Loan Repayment: Conditions for appointment of a Receiver

  • Are you unable to repay a vehicle loan?
  • Is the Bank insisting on claiming possession of your vehicle?
  • Are you aware of procedure the Bank should follow while claiming possession?
  • Has the Bank appointed a Receiver to take possession from you?
  • Are you contemplating legal action in the process?
  • Has the Bank approached the Court for taking possession?

I was looking for answers to several such questions. And my search led me to following answers:

1) In Sundaram Finance Limited vs NEPC Private Ltd. (1999) 2 SCC 479, the Honorable Supreme Court observed that a Receiver can be appointed ex-parte.

2) In ICICI Bank vs Tara Chand, FAO 265/2007, the Delhi High Court observed that in given facts and circumstances of the case, appointment of receiver should be the better course and the receiver can be appointed even ex-parte.

3) If the Bank approaches the Court or if you approach the Court then you can insist on stipulation of specific conditions before the Receiver takes possession of your vehicle. You can even approach the Court after the Receiver takes possession if you anticipate any loss or damage to your vehicle.

4) If you are sure of repayment of balance loan then take appropriate steps to ensure safety and security of your vehicle with the Bank or Receiver in the intervening period.

5) Build clarity on what the Receiver can do and how it would be done.

6) Depending upon facts and circumstances of the case you could insist on following conditions as far as Receiver’s role is concerned:

i) The receiver to serve the copy of the Order in the first instance to the owner (loan-taker) or the occupier of the vehicle, giving him time to go through the order.

ii) In the event the loan-taker pays the outstanding loan amount the loan-giver should not enforce the order of taking possession of the vehicle.

iii) In the event the receiver has taken possession of the vehicle and thereafter the payment is made within a period of 1-2 months or as agreed upon, then also the vehicle should be released to the loan-taker.

iv) Insist on receipts of payments made by you.

v) The receive to ensure that no inconvenience is caused to the loan-taker, specially with respect to time and place for taking possession.

vi) The receiver to take over possession of the vehicle at the address mentioned in loan application.

vii) The receiver to not stop a running vehicle on road to take forcible possession.

viii) The receiver to avoid taking possession of the vehicle if the vehicle is occupied by an elderly, infirm or physically/mentally challenged person.

ix) The receiver not to use force at the time of seizing the vehicle and to issue proper receipt with date, time and place mentioned thereon along with signature of loan-taker (defaulter) and two witnesses present on the spot.

x) The receiver to prepare inventory of articles found in the vehicle.

xi) The receiver to ascertain the position of the vehicle at the time of seizure by taking photographs and noting down its condition in writing.

xii) The receiver to allow defaulter (loan-taker), occupier of vehicle to remove his belongings from the vehicle including attached accessories to the vehicle.

xiii) The receiver to note down the reading of mileage on the receipt.

xiv) The receiver to get the vehicle inspected for actual mechanical condition at the nearest authorized workshop and to submit a copy of the report to the defaulter (loan-taker).

xv) The receiver to keep the vehicle in safe custody and condition in which it was seized.

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