Banks can’t lift cars of loan defaulters: SC | india | Hindustan Times
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Banks can’t lift cars of loan defaulters: SC

SC questions the private banks’ right to lift vehicles of loan defaulters and sell it later, reports Bhadra Sinha.

india Updated: Jul 28, 2007 03:32 IST
Bhadra Sinha

The Supreme Court on Friday questioned the private banks’ right to lift vehicles of loan defaulters and sell it later. The division bench of Justice B.N. Aggarwal and Justice P.P. Naolekar said: “You cannot take possession of the vehicle by force and then sell it. Your powers have been defined by the Supreme Court. How can you employ force to recover the loan?”

The judges said the banks have to follow the law and not resort to the use of musclemen. It refused to stay the execution proceedings in which ABN-AMRO bank has to pay Rs 71,000 to a woman. Earlier, in a complaint against the ICICI bank, the Supreme Court had strongly deplored the growing tendency of the banks indulging in using strong arm tactics against defaulters for recovery of loans.

While hearing ABN-AMRO’s petition, the bench issued notice to the woman, Sangeeta Srivastava, and asked her to file a reply.

The bank has challenged the judgement of National Consumer Disputes Redressal Commission that had directed it to pay the money to Srivastava. The Commission had observed that there was deficiency of service on behalf of the bank.


Srivastava had moved the district consumer forum challenging the alleged forcible seizure of her Tata Indica car by the bank for default in paying the installment of the loan.

The bank not only allegedly seized the vehicle but also sold it later.

The district forum had asked the bank to pay Srivatsava Rs 71,223 that was upheld by the State Consumer Forum and then by the National Consumer Disputes Redressal Commission. ABN-AMRO has now claimed that there was no notice issued to the bank and it did not receive a chance to represent its side of the story.