Uttarakhand High Court
Unknown vs Reserve Bank Of India And Others on 2 April, 2026
Author: Pankaj Purohit
Bench: Pankaj Purohit
2026:UHC:2472
HIGH COURT OF UTTARAKHAND AT NAINITAL
Writ Petition Misc. Single No.2032 of 2023
02nd April, 2026
Mohan Lal ........Petitioner
Versus
Reserve Bank of India and others ........Respondents
With
Writ Petition Misc. Single No.2500 of 2023
Rajendra Singh ........Petitioner
Versus
Reserve Bank of India and others ........Respondents
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Presence:-
Mr. Altaf Hussain, learned counsel holding brief of Mr. Aakib
Ahmed, learned counsel for the petitioners.
Dr. Kartikey Hari Gupta, learned counsel for the respondents.
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Hon'ble Pankaj Purohit, J.
These two writ petitions, namely Writ Petition
(M/S) No. 2032 of 2023 (Mohan Lal vs. Reserve Bank of
India & others) and Writ Petition (M/S) No. 2500 of 2023
(Rajendra Singh vs. Reserve Bank of India & others), have
been heard together as they involve substantially similar
questions of law relating to the legality of repossession of
financed vehicles by a Non-Banking Financial Company
and the maintainability of writ petitions in such matters.
Though the factual matrix in both petitions is not identical
in all respects, the core issues being common, both
petitions are being decided by this common judgment,
while noticing their individual facts separately.
2. In Writ Petition (M/S) No.2032 of 2023, the
petitioner-Mohan Lal, a Transporter by profession, is the
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registered owner of a goods vehicle bearing registration No.
UP-26-6199, which was financed by respondent no.3-
Indostar Capital Finance Limited. The respondent
sanctioned a loan of Rs.31,40,848/- for purchase of the
said vehicle, which was repayable in 66 equated monthly
instalments. As per the petitioner, he has already paid a
sum of Rs.14,66,850/- towards the loan amount. It is the
case of the petitioner that only an amount of Rs.1,84,030/-
remained due as on 22.06.2023, however, an additional
sum of Rs.47,994/- has been arbitrarily added by the
respondent without justification. On 25.06.2023, while the
vehicle was on a commercial consignment, it is alleged that
recovery agents of the respondent forcibly intercepted the
vehicle, removed the driver, and repossessed the same
without following due process of law. Despite subsequent
representations and issuance of a legal notice, the vehicle
was not returned.
3. In Writ Petition (M/S) No.2500 of 2023, the
petitioner-Rajendra Singh, who is also engaged in the
business of transportation, is the registered owner of a
goods vehicle bearing registration no. UK-06-CA-8813. The
said vehicle was financed by respondent no.3 through a
loan of Rs.15,00,000/-, repayable in 44 monthly
installments. The petitioner asserts that he has already
paid a sum of Rs.18,64,891/-, which is more than the
principal loan amount. According to the petitioner, only an
amount of Rs.1,77,359/- remained due as on 28.08.2023,
however, an additional sum of Rs.60,067/- has been added
without justification. The petitioner further alleges that the
respondent, through its recovery agents, has forcibly
repossessed or attempted to repossess the vehicle in
violation of law and binding guidelines. It is also the case of
the petitioner that such action has severely affected his
livelihood.
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4. Both the petitions, thus, arise out of loan
transactions entered into between the petitioners and
respondent no.3, wherein disputes have arisen regarding
the outstanding amounts as well as the legality of the
action taken by the respondent in repossessing the vehicles
allegedly through coercive means.
5. Learned counsel for the petitioners submitted
that the action of the respondent in forcibly repossessing
the vehicles is wholly illegal and contrary to the binding
guidelines issued by the Reserve Bank of India regulating
recovery practices of banks and financial institutions. It is
contended that such guidelines have statutory force and
are binding on Non-Banking Financial Companies, and any
violation thereof renders the action arbitrary and amenable
to writ jurisdiction under Article 226 of the Constitution of
India. It is further submitted that the Hon’ble Supreme
Court in the cases of ICICI Bank Ltd. vs. Prakash Kaur &
Ors., (2007) 2 SCC 711 and Citicorp Maruti Finance Ltd. vs.
