A three-judge bench of the Supreme Court recently held that any action for forcible recovery of vehicles under hire-purchase agreements when a hirer defaults on payments “cannot but be struck down”.
Ruling in Citicorp Maruti Finance Ltd v S Vijayalaxmi, the court directed that banks and financers that fail to follow guidelines set by the Reserve Bank of India could be saddled with punitive costs. The court reiterated that even the recovery of mortgaged goods which are under hire-purchase agreements has to be in accordance with the law and without the use of force.
Citicorp Maruti Finance had challenged a July 2007 decision of the National Consumer Disputes Redressal Commission that upheld an order by a state consumer commission to increase the punitive damages imposed on it by a district consumer forum.
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The update of court judgments is compiled by Bhasin & Co, Advocates, a corporate law firm based in New Delhi. The authors can be contacted at lbhasin@bhasinco.in or lbhasin@gmail.com. Readers should not act on the basis of this information without seeking professional legal advice.
