Repossession Of Financed Vehicle Through Recovery Agents Without Following Due Process Violates Article 300A: Uttarakhand High Court

The Court further held that the existence of a repossession clause in a loan agreement does not authorise financiers or their agents to take the law into their own hands and that disputes regarding outstanding dues cannot justify unilateral repossession without following due process.

The Court was hearing a writ petition filed challenging the repossession of a commercial vehicle financed by ICICI Bank Limited. The petitioner sought restoration of possession of the vehicle, issuance of a No Objection Certificate and action against the persons allegedly involved in the forcible repossession of the vehicle.

A Bench of Justice Pankaj Purohit observed: “The existence of a repossession clause in the loan agreement does not authorise the respondents to take the law into their own hands. It is trite that contractual terms cannot override the requirement of legality and due process. Any enforcement of contractual rights must necessarily conform to law.”

The Court further observed that "the action of respondents in repossessing/attempting to repossess the vehicle without demonstrating due compliance with the procedure established by law is unsustainable, ...such action amounts to deprivation of property without authority of law and is violative of Article 300A of the Constitution of India.”

Advocate Aakib Ahmed appeared for the petitioner. Advocates Monika Pant, Kartikey Hari Gupta, and Standing Counsel N.K. Papnoi appeared for the respondents.

Background

The petitioner had availed a vehicle loan facility from ICICI Bank Limited in December 2019 for the purchase of a commercial vehicle. The loan amount was repayable in equated monthly instalments over a tenure of 67 months.

According to the petitioner, disputes subsequently arose regarding the outstanding dues under the loan account. The petitioner asserted that the account had already been settled, and despite such settlement, the Bank failed to issue a No Objection Certificate in respect of the vehicle.

The record revealed that respondent Nos. 2 and 3 subsequently paid an amount of ₹7,45,109/- to ICICI Bank Limited, following which the loan account was allegedly assigned or subrogated in their favour. Thereafter, possession of the vehicle came to be taken by respondent No.4 on behalf of respondent Nos. 2 and 3.

The petitioner contended that the vehicle constituted the primary source of livelihood and that repossession was carried out forcibly through recovery agents without following due process of law. It was further contended that no lawful notice had been issued before repossession and that no material existed to demonstrate compliance with statutory or procedural safeguards.

The petitioner also questioned the legality of the alleged assignment or subrogation in favour of respondent Nos. 2 and 3 and contended that no lawful assignment deed or notice of assignment had been supplied.

ICICI Bank Limited raised a preliminary objection regarding the maintainability of the writ petition, contending that the dispute arose purely out of a contractual transaction between private parties. The Bank further contended that after payment made by respondent Nos. 2 and 3, the account stood assigned in their favour and no cause of action survived against the Bank.

Respondent Nos. 2 and 3 contended that the petitioner had committed a persistent default in repayment of instalments and that repossession had been carried out in accordance with the terms and conditions of the loan agreement.

Court’s Observation

The High Court first examined the preliminary objection regarding maintainability of the writ petition and observed that although contractual disputes ordinarily do not warrant interference under Article 226 of the Constitution, exceptions arise where the impugned action is arbitrary, unfair or results in deprivation of property without authority of law.

The Court observed, “A well-recognised exception exists where the impugned action is arbitrary, unfair, in violation of statutory or regulatory norms, or results in deprivation of property without authority of law. In such circumstances, the dispute ceases to remain confined within the domain of private law and assumes a public law character warranting judicial review.”

The Court noted that the petitioner had specifically alleged that the vehicle had been repossessed through recovery agents. The Court observed that such allegations were serious in nature and carried substantial civil consequences, particularly where the vehicle constituted the petitioner’s source of livelihood.

The Court thereafter examined the law governing repossession of financed vehicles and referred extensively to the decisions of the Supreme Court in ICICI Bank Ltd. v. Prakash Kaur (2007) and Citicorp Maruti Finance Ltd. v. S. Vijayalaxmi (2012).

Referring to Prakash Kaur (2007), the Court observed that the Supreme Court had strongly deprecated the practice of employing musclemen or recovery agents for repossession of financed vehicles and held that such practices are impermissible in a society governed by the rule of law.

The Court further observed that the Supreme Court in Citicorp Maruti Finance (2012) reiterated that even in cases involving loan default, repossession must be undertaken strictly in accordance with law and through legally sanctioned procedures.

The Court observed, “These pronouncements leave no manner of doubt that self-help measures involving force, intimidation, or coercion are impermissible.”

Applying the aforesaid principles to the facts of the case, the Court found that the respondents had failed to place any cogent material on record demonstrating that possession of the vehicle had been taken strictly in accordance with due process of law.

The Court observed, “No material has been produced to indicate compliance with the procedural safeguards ordinarily required prior to repossession, including issuance of notice and affording opportunity to the borrower.”

The Court held that in the absence of material demonstrating compliance with legal safeguards, repossession could not be said to be lawful.

The Court further observed, “In the absence of such material, the action of respondents in taking possession of the vehicle cannot be said to be in accordance with law.”

The Bench emphasised that contractual stipulations permitting repossession cannot override constitutional protections under Article 300A or authorise extra-legal methods of recovery.

The Court additionally noted that disputes regarding the exact quantum of outstanding dues remained contested between the parties and such disputes necessarily required adjudication before competent forums on the basis of evidence.

The Court observed, “Such disputes require adjudication by competent forums on the basis of evidence and cannot justify unilateral action in the nature of repossession without following due process.”

Conclusion

The High Court held that the action of the respondents in repossessing or attempting to repossess the vehicle without adherence to due process of law was illegal and unsustainable.

Accordingly, the Court directed the respondents to forthwith release and restore possession of the vehicle to the petitioner if the vehicle had already been repossessed.

The Court further restrained the respondents, their agents and representatives from interfering with the peaceful possession and use of the vehicle except in accordance with due process of law.

The Court clarified that the order would not preclude the respondents from recovering legitimate dues, if any, in accordance with the law before the competent forum. Pending applications were also disposed of.

Cause Title: Savitri Devi v. ICICI Bank Limited & Ors. (Neutral Citation: 2026:UHC:3157)

Petitioners: Advocate Aakib Ahmed

Respondents: Advocates Monika Pant, Kartikey Hari Gupta, Irum Zeba, Rafat Munir Ali and Standing Counsel N.K. Papnoi

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