Supreme Court bars forcible vehicle repossession, awards ₹10 lakh to truck owner

Who it concerns: Appellant: Hari Dutta Sharma; Respondents: State of U.P. & Ors. (including Cholamandalam Investment and Finance Company Limited); Bench: Justice Alok Aradhe.

What the court decided

• The Court condoned the delay in filing the appeal.
• The Court granted leave to appeal.
• The Court held that a financier's right to self-help repossession must be exercised within the bounds of law and cannot be done by force, deceit, or in violation of contract terms.
• The Court reiterated that seizure of vehicles can only be effected through lawful means and banks cannot employ 'goondas' to take possession by force.
• The Court outlined that repossession clauses must be legally valid and conform to the Indian Contract Act, 1872.
• The Court noted that lenders shall not resort to undue harassment or use of muscle power for loan recovery.

Also in the document

• The judgment is marked as 'REPORTABLE'.
• The Court emphasized that while self-help repossession clauses are commercially feasible, they must be construed with circumspection to prevent oppression.
• The Court referenced RBI Guidelines and Master Circulars prohibiting the use of muscle power and undue harassment in loan recovery.