BM - Seizure of Vehicle by the lender is not a criminal offense - Supreme Court

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SURYANARAYAN MOHAPATRA

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Nov 7, 2012, 3:25:05 AM11/7/12

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Dear Students,

Here are some developments pertaining to banks and NBFCs

(Came in Business line on 06/11/2012).

This is relating to Seizure of Vehicle by the Financial institutions (financed under hire-purchase) :

The Supreme Court has categorically upheld the financiers’ right to re-possess a vehicle in case of default.

“The law can be summarized that in an agreement of hire purchase, the purchaser remains merely a trustee/bailee on behalf of the financial institution and ownership remains with the latter (financial institution)”.

In case the vehicle is seized by the financier, no criminal action can be taken against the financier as he is the legal owner, and only re-possessing the vehicle owned by him - the apex court said in a recent ruling.

This ruling by the apex court will strengthen the hands of asset-financing non-banking financing companies, say industry observers.