S. Vijayalaxmi & Anr., (2012) 1 SCC 1 has categorically
deprecated the practice of employing musclemen or
recovery agents for repossession of vehicles and has held
such actions to be impermissible in law. It is argued that in
the present cases, the repossession has been carried out in
a coercive and unlawful manner, violating the dignity and
rights of the petitioners.
6. Learned counsel for the petitioners further
contended that the dispute is not merely contractual in
nature, as the impugned action involves violation of
statutory guidelines and fundamental rights. It is argued
that the petitioners have been deprived of their livelihood,
as the vehicles in question constitute their sole source of
income, and the arbitrary action of the respondent has
caused grave prejudice. It is also urged that the
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outstanding amounts claimed by the respondent are
inflated and disputed, and such financial disputes cannot
justify resort to illegal means of recovery. The petitioners
submit that even assuming default, the respondent is
bound to follow due process of law, and cannot take law
into its own hands.
7. Learned counsel for the respondents submitted
that the writ petitions are not maintainable as the dispute
arises out of a purely commercial contract between private
parties, and the petitioners have an efficacious alternative
remedy available under law. It is contended that the
jurisdiction under Article 226 of the Constitution of India
ought not to be invoked in such matters, particularly where
disputed questions of fact are involved.
8. It is further submitted that the petitioners have
admittedly defaulted in repayment of loan installments,
and as per the terms of the loan-cum-hypothecation
agreement, the respondent is entitled to repossess the
vehicle in case of default. It is argued that the petitioners,
having voluntarily entered into the agreement, are bound
by its terms and cannot now challenge the contractual
rights of the respondent.
9. Learned counsel for the respondents also
contended that no illegal or forcible repossession has been
carried out, and the allegations made by the petitioners are
false and exaggerated. It is submitted that the actions of
the respondent are strictly in accordance with law and the
terms of the agreement, and the present writ petitions have
been filed with the sole intention of delaying recovery
proceedings. It is submitted that in view of the availability
of alternative remedies and the contractual nature of the
dispute, this Court ought not to entertain the writ petitions
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and the same are liable to be dismissed at the threshold.
10. Having considered the submissions advanced by
learned counsel for the parties and upon perusal of the
material brought on record, this Court finds that the
central issue arising for determination is not merely the
existence of a contractual relationship between the parties
or the quantum of outstanding dues, but the legality,
fairness, and procedural propriety of the manner in which
the respondent-financial institution has proceeded to
repossess or attempt to repossess the vehicles of the
petitioners. At the outset, the objection regarding
maintainability of the writ petitions deserves to be
addressed. It is well settled that disputes arising purely out
of contractual obligations ordinarily do not warrant
interference under Article 226 of the Constitution of India,
particularly when alternative remedies are available.
However, this rule is not absolute. A well-recognized
exception exists where the impugned action is arbitrary,
unfair, in violation of statutory or regulatory norms, or
results in infringement of fundamental rights. In such
circumstances, the dispute ceases to remain confined
within the domain of private law and assumes a public law
character warranting judicial review.
11. In the present case, the petitioners have made
specific and categorical allegations of forcible repossession
through recovery agents, allegedly in violation of binding
guidelines issued by the Reserve Bank of India. Such
allegations, if established, cannot be treated as mere
breaches of contract, but would amount to arbitrary and
high-handed action offending Article 14 of the Constitution
of India. Further, considering that the vehicles in question
constitute the primary means of livelihood of the
petitioners, such action directly impinges upon their right
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to livelihood under Article 21 of the Constitution of India,
as well as their right to carry on trade and occupation
under Article 19(1)(g) of the Constitution of India.
Therefore, this Court has no hesitation in holding that the
writ petitions are maintainable, and the preliminary
objection raised by the respondents is liable to be rejected.
It is not in dispute that respondent no.3 is a Non-Banking
Financial Company operating under the regulatory control
of the Reserve Bank of India. The guidelines issued by the
Reserve Bank of India governing recovery practices are not
mere advisory instructions, but are binding in nature and
are intended to ensure that recovery of loans is carried out
in a manner consistent with fairness, transparency, and
respect for the dignity of borrowers.
