The Supreme Court of India criticized the use of coercive pressure by financial institutions to recover mortgaged vehicles and ordered one such financier to pay the truck owner ₹15 lakh. This owner had taken a loan of ₹10.4 lakh to purchase the vehicle.
Approximately two years after the loan was approved in June 2021, the company Cholamandalam Investment and Finance secretly took the truck due to non-payment of monthly installments (EMI). A video recording from a warehouse in Ayodhya dated April 9, 2023, captured four people breaking the steering wheel lock of the vehicle at midnight and taking it away.
Six months later, Cholamandalam sent a notice stating that it had seized and sold the truck at auction for ₹4.5 lakh, while a remaining balance of ₹1.3 lakh was still owed by them.
The Supreme Court bench, comprising judges P. S. Narasimha and Alok Arathe, noted that although the seizure of a mortgaged vehicle is a legal step to secure the borrowed asset, it must be carried out strictly in accordance with the law and procedures established by the RBI's guidelines on fair practices for lenders, issued on May 5, 2003.