Allahabad High Court quashes recovery citation over Bank of Baroda commercial loan

The Allahabad High Court has quashed a recovery citation issued by a tehsildar in Kanpur against a business borrower of Bank of Baroda. In its judgment of 15 October 2026, a division bench held that a commercial loan cannot be recovered through a certificate under the Uttar Pradesh Public Moneys (Recovery of Dues) Act, 1972. The loan was a cash credit facility of Rs 25 lakh.

What Happened

According to the judgment, the petitioners, M/s Laptop Solution and another, took a cash credit facility of Rs 25 lakh from Bank of Baroda's Panki-1 branch in Kanpur, and repayment became irregular. The bank filed an Original Application under Section 19 of the Recovery of Debts and Bankruptcy Act, 1993, which is still pending before the Debts Recovery Tribunal, Allahabad.

In the meantime, a recovery certificate was issued under Section 3 of the 1972 Act, and the Tehsildar, Tehsil Sadar, Kanpur Nagar issued a citation dated 24 September 2026. The petitioners argued that a commercial loan that was not given under a state-sponsored scheme cannot be recovered under this Act.

The bank's counsel told the court that the bank did not wish to file a reply and had already written to the Collector, Kanpur Nagar on 5 October 2026, recalling the recovery certificate. The court said that since a citation had already been issued, it had to be dealt with in accordance with law. Relying on an earlier Full Bench decision of the same court, it held that the citation, based on a certificate under the 1972 Act for the recovery of a commercial loan, was manifestly illegal and without jurisdiction. It quashed the citation and made no order on costs.

What It Means

For borrowers, the ruling draws a line: according to the court, a commercial loan that is not under a state-sponsored scheme cannot be pursued through a recovery certificate under the 1972 Act. Here, that meant the tehsildar's citation against the business could not stand.

The ruling does not cancel the debt. The court said the bank is free to recover its outstanding amount in accordance with law, and the bank's own recovery application before the Debts Recovery Tribunal remains pending.

Source: High Court judgment