Sunil Kumar Sharma (LEGAL ADVISOR) 24 June 2012

Recovery by finance compnies/banks

Dear Sir,

If a finance company or bank finance any product like motor cycle or car by signing an agreement in which some claused are clearly mentioned like :

i) if the borrower default in payments then finance company can repossessed the product vehicle etc to recover /settle his due payments.

ii) legal proceeding u/s 138 can be executed.

iii) Legal proceeding of arbitration act 1965 can be executed

Pls explain breifly

1 that can any finance company who made HP agreement can repossessed the vehicle as per agreement if yes , is there any particular direction of any court of india/ delhi.

2 That If any finance company repossessed the vehicle from the customer peacefully or from a particular spot with the prior intemation to police station.

3 That Can police refuse to take prior intemation of repossession attempt any way.

4 That under which police act or section police is bound /duty to take any complaint /intemation in police station.

5 That if police refuses to take complaint/intemation then under which police act or section disciplinery action can be taken.

Pls suggest me read with orders / section issued by the honourable court.

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1 Replies

narendra.s.p (Chief Manager(Law)) 27 June 2012

For seizure of vehicles (hypothecated assets) please refer to the following Supreme Court Judgments.

1. The Managing Director, Orix Auto finance (India) Limited Vs. Sri. Jagmander Singh & another. In Appeal (Civil) No.1070 of 2006. Judgment dated.10/02/2006

2. Citicrop Maruti finance Ltd Vs. S.Vijayalaxmi. In civil Appeal No. 9711 of 2011. Judgment dated.14/11/2011.

Intimation to the Police can be given to avoid a situation where borrower approaches the Piolice and registers a complaint against the financier. It is suggested that the financer video tapes the entire seizure process to counter any false allegations by the borrower. Police will assist the financier in seizure of the vehicle only if there is reasonable apprehention of "Law and order situation" or of possible assult etc., while taking repossession of the vehicle.

Financer can register FIR with the Police only if he can bring out facts alleging an offence committed by the Borrower and which should be a cognizible offence. For offence other than cognizable ofence, private complaint may be filed under section 200 of CrPC. Complaint under Section138 NI act can be filed if the post dated cheques are dishonoured.

For duty of Police to register FIR in cognizable cases please refer Supreme Court Judgment in State Of Maharashtra Vs. Sarangdhrsingh Sihivdasingh Chavan in Criminal Appeal No...of 2010. Judgment dated 14/02/2010