Hypothecation -- Repossession Without Notice by Force -- Repossession of hypothecated vehicle without notice and by force violates right to fair procedure and attracts compensation
(i) Indian Contract Act, 1872, S.148 -- Hypothecation -- Repossession Without Notice by Force -- A financier's right of self-help repossession of a hypothecated vehicle cannot be exercised through force, deceit, or in violation of loan agreement terms. Recovery of loans or seizure of vehicles can be made only through lawful means. A repossession clause must be legally valid, provide for a notice period before possession, prescribe a procedure for taking possession and sale, and cannot leave notice to the unilateral discretion of the financier. Repossession without the stipulated notice means the right of repossession never accrued. (ii) Constitution of India, 1950, Art.21 -- Right to Livelihood -- Arbitrary Seizure of Vehicle -- Arbitrary and forcible seizure of a vehicle that is the sole source of livelihood of its owner, carried out without notice and without due process, amounts to violation of the right to livelihood under Articles 14 and 21 of the Constitution and entitles the affected person to compensation.
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