The court cannot be used as recovery agent by finance companies and banks to seize vehicles without serving proper notice to the borrowers and giving them an opportunity to respond, the Madras High Court ruled on Monday.
The order was passed by Justice V K Sharma while he dismissed a batch of petitions from Hinduja Leyland Finance Ltd and ordered the return of seized vehicles.
The petitioners had approached the court seeking the appointment of an Advocate Commissioner to seize a multi-axle goods vehicle from the borrower for default in repayment of loan.
The borrower had apparently taken a loan of `5 lakh to purchase the vehicle. The loan was to be repaid in 35 installments. However, the borrower failed in this regard and a payment of `1.10 lakh was outstanding.
When the company approached the court last December after issuing a legal notice to the borrower, the court issued an interim order to appoint an Advocate-Commissioner and seize the vehicle. The borrower submitted a petition seeking vacation of interim order.
Dismissing the applications of the company, Justice Sharma said several facts were not brought to court’s notice by the applicant, including that only `1.10 lakh was outstanding and the borrower had paid the rest. Also, the company failed to disclose the current status of the arbitral proceedings which it said it had initiated.