Page No.# 1/8 vs The General Manager Indian Bank And 2 Ors
2025 Latest Caselaw 3344 Gua

Gauhati High Court

Page No.# 1/8 vs The General Manager Indian Bank And 2 Ors on 20 February, 2025

Author: Manish Choudhury

Bench: Manish Choudhury

                                                                        Page No.# 1/8

GAHC010261112024




                                                                  2025:GAU-AS:2012

                              THE GAUHATI HIGH COURT
   (HIGH COURT OF ASSAM, NAGALAND, MIZORAM AND ARUNACHAL PRADESH)

                               Case No. : WP(C)/6652/2024

            PABITRA DAS
            S/O- LATE DHANESWAR DAS, R/O- VILL.- AMTOLA, P.S. CHOYGOAN, P.O.
            AMTOLA, DIST. KAMRUP, ASSAM



            VERSUS

            THE GENERAL MANAGER INDIAN BANK AND 2 ORS
            ZONAL OFFICE, SHARMA AND SHARMA MARKET, CHANDMARI,
            GUWAHATI-03, DIST. KAMRUP(M), ASSAM

            2:THE BRANCH MANAGER
             INDIAN BANK
             KHANAPARA
            ANJANA COMPLEX 1ST FLOOR
             PANJABARI VIP ROAD JUNCTION
             KHANAPARA
             GUWAHATI-22
             DIST. KAMRUP(M)
            ASSAM

            3:M/S ASHIQ ENTERPRISE
             RECOVERY AGENT/ SEIZURE AND DISPOSAL AGENT (SADA)
             REGISTERED OFFICE- UNB ROAD
             SILPUKHURI
             GUWAHATI-781003
             DIST. KAMRUP(M)
            ASSA

Advocate for the Petitioner   : MR S PARASHAR, MS.TWINKLE SARMA

Advocate for the Respondent : SC, INDIAN BANK,

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BEFORE HONOURABLE MR. JUSTICE MANISH CHOUDHURY

JUDGMENT & ORDER [ORAL] 20.02.2025

Heard Mr. S. Parashar, learned counsel for the petitioner and Mr. M. Sarma, learned Standing Counsel, Indian Bank for the respondent nos. 1 & 2.

2. The projections made in the writ petition can be narrated, at first, in brief. The petitioner has stated that in the year 2022, he purchased a vehicle bearing Registration no. AS-01-FG/9546 [Aura 1.2 MT Kappa S (Hyundai)] ['the subject-vehicle', for short] after obtaining financial facility from the respondent Bank on 21.10.2022. As per the terms and conditions of an Agreement executed with the respondent Bank, the petitioner was required to pay eighty-four nos. of Equated Monthly Installments [EMIs] @ Rs. 10,557/- per month in order to liquidate the loan amount.

3. The petitioner in the instant writ petition, preferred under Article 226 of the Constitution of India, has sought a direction to the respondent Bank authorities not to re- possess the hypothecated subject-vehicle without following due process of law and to allow the petitioner to repay the outstanding dues in six equal installments along with the regular monthly installments in respect of the financial facility he obtained to purchase the subject- vehicle.

4. In view of the nature of grievances raised in this writ petition and on the statements of the learned Standing Counsel for the respondent Bank that the respondent no. 3 is an authorized Recovery Agent / Seizure and Disposal Agent [SADA] of the respondent Bank and he has received the necessary instructions for disposal of the writ petition, the writ petition is taken up for final consideration, at the motion stage itself, without issuing notice to the respondent no. 3, and as consented by the learned counsel for the parties.

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5. Mr. Parashar, learned counsel for the petitioner has contended that after purchasing the subject-vehicle under the Agreement, the petitioner paid the EMIs in time without fail during the first year. But thereafter, due to sudden illness of his sister, the petitioner could not deposit the EMIs in time. It has been submitted that, as in the meantime, the petitioner also lost his job, the default in payment of the EMIs occurred for several months and as a result, the dues towards EMIs payable to the respondent Bank got accumulated.

