PATNA: The Patna high court has held that forceful seizure of vehicles from owners who default on loans, through musclemen, is sheer violation of the fundamental right to life and livelihood as guaranteed by the Constitution and that such bullying actions attract lodging of FIRs.
The court observed that vehicle loans should be recovered by following provisions of securitisation that empower banks and equivalent financial institutions to recover bad debts by acquiring physical possession of the mortgaged properties of defaulting borrowers with the aid of the district administration and getting them auctioned in order to enforce their security interest.
A single bench of Justice Rajeev Ranjan Prasad, while disposing a batch of writ petitions, lambasted banks and finance companies that rope in musclemen to forcefully seize hypothecated vehicles (even at gunpoint). The court directed all police superintendents in Bihar to ensure that no vehicle is seized forcefully by any recovery agent.
The court passed the judgment on May 19 while hearing five cases of forceful seizure of vehicles by recovery agents. The erring banks/financial companies were fined Rs 50,000 each.
In his 53-page judgment, Justice Ranjan referred to more than 25 decisions of the Supreme Court, and also one by South Africa’s apex court, and held that the high court can hear a writ petition against any “private actor” whose actions under the “government’s nose deprive a citizen of his fundamental right to life and livelihood as envisaged under Article 21 of the Constitution”.
The court observed that vehicle loans should be recovered by following provisions of securitisation that empower banks and equivalent financial institutions to recover bad debts by acquiring physical possession of the mortgaged properties of defaulting borrowers with the aid of the district administration and getting them auctioned in order to enforce their security interest.
A single bench of Justice Rajeev Ranjan Prasad, while disposing a batch of writ petitions, lambasted banks and finance companies that rope in musclemen to forcefully seize hypothecated vehicles (even at gunpoint). The court directed all police superintendents in Bihar to ensure that no vehicle is seized forcefully by any recovery agent.
The court passed the judgment on May 19 while hearing five cases of forceful seizure of vehicles by recovery agents. The erring banks/financial companies were fined Rs 50,000 each.
In his 53-page judgment, Justice Ranjan referred to more than 25 decisions of the Supreme Court, and also one by South Africa’s apex court, and held that the high court can hear a writ petition against any “private actor” whose actions under the “government’s nose deprive a citizen of his fundamental right to life and livelihood as envisaged under Article 21 of the Constitution”.
