Banks cannot use police to evict defaults, rules Bombay High Court
January 31, 2011‐ Mumbai, Maharashtra, India
The Bombay High Court bench, while dealing with a case related to a bank evicting a flat owner who mortgaged his property using police force, said that secured creditors, like banks, cannot use police force to evict defaulters and that the use of police force can only be authorized by a magistrate.
The High Court bench said that: 'if the borrower does not hand over possession voluntarily after a notice has been served on him, the only remedy open to the bank is to seek an appropriate order from the chief metropolitan magistrate or district magistrate'.
The court gave this landmark ruling while dealing a case between State Bank of India and its borrower - a private company Clarity Gold. The company Director Ganga Gupta signed as the guarantor. The company stated that about 20 policemen and bank officials barged into the residential house to forcibly take possession of the residential flat in Malabar Hill without a proper court order and a valid notice. SBI denied the possession was forcibly taken. However, the High Court has upheld the bank notice as valid and ruled that the SBI did not act unlawfully. The High Court remanded the matter to the appellate tribunal to hear both the parties again and find if the bank has used police force unlawfully.
Other top banking news
- Bharatiya Mahila Bank aims at adding 55 new branches in FY 2014-15 (March 11, 2014)
- Indian banking sector to be hit with Microsoft withdrawal of support for XP (March 4, 2014)
- Withdrawal of old Currency Notes in circulation in India (February 22, 2014)
- Linking of MNREGS with the Banking System (February 22, 2014)