PRAYAGRAJ, Nov. 14 -- The Allahabad high court recently held that finance companies cannot use goons to seize vehicles over loan default. The court said that a finance company's contractual right to repossess a financed vehicle must be enforced through a forum known to law, such as a civil court or an arbitrator, and not by recovery agents who waylay the borrower and seize the vehicle by force.

The court said reading a repossession clause literally, to allow this, would arm a private party with the coercive authority of the state. It noted that the vehicle of a borrower, who had paid 31 of 45 instalments, was seized at gunpoint and the allegation was never specifically denied.

While allowing the writ petition filed by a borrower S Ahmad...