so, record conversations or save threatening text messages.
• Do Not Pay Under Duress: Do not make any promises or partial payments under pressure. Coercive recovery is illegal, and paying them might be seen as an admission of liability, even if you are not legally obligated.
• File a Police Complaint: Immediately go to your local police station and file a formal complaint (FIR) against the recovery agents and the finance company for criminal intimidation and harassment.
• **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

The actions of the recovery agents may fall under several provisions of the Bharatiya Nyaya Sanhita, 2023 (BNS).

• Section 351 of BNS (Criminal Intimidation): This section applies if someone threatens another person with injury to their person, reputation, or property. The threats made by recovery agents to coerce payment clearly fall under this category. The punishment can be imprisonment for up to two years, a fine, or both.
• Section 324 of BNS (Extortion): If the agents intentionally put you or your family in fear of any injury and thereby dishonestly induce you to pay the money, it can amount to extortion.
• Reserve Bank of India (RBI) Guidelines: While primarily for banks and NBFCs, the principles laid down by the RBI against using harassment and intimidation for debt recovery are a strong standard. These guidelines prohibit lenders from resorting to undue harassment, such as persistently bothering borrowers at odd hours or using muscle power for recovery. These can be cited in your police complaint to strengthen your case.

If you are the complainant

When you file a complaint against the lenders for their illegal recovery tactics, follow these steps:

• Lodge an FIR: Approach the police station and submit a written complaint detailing the harassment and threats. Insist on the registration of a First Information Report (FIR).
• Provide Evidence: Submit all the evidence you have collected, such as call recordings, text messages, or details of eyewitnesses (like neighbours who saw the agents).
• Be Specific: Clearly state the words used by the agents, the threats made, and the fear it caused your family. Mention the date and time of the incident.
• **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 family of the borrower, it’s essential to understand your legal position regarding the loan itself.

• Understand Liability: For an unsecured personal loan, the liability to repay is solely that of the person who took the loan. Legal heirs (like a spouse or children) are not personally responsible for repaying the debt from their own funds.
• Liability is Limited to the Estate: The lender can only recover the loan amount from the assets or estate left behind by the borrower. If the missing person has no assets in his name (as in this case, where the family lives in a rented house), the lender cannot legally force the family to pay.
• Cooperate with the Police: Continue to cooperate fully with the police in the investigation of the missing person case. Provide them with any information that might help locate your family member.
• **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 vary. For the missing person complaint, they will register it and begin the standard procedure of inquiry and search. For the complaint against the recovery agents, ideally, they should register an FIR if the complaint discloses a cognizable offense like criminal intimidation. However, sometimes the police may view it as a civil dispute related to loan recovery and show reluctance. In such a scenario, you have the right to approach a senior police officer (like the Superintendent of Police) or file a private complaint directly with the jurisdictional Magistrate under Section 175(3) of the Bharatiya Nagarik Suraksha Sanhita, 2023 (BNSS).

FAQs people normally have

Am I legally responsible for my father’s personal loan if he is missing or deceased?

You are not personally responsible. The lender’s claim is limited to the estate or assets left behind by your father. If he has no assets, you are not liable to pay from your personal income or property.

Can recovery agents come to my house and threaten me?

No. Using threats, intimidation, or any form of harassment for debt recovery is illegal. It is a criminal offense for which you can file a police complaint.

What if the police refuse to file my FIR against the lenders?

If the police refuse, you can send a written complaint to the Superintendent of Police by registered post. If no action is taken even then, you can approach the Magistrate’s court with the help of a lawyer to seek a direction for the police to register the FIR.

What evidence is required?

To build a strong case against the harassing lenders, the following evidence is crucial:

• Any audio or video recordings of the threats.
• Screenshots of threatening text messages or emails.
• The names, contact numbers, or vehicle numbers of the recovery agents.
• Statements from any eyewitnesses, such as neighbours, who saw the confrontation.
• A copy of the loan agreement, if available, to establish the context.

How long will the investigation take?

The timeline for such cases can vary. The investigation into a missing person’s case has no fixed duration and can be a prolonged process. For the criminal complaint against the recovery agents, the investigation period depends on the complexity of the case, the evidence available, and the efficiency of the police. It can take a few months for the police to file a final report (chargesheet) in court.

Advocate Sudhir Rao, Supreme Court of India