6. On 26.09.2024, the petitioner was served with a Possession -cum- Sale Notice by the respondent no. 2 stating that by the Notice dated 10.07.2024, the petitioner was requested to deposit a sum of Rs. 1,50,059/- along with further interest. The Possession -cum- Sale Notice had further mentioned that as the petitioner had failed to deposit the amount in terms of the Notice dated 10.07.2024, a decision had been taken to take possession of the hypothecated subject-vehicle on any day from 11.10.2024 onwards and the Bank would sale the same to recover its dues through its authorized Recovery Agent/SADA, that is, the respondent no. 3. By the Possession -cum- Sale Notice, the petitioner was requested to ensure that he or his authorized representative should be present at the place to cooperate in peaceful handing over the hypothecated subject-vehicle to the Recovery Agent/SADA, appointed by the Bank. The Possession -cum- Sale Notice further mentioned that the petitioner would be at liberty to repay to the respondent Bank's dues on any day before the date of sale and get back possession of the hypothecated subject-vehicle.

7. Mr. Parashar, learned counsel for the petitioner has submitted that the petitioner did not receive the Notice dated 10.07.2024, referred to in the Possession -cum- Sale Notice dated 26.09.2024, and was surprised to receive the Possession -cum- Sale Notice. The petitioner was never given sufficient opportunity to reply to any demand notice. He has further contended that the Possession -cum- Sale Notice did not indicate about the persons who were authorized to take possession of the hypothecated subject-vehicle. He has further submitted that the petitioner approached the respondent no. 2 to apprise him about the difficulties the petitioner was facing at that time and requested the respondent no. 2 to allow him to pay the dues amount in six installments along with regular EMIs. The petitioner has Page No.# 4/8

also averred that after the Possession -cum- Sale Notice, the petitioner was receiving threatening calls repeatedly at odd hours at night from persons claiming to be Recovery Agent/SADA of the respondent Bank. Mr. Parashar has submitted that facing such situations, the petitioner has been compelled to approach this Court by the instant writ petition. To support his submissions, Mr. Parashar has referred to a number of decisions of the Hon'ble Supreme Court of India, which would be adverted in the later part of the order.

8. Mr. Sarma, learned Standing Counsel appearing for the respondent Bank authorities has submitted that after issuance of the Possession -cum- Sale Notice, the Bank, till date, has not taken any further steps in order to take possession of the hypothecated subject- vehicle. He has further submitted that in order to take possession of the hypothecated subject-vehicle, the respondent Bank authorities have appointed a Recovery Agent/SADA, that is, the respondent no. 3. He has further submitted that the prayer of the petitioner regarding re-scheduling of the EMIs cannot be accepted and with such a prayer, the writ petitioner could not have approached this Court. He has further submitted that the matter of taking possession of a hypothecated subject-vehicle is regulated by the Standard Operating Procedure [SOP] of the respondent Bank. He has, thus, submitted that in case of taking of possession of the hypothecated subject-vehicle, it would invariably follow the procedure laid down in the SOP.

9. I have given due consideration to the submissions of the learned counsel for the parties and have also gone through the contents of the Agreement, executed between the petitioner and the respondent Bank on 19.10.2022 in respect of the hypothecated subject- vehicle; and the SOP of the respondent Bank on seizure and sale of hypothecated subject- vehicles; placed by Mr. Sarma, learned Standing Counsel, Indian Bank.

10. Admittedly, the petitioner has defaulted in depositing the EMIs as per the terms and conditions set forth in the Agreement executed on 19.10.2022 by him with the respondent Bank. As per the said Agreement, the respondent Bank had granted a sum of Rs. 6,50,000/- to the petitioner, as per the interest rate mentioned therein. The vehicle loan amount of Rs. 6,50,000/-under the EMI scheme was repayable by installments, as stipulated in Schedule-II Page No.# 5/8

