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'Banks cannot employ thugs to recover dues'

'We are governed by a rule of law in the country', says Chief Justice- designate KG Balakrishnan and Justice DK Jain.

india Updated: Jan 07, 2007 15:28 IST

The Supreme Court has strongly deplored the practice of banks and financial institutions using "goondas" and musclemen to recover loans from alleged defaulters.

Rejecting arguments by senior counsel Mukul Rohtagi appearing for the ICICI Bank that if force was not applied the defaulters would not repay, a Bench comprising Chief Justice- designate KG Balakrishnan and Justice DK Jain asserted that recovery of loans, if any, should be only through legal means.

"We are governed by a rule of law in the country. How can someone take possession by force? You cannot employ goondas," the Bench remarked while dealing with a plea by the bank challenging the registration of a criminal case against its officials for allegedly using criminal force against a loanee.

The Uttar Pradesh police had earlier registered criminal cases against the bank officials including its managing director following a complaint that the bank sent musclemen to recover a car from a loanee for non-payment of loan.

Following this, the bank moved the Allahabhad High Court, which rejected its plea for quashing the criminal cases registered against its officials.

Rohtagi who mentioned the bank's plea before the Supreme Court contended that in the absence of force, loans could not be recovered from the defaulters.

First Published: Jan 07, 2007 15:28 IST