Loan, being an agreement or understanding between the Bank and the borrower, the general laws like Law of Contract, Transfer of Property Act, Specific Relief Act, Specific Performance etc., are applicable to all banking transactions depending upon the nature of transaction.The remedy available to lenders has been to file an ordinary money suit for recovery against the defaulting borrower for the outstanding amounts or to file a summary suit as provided for under Order 37 of Code of Civil Procedure 1908.The Supreme Court, while emphasising that banks and other financial institutions cannot resort to muscle power for recovery of their loans