12. The Hon’ble Supreme Court in the case of ICICI
Bank Ltd. vs. Prakash Kaur & Ors., reported in (2007) 2
SCC 711 has unequivocally deprecated the practice of
employing recovery agents or musclemen for forcible
repossession, holding that such methods are wholly
impermissible in a civilized society governed by the rule of
law. The said principle has been reiterated and reinforced
in the case of Citicorp Maruti Finance Ltd. vs. S. Vijayalaxmi
& Anr., reported in (2012) 1 SCC 1, wherein it has been
emphasized that even in cases of admitted default,
repossession must be carried out strictly in accordance
with law and through legally sanctioned procedures. The
pronouncements of the Hon’ble Supreme Court, therefore,
leave no manner of doubt that self-help measures involving
force, intimidation, or coercion are alien to the legal
framework governing recovery of debts. Financial
institutions, regardless of contractual stipulations, cannot
assume the role of law enforcement authorities. Applying
the aforesaid principles to the facts of the present case, this
Court finds that the petitioners have specifically asserted
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that their vehicles were intercepted on public roads and
forcibly taken possession of by recovery agents, including
removal of drivers. These allegations are serious in nature
and have not been effectively rebutted by the respondents,
who have merely offered bald and general denials without
placing any cogent material on record to demonstrate that
due process of law was followed.
13. Significantly, no material has been produced to
indicate that any prior notice of repossession, opportunity
of hearing, or recourse to lawful recovery proceedings
before a competent forum was undertaken. In the absence
of such procedural safeguards, the action of the respondent
cannot be sustained. The existence of a repossession clause
in the loan agreement does not authorize the respondent to
take law into its own hands. It is trite law that contractual
terms cannot override constitutional guarantees or
statutory protections. Any enforcement of contractual
rights must necessarily conform to the overarching
requirement of legality and due process. Moreover, the
dispute regarding the quantum of outstanding dues
remains contested in both petitions. Such disputes, by
their very nature, require adjudication by competent
forums on the basis of evidence. They cannot be resolved
through unilateral and coercive action by the creditor.
Permitting such conduct would not only undermine the
rule of law but also create a dangerous precedent enabling
stronger parties to impose their will upon weaker
borrowers. This Court also cannot overlook the socio-
economic realities of the case. The petitioners are
transporters by profession, and the vehicles in question
constitute their primary source of income and sustenance.
The arbitrary deprivation of such essential assets, without
adherence to due process, results in serious civil
consequences and a direct infringement of the right to
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livelihood, which forms an integral part of Article 21 of the
Constitution of India.
14. In view of the aforesaid discussion, and in light
of the law laid down by the Hon’ble Supreme Court, this
Court is of the considered opinion that the action of
respondent no.3 in repossessing/attempting to repossess
the vehicles of the petitioners through coercive means is
not merely unsustainable, but is arbitrary, illegal, and
violative of constitutional and regulatory safeguards.
15. Accordingly, Writ Petition (M/S) No.2032 of 2023
and Writ Petition (M/S) No.2500 of 2023 are allowed in the
following terms:
(A) The action of respondent no.3 in repossessing and/or
attempting to repossess the vehicles of the petitioners
through coercive means, without adherence to due process
of law, is hereby declared illegal, arbitrary, and violative of
Articles 14, 19(1)(g), and 21 of the Constitution of India.
(B) The respondent no.3 is directed to forthwith release
and restore possession of the vehicles in question to the
respective petitioners, if already repossessed.
(C) The respondent no.3, its agents, and representatives
are restrained from interfering with the peaceful possession
and use of the vehicles by the petitioners except through
due process of law.
(D) The vehicles shall be returned in roadworthy
condition, subject to normal wear and tear. In the event of
any damage, loss, or deterioration attributable to the
respondent during the period of repossession, the
petitioners shall be at liberty to seek appropriate
compensation before a competent forum, and such claim8
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shall be considered on its own merits.
(E) It is clarified that this order shall not preclude the
respondent from recovering its legitimate dues. However,
any such recovery shall be undertaken strictly in
accordance with law, including by initiating appropriate
proceedings before competent forums, and not by resorting
to self-help or coercive methods.
(F) The respondent no.3 shall ensure strict and
scrupulous compliance with the guidelines issued by the
Reserve Bank of India governing recovery practices. Any
future deviation shall invite appropriate legal
consequences.
(Pankaj Purohit, J.)
02.04.2026
SK
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