According to the Patna High Court, it is a violation of the basic right to life and livelihood for musclemen hired by financial institutions and banks to forcefully take automobiles away from owners who have fallen behind on their loan payments. When deciding on a number of writ petitions, Justice Rajeev Ranjan Prasad said that the powers of banks and financial corporations must be exercised within the parameters of the constitution and in line with the law.
The one-judge panel said that banks and financial businesses cannot behave in a way that is inconsistent with India's core values and policies, which implies that no one may be denied their means of subsistence and their ability to live in dignity without first following the established legal process. The court said in its judgment that a Supreme Court order fully prohibits obtaining such possession by using gangsters, thugs, and musclemen as so-called recovery agents.
According to the high court, vehicle loans must be recovered in accordance with securitization provisions that allow banks and financial institutions to recoup bad debts by physically obtaining the mortgaged properties of defaulting borrowers with the assistance of the district administration and having them auctioned to enforce their security interest. The court penalised errant banks and credit businesses Rs 50,000 apiece and ordered all police superintendents in Bihar to ensure that no car is forcibly taken by any recovery agency.
When a person's constitutional right to life—the right to live with dignity and not to have that right violated—is compared to the right of these banks and financial institutions to recover their losses, the court ruled that the person's constitutional rights will win out. They cannot be permitted to impose their own laws under the guise of the authority the lender has obtained under the loan agreement to reclaim the car, the high court said in its ruling of May 19.