Patna High Court has ruled that banks cannot use recovery agents to forcefully seize the vehicles of the customer who has taken a vehicle loan from a finance company or bank. Rs. 50,000 will be imposed on banks and finance companies if they are found guilty. This rule was imposed on May 19, 2023 by Justice Rajiv Ranjan Prasad of Patna High Court. He said that seizure of vehicles forcefully from customers through recovery agents was illegal and a violation of the fundamental rights to life and livelihood. 

“The right to recovery of these banks and financial institutions if pitted against the constitutional right of life of a person/ petitioner to live with dignity and not to be deprived of without following the established procedure of law, the constitutional rights of the person/petitioner shall prevail.” - the order said. 

Patna High Court also referred to the Supreme Court Judgement which ruled that the engagement of gangstera, goons or muscle men as recovery agents in seizing the vehicle of customers is prohibited. By looking at a bunch of writ petitions, Justice Prasad has asked police to register FIRs against such recovery agents and take legal action against them. 

Vehicles loans should be recovered following the provisions that empower banks and financial companies to recover bad debts by acquiring possession of the mortgaged properties of defaulting borrowers with the aid of the district administration and getting them auctioned in order to enforce their security interest, the High Court ruled. 

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