The Patna High Court recently slammed banks and finance companies that utilise the services of recovery agents to forcibly confiscate the vehicles of customers who were unable to pay the EMI for their car loans on time.
The Patna High Court recently slammed banks and finance companies that utilise the services of recovery agents to forcibly confiscate the vehicles of customers who were unable to pay the EMI for their car loans on time.
The high court also fined erring banks and financing companies Rs 50,000 each.
In a May 19 ruling, Justice Rajiv Ranjan Prasad stated that the seizure of vehicles by recovery agents was illegal and violated the fundamental rights to life and livelihood.
While disposing of a slew of writ petitions, Justice Prasad maintained that banks and finance companies could not utilise recovery agents services to confiscate a vehicle if the customer had defaulted on EMI payments. He ordered the police to file FIRs and take legal action against such recovery agents.
The high court stated that vehicle loans should only be recovered by banks and finance companies by following the provisions of securitisation, which gives banks and finance companies the authority to recover bad debt by acquiring physical possession of the defaulting customer’s mortgaged property.
The high court passed its judgement while disposing of five writ petitions concerning the forcible seizure of vehicles belonging to customers who had defaulted on their EMI payments.
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