Court slams financier for selling seized vehicle

The Madras High Court has deprecated the attitude of a financier who, it said, used a sinister method to seize a vehicle with the court's aid and, thereafter, without the court's permission or without giving an opportunity to the borrower to pay the amount, sold it clandestinely. The court held that it was the fittest case in which a creditor had taken possession of a vehicle been purchased by obtaining a loan, in contravention of rules and regulations.


A Division Bench, comprising Justices R. Banumathi and B. Rajendran, in its judgment on the appeal filed by the borrower, R. Joseph Miranda, against a single Judge's order, said the finance company had taken possession of the vehicle pursuant to a High Court order, but it was misused.

The vehicle had been sold to an alleged purchaser, whose details were not given to the court, barring a voucher indicating the name. The Bench treated the sale of the vehicle by Dhandapani Finance Pvt. Limited here as non-est in the eye of law.

Normally, sale of the vehicle after seizure would be done by the advocate commissioner. In the present case, everything happened quickly without giving any time to the advocate commissioner or the borrower.

The Bench directed the company to repossess the vehicle from the purchaser and hand it over to Mr. Miranda. Thereafter, both parties could seek permission from the High Court.

Allowing the appeal, the Judges said the direction to redeliver the vehicle would not prevent the financier from taking necessary action as per law against the appellant for recovery of the loan amount.

Citing judgments of a Division Bench, which had quoted decisions of the Supreme Court and the Full Bench of the High Court, the Judges said a person making an application under the Arbitration and Conciliation Act should show prima facie case and establish the irreparable injury and the balance of convenience where a vehicle had to be emergently seized. There should be averments to show why it was just and convenient to seize the vehicle. The party should also be able to satisfy the court that the arbitral proceedings are actually contemplated.