SC Orders Rs 10 Lakh Compensation to Truck Driver Over Forceful Repossession

New Delhi , September 18 : The Supreme Court has set aside an Allahabad High Court order and awarded Rs 10 lakh compensation to a truck driver whose commercial vehicle was allegedly repossessed by a finance company’s agents at around 1 a.m. without prior notice.

 

 

A Bench comprising Justice Alok Aradhe and Justice Pamidighantam Sri Narasimha was hearing an appeal filed by Hari Dutta Sharma against the Allahabad High Court’s April 4, 2025 order. Sharma had taken a commercial vehicle loan from Cholamandalam Investment and Finance Company Limited in 2019, with his truck hypothecated as security.

 

According to Sharma, four unidentified persons broke the steering lock of his truck and drove it away on April 9, 2023, while it was parked after a delivery. He lodged a police complaint and an FIR on the same day. He later came to know through a legal notice that the vehicle had been sold on August 31, 2023, for Rs 4.5 lakh.

 

The finance company defended the repossession, citing the loan agreement and Sharma’s repeated defaults. However, Sharma argued that the agreement required seven days’ prior notice before repossession.

 

The Supreme Court noted that no such notice had been issued. It also observed that the possession memorandum did not carry Sharma’s signature and that breaking the steering lock at 1 a.m. amounted to the kind of forceful recovery practices earlier condemned by the Court.

 

 

Referring to RBI guidelines against harassment and the use of force during loan recovery, the Court said contractual repossession rights cannot be treated as permission to seize property by force, stealth or at night.

 

While allowing the completed sale to remain undisturbed, the Court directed the company to close Sharma’s two loan accounts, refund Rs 4.5 lakh with 6% interest, pay Rs 10 lakh compensation and Rs 50,000 towards costs.