Uttarakhand HC Quashes Vehicle Repossession by Recovery Agents, Directs Restoration Under Article 300A

The High Court of Uttarakhand held that repossessing a commercial vehicle through recovery agents, without notice or due process, violates Article 300A and is unsustainable in law.

Justice Pankaj Purohit, sitting singly at the High Court of Uttarakhand at Nainital, allowed a writ petition filed by Savitri Devi against ICICI Bank Limited and others, declaring the repossession of her commercial vehicle illegal and directing its immediate restoration. The vehicle, bearing registration number UP-25-DT-7817, had been taken into possession on 11 October 2024 by recovery agents acting on behalf of the assignees of the original loan account. The court found that no material was placed on record to show compliance with procedural safeguards before repossession, and held that the action amounted to deprivation of property without authority of law in violation of Article 300A of the Constitution of India.

The Loan, the Assignment, and the Repossession

ICICI Bank Limited sanctioned a loan of Rs. 17,60,000/- on 30 December 2019 for the purchase of the commercial vehicle. The loan was repayable in equated monthly instalments over a tenure of 67 months under a loan agreement between the parties.

Disputes arose over outstanding dues. On 30 April 2024, a sum of Rs. 7,45,109/- was paid to ICICI Bank by respondent Nos. 2 and 3, following which the bank treated the loan account as subrogated and assigned in their favour. Respondent No. 4 then took possession of the vehicle on behalf of respondent Nos. 2 and 3.

Savitri Devi contended that the loan had already been settled and no amount remained outstanding. She sought quashing of the seizure memo dated 11 October 2024, restoration of the vehicle, issuance of a No Objection Certificate by ICICI Bank, and an inquiry into the repossession. The vehicle, she submitted, was her primary source of livelihood.

The Competing Positions

Counsel for the petitioner, Mr. Aakib Ahmed, argued that the repossession was carried out forcibly through recovery agents without any notice under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. He submitted that the mandatory requirements of issuing a demand notice and affording the borrower an opportunity had been completely bypassed. He also challenged the assignment to respondent Nos. 2 and 3, contending that no valid assignment had been demonstrated and no notice of assignment was ever given to the petitioner. The action, he argued, violated Article 300A of the Constitution.

Counsel for ICICI Bank, Ms. Monika Pant, raised a preliminary objection to maintainability. She submitted that ICICI Bank is not “State” within the meaning of Article 12 of the Constitution, the dispute arose from a purely contractual loan transaction between private parties, and the petitioner had an efficacious alternative remedy. She further submitted that following the assignment on 30 April 2024, ICICI Bank ceased to have any subsisting interest in the loan account or the vehicle, and no cause of action survived against it.

Counsel for respondent Nos. 2 and 3, Dr. Kartikey Hari Gupta, submitted that the borrower had committed persistent default, demand notices had been issued, and the repossession was carried out in accordance with the terms of the loan agreement. He contended that the dispute concerned enforcement of contractual rights for which appropriate remedies were available before competent forums.

Maintainability: When a Contractual Dispute Acquires a Public Law Character

The court addressed the maintainability objection at the outset. It acknowledged the settled position that disputes arising purely out of contractual obligations ordinarily do not warrant interference under Article 226 of the Constitution, particularly when alternative remedies are available. However, it held that this rule is not absolute.

The court identified a recognised exception: where the impugned action is arbitrary, unfair, in violation of statutory or regulatory norms, or results in deprivation of property without authority of law, the dispute ceases to remain confined within private law and assumes a public law character warranting judicial review.

Applying this to the facts, the court found that the petitioner had made specific allegations of repossession through recovery agents in violation of applicable guidelines governing recovery practices. Such allegations, if established, would amount to arbitrary and high-handed action. Given that the vehicle was a source of livelihood, the action also carried serious civil consequences. The preliminary objection was accordingly rejected and the writ petition held maintainable.

Recovery Agents and the Limits of Self-Help

The court referred to two Supreme Court decisions on the conduct of financial institutions in recovering dues. In ICICI Bank Ltd. v. Prakash Kaur & Ors., reported in (2007) 2 SCC 711, the Supreme Court deprecated the practice of employing recovery agents or musclemen for repossession, holding that such methods are impermissible in a civilised society governed by the rule of law. In Citicorp Maruti Finance Ltd. v. S. Vijayalaxmi & Anr., (2012) 1 SCC 1, the Supreme Court reiterated that even in cases of default, repossession must be carried out strictly in accordance with law and through legally sanctioned procedures.

The court held that these pronouncements left no doubt that self-help measures involving force, intimidation, or coercion are impermissible. A repossession clause in a loan agreement does not authorise a lender or its assignee to take the law into its own hands. Contractual terms cannot override the requirement of legality and due process, and any enforcement of contractual rights must conform to law.

Absence of Due Process: The Decisive Finding

Turning to the facts, the court found that the respondents had not placed cogent material on record to demonstrate that possession of the vehicle was taken strictly in accordance with due process of law. No material was produced to indicate compliance with procedural safeguards ordinarily required prior to repossession, including issuance of notice and affording the borrower an opportunity to be heard.

The court also noted that the dispute regarding the quantum of outstanding dues remained contested. Such disputes require adjudication by competent forums on the basis of evidence and cannot justify unilateral repossession without following due process.

In the absence of demonstrated compliance, the court held that the action of the respondents in taking possession of the vehicle could not be said to be in accordance with law. The repossession was declared violative of Article 300A of the Constitution of India, which protects persons from deprivation of property without authority of law.

Order

The writ petition was allowed on 27 April 2026. The court issued four directions:

The action of respondent Nos. 2 and 3 in repossessing and/or attempting to repossess the vehicle without adherence to due process of law was declared illegal and unsustainable.

The respondents were directed to forthwith release and restore possession of the vehicle to the petitioner, if already repossessed.

The respondents, their agents and representatives were restrained from interfering with the peaceful possession and use of the vehicle except in accordance with due process of law.

The court clarified that the order would not preclude the respondents from recovering their legitimate dues, if any, in accordance with law before the appropriate forum. All pending applications were disposed of.