{
  "id": 7846252,
  "title": "Banks, NBFCs cannot use force to seize vehicles in loan default cases: Supreme Court",
  "url": "https://urgent.news/2026/09/16/banks-nbfcs-cannot-use-force-to-seize-vehicles-in-loan-default-cases",
  "topic": "world",
  "section": "World",
  "published": "2026-09-16T18:35:47.000Z",
  "source": {
    "name": "The Indian Express",
    "slug": "the-indian-express",
    "url": "https://indianexpress.com/article/legal-news/banks-nbfcs-seize-vehicles-loan-default-cases-supreme-court-10881198/"
  },
  "original_language": "en",
  "account": "The Supreme Court of India ruled on Wednesday that financial institutions, including banks and non-banking financial companies (NBFCs), cannot use force to seize vehicles in situations of loan default. A bench of Justices P S Narasimha and Alok Aradhe emphasized that guidelines issued by the Reserve Bank of India (RBI) on fair practices for lenders have existed only on paper without being implemented. Justice Aradhe stated that the right of financiers to seize financed vehicles is contract-based and should be applied cautiously, as it could be misused to oppress borrowers. The ruling came in response to an appeal from an individual who defaulted on a commercial vehicle loan from Cholamandalam Investment and Finance Company Ltd. After the default, the company repossessed the truck without providing any notice and sold it after the borrower paid an amount and assured to regularize the loan. The man alleged that on April 9, 2023, unidentified individuals broke the vehicle's steering lock and drove away with the truck. The Supreme Court recognized the RBI's May 5, 2003, guidelines on fair practices, which discourage lenders from using undue harassment in loan recovery. The court also referenced its 2007 decision in Manager, ICICI Bank Ltd vs Prakash Kaur, which stated that recovery of loans must follow legal means, and banks cannot employ force or \"goondas\" to take possession of vehicles. The Supreme Court noted that the loan agreement left the borrower entirely at the lender's discretion regarding notice and the manner of vehicle sale. The bench concluded that the repossession by breaking the steering lock and lack of a seven-day notice violated the borrower's constitutional rights and the provisions of the Indian Contract Act, 1872. The court ordered the company to compensate the borrower for the violation and directed the RBI to take effective steps to ensure compliance with its guidelines and circulars.",
  "summary": null,
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}