Allahabad High Court Asks ICICI Bank to Explain Civil Suit Against Loan Consumer Despite Full Repayment

The Allahabad High Court asked the ICICI Bank Chairman to clarify how a civil suit was filed against a loan consumer when the entire amount, along with interest, had been paid. The court also questioned how the bank's officials engaged recovery agents in a loan case despite a prohibition by the Supreme Court.

The bank chairman was directed to file a personal affidavit. “He may also state how his bank was still taking the services of recovery agents when the same was clearly barred by the Hon'ble Supreme Court,” the Court said, as reported by Bar and Bench.

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Singh, an American citizen and Overseas Citizenship of India (OCI) cardholder told the Court that recovery agents appointed by the bank kept visiting his house and made derogatory remarks against him. This led him to file a defamation case against the bank officials.

The high court was hearing a plea seeking to quash a defamation case filed against bank officials by Rahul Singh, who had availed a home loan facility from the bank’s Noida branch. Though the loan amount along with the interest was paid, Singh was still shown as a defaulter in the CIBIL rating. The bank even filed a civil suit against him.

“After getting the summons, the complainant filed a written statement and submitted all the documents showing that the entire loan amount along with interest and foreclosure charges had been paid and the loan account had been closed. In spite of having full knowledge, the bank continued to show that the complainant is a defaulter,” the Court noted.

While dealing with the petition seeking to quash the defamation proceedings, Justice Kumar observed that despite knowing fully well that the loan account had been closed, the bank officers purposely kept showing Singh as a defaulter.

Taking note of a Supreme Court judgment against the use of recovery agents by bank officials, the Court asked the ICICI Bank Chairman to explain how they “had engaged the services of recovery agents in the year 2013, which is six years after the passing of the judgment by the Hon'ble Supreme Court.”