In Hari Dutta Sharma v. State of U.P., a bench of Justice P.S. Narasimha and Justice Alok Aradhe dealt with a truck owner whose vehicle was taken away at 1 a.m. by unidentified agents of a finance company, without notice. The Court held that this violated his rights under Articles 14 and 21, awarded ₹10 lakh compensation, and directed the Reserve Bank of India to strictly enforce its guidelines on vehicle repossession by lenders.
Even if you have missed EMIs, a lender cannot use force or unidentified 'recovery agents' to snatch your vehicle without following due process and RBI rules. If this happens, file a police complaint, complain to the lender's grievance officer, and then to the RBI Ombudsman.
When a vehicle is bought on loan or hire purchase, the agreement usually gives the lender a right to repossess it if the borrower defaults. That right must be exercised lawfully. The Reserve Bank of India's fair practices directions and guidelines on recovery agents require lenders to give notice, use only verified agents, and avoid intimidation, harassment or calls and visits at odd hours. Courts have held that taking a vehicle by force violates rights under Articles 14 and 21 and can make the lender liable.
In practice, a borrower who faces unlawful repossession can file a police complaint, complain to the lender's grievance redressal officer, and, if not resolved within 30 days or the reply is unsatisfactory, approach the RBI Ombudsman under the Integrated Ombudsman Scheme through cms.rbi.org.in. Compensation for deficiency in service can also be sought before a Consumer Commission.
A lender may have a contractual right to repossess a financed vehicle on default, but it must follow the agreement, give proper notice and follow RBI guidelines. It cannot use force, threats or unidentified agents. The Supreme Court has held that forcible seizure without due process violates fundamental rights.
Under RBI guidelines, lenders must ensure recovery agents are properly verified and trained, carry identification and authorisation, behave decently and do not harass or intimidate borrowers. Calls and visits at inconvenient hours are not allowed. The lender remains responsible for the conduct of agents it engages.
Start with the lender's grievance redressal officer. If there is no reply within 30 days, or the reply is unsatisfactory, complain to the RBI Ombudsman online at cms.rbi.org.in. For forcible seizure, also file a police complaint. You may separately seek compensation before a Consumer Commission.
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