Published On : Thu, May 25th, 2023

Patna HC raps banks, finance companies for forcibly impounding vehicles of defaulters


Patna: In a significant ruling, the Patna High Court has provided relief to customers by declaring the forcible impounding of vehicles from defaulting owners as wrong. The court emphasized that such actions not only infringe upon the fundamental right to life and livelihood guaranteed by the Constitution but also ordered the registration of FIRs (First Information Reports) against individuals involved in these threatening acts.


This decision by the High Court is expected to curb the arbitrary practices of banks and finance companies in managing vehicle loans. The court emphasized that the recovery of vehicle loans should adhere to the provisions of securitization.

The ruling was made by a single bench headed by Justice Rajeev Ranjan Prasad, who strongly criticized banks and finance companies while delivering the judgment on several writ petitions. Justice Prasad directed all Superintendents of Police in Bihar to ensure that no vehicles are forcibly seized by recovery agents. The court issued this order on May 19 after hearing five cases concerning the forcible seizure of vehicles by recovery agents.

The High Court imposed a penalty of Rs 50,000 each on the defaulting banks and financial companies. In the 53-page judgment, Justice Ranjan referred to more than 25 judgments of the Supreme Court, and also mentioned a decision from South Africa. The judge observed that the High Court has the authority to entertain a writ petition against any “private company” whose actions deprive a citizen of their fundamental right to life and livelihood, as envisaged under Article 21 of the Constitution.

This ruling of the Patna High Court is expected to have far-reaching implications for the banking and finance sector, ensuring that the recovery of vehicle loans follows legal provisions and protects the rights of customers. The court’s directive to register FIRs against those involved in forcible seizures sends a strong message against such actions and provides a legal recourse for affected individuals.