attached to the Agreement. The Agreement further mentioned that in case of default in payment of any one installment or any part thereof or any other irregularities on the part of the borrower, entire balance then outstanding with interest, costs, commissions and charges shall, if the Bank so chooses, at once would become due and payable. It is further laid down in the Agreement that if the borrower fails or neglects to repay to the Bank on demand, the balance then due to the Bank, or fails to carry out and perform any of the obligations under the Agreement, or in the event of the borrower committing any act of insolvency, etc., or if the Bank is of the opinion that the security is otherwise imperiled, it shall be lawful for the Bank, its agents and nominees with a view to obtain possession for and on behalf of the Bank, at all times and without assigning any reason and without any previous notice to the borrower but at the borrower's risk and expense. The manner in which the Bank would obtain possession is also mentioned in the Agreement. It is further set forth to the effect that the borrower shall, on demand, deliver to the Bank the keys of the hypothecated subject- vehicle.

11. In so far as the direction sought for by the petitioner to repay the outstanding dues against the financial facility he had availed in respect of the hypothecated subject-vehicle in six equal installments, apart from the regular EMIs, is concerned, this Court is of the considered view that such a direction is not called for in a writ proceeding. The hypothecated subject-vehicle is purchased by the petitioner as the borrower after entering into an Agreement with the respondent Bank on agreed terms and conditions. The Agreement has set forth the manner in which the amounts borrowed by the petitioner shall be repaid.

12. It is noticed that the Hon'ble Supreme Court of India by its decision in State Bank of India vs. Arvindra Electronics Private Limited reported in [2023] 1 SCC 540; and Bijnor Urban Cooperative Bank Limited, Bijnor and others vs. Meenal Agarwal and others reported in [2023] 2 SCC 805; has considered the matters of One Time Settlement Scheme and maintainability of a writ petition under Article 226 of the Constitution of India seeking a direction for consideration of case under One Time Settlement of a financial institution/bank.

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13. It has been observed in Bijnor Urban Cooperative Bank Limited [supra] that if a prayer is entertained on the part of a defaulting person to compel or direct the financial institution / bank to enter into a one-time settlement on the terms proposed by him, then every defaulting person who is capable of paying his dues as per the terms of the agreement entered into by him would like to get one-time settlement in his favour. It has been observed that no writ of mandamus can be issued by the High Court in the exercise of powers under Article 226 of the Constitution of India, directing financial institution / bank to positively grant the benefit under the One Time Settlement to a defaulting borrower. A grant of benefit under the One Time Settlement Scheme is always subject to eligibility criteria mentioned under the One Time Settlement Scheme and the guidelines issued from time to time. Such a decision is on the commercial wisdom of the financial institution/bank whose amount is involved.

14. In State Bank of India [supra], it has been held that the borrower, as a matter of right, cannot claim for a grant for the benefit of One Time Settlement Scheme of a financial institution / bank. A borrower who has not made the payment as per the sanctioned One Time Settlement Scheme to grant further extension as a matter of right and a borrower is bound to make the payment as per the sanctioned One-Time Settlement Scheme, cannot seek a writ of mandamus. The High Court should refrain itself from granting any extension / benefit under the One-Time Settlement Scheme while exercising the power under Article 226 of the Constitution of India.

15. It emerges as a proposition from the afore-mentioned two decisions that if exercising the power under Article 226 of the Constitution of India the writ court allows a prayer like the petitioner has made in this case, that is, to allow him to pay the outstanding loan dues in six equal installments along with the regular EMIs, then the same would amount to re-writing or modifying the terms and conditions of the Agreement, already executed mutually by the petitioner as a borrower with the respondent Bank as the financier on agreed terms and conditions. It is not open for a court in exercise of its writ jurisdiction to direct a financial institution / Bank to modify the terms and conditions of a loan agreement as it would amount to re-writing the contract, without its consent, whereas mutual consent is an essential prerequisite for a valid contract. In such view of the matter, the prayer for a direction to the Page No.# 7/8

respondent Bank authorities to allow the petitioner to repay the outstanding dues in six equal installments is not one, which can be allowed in a writ petition.

16. It is noticed that the Bank has framed a Standard Operating Procedure [SOP] on seizure and sale of hypothecated subject-vehicles and for empanelment of Seizure and Disposal Agent [SADA] for seizure and sale of vehicles. With regard to seizure and sale of the hypothecated subject-vehicle, the SOP has laid down a detail procedure. As per the SOP, any notice on seizure is to be issued with the signature of the Branch Manager only and it is the responsibility of the concerned Branch Manager to be present all times to ensure compliance of the principles of natural justice. On the date of taking possession, a seizure memo/panchnama of the hypothecated vehicle and its parts and accessories is to be undertaken in presence of all concerned and its photography/videography is to be invariably taken up. The videography of the process of seizure of vehicle is to be stored in the safe custody of the Branch Manager. The SOP has further provided that the delivery of possession of the vehicle can be given back to the owner of the vehicle [borrower or guarantor] in case sufficient amount is paid for regularizing the amount and after submission of an undertaking to pay the installments regularly and not on payment of some nominal amount.

17. It has been consistently observed by the Hon'ble Supreme Court in a line of decisions that in the matter of recovery of vehicles, lenders like Banks or financial institutions should not resort to undue harassment, say, persistently bothering the borrower at odd-hours with use of muscle power by recovery agent. In ICICI Bank vs. Shanti Devi Sharma and others, [2008] 7 SCC 532, the Hon'ble Supreme Court of India has referred to the guidelines contained in 'the Code of Bank's Commitment to Customers' [BCSBI Code] pertaining to collection of dues. As per the said guidelines in the BCSBI Code, the members or the staff or any person authorized in collection or/and security re-possession have been requested to maintain decency and decorum during visits to the borrowers places and to respect the privacy of the borrowers. It has been mentioned to interact with the borrowers in a civil manner. In ICICI Bank Limited vs. Prakash Kaur and others, [2007] 2 SCC 711, the practice of hiring recovery agents, who are musclemen, to take possession of vehicles, has been deprecated and the Banks have been advised to resort to procedure recognized by law to Page No.# 8/8

take possession of vehicles in cases where the borrowers might have committed defaults in payment of the installments instead of taking resort to strong-arm tactics. In Citicort Maruti Finance Limited vs. S. Vijayalaxmi, [2012] 1 SCC 1, the Hon'ble Supreme Court of India while recognizing the right of the financier to take back the possession of vehicles on the strength of the agreement, has emphasized that such possession of vehicles should not be taken back by use of force. Recognizing the right of the financier to take back the possession of the financed vehicle also in Charanjit Singh Chadha vs. Sudhir Mehra, [2001] 7 SCC 417; Anup Sarmah vs. Bhola Nath Sharma, [2013] 1 SCC 400; and Magma Fincorp Limited vs. Rajesh Kumar Tiwari, [2020] 10 SCC 399; the Hon'ble Supreme Court has observed that there can be no impediment to the financier in taking possession of the vehicle when the borrower / hirer does not make payment of installments / hire charges in terms of the loan agreement / hire purchase agreement, but such re-possession shall neither be taken by recourse to physical violence, assault and/or criminal intimidation nor by engaging gangsters, goons and musclemen as so-called recovery agents.

18. Since the Agreement itself has provided for possession of the hypothecated subject- vehicle by the Bank in the event of default in paying the installments in terms of the Agreement, the prayer of the petitioner for a direction to the respondent authorities not to take possession the hypothecated subject-vehicle is found not sustainable in law. As such, none of the two directions, as have been sought for by the petitioner in this writ petition, can be entertained. Consequently, the writ petition is found to be one, which is bereft of any merit and, thus, liable to be dismissed. It is accordingly, dismissed. It is, however, clarified that if the respondent Bank intent to take possession of the hypothecated subject-vehicle, then such an action shall be undertaken in strict conformity of the SOP framed by the respondent Bank and the directives given by the Hon'ble Supreme Court in the matter of taking possession of hypothecated vehicles, as highlighted above.

JUDGE

Comparing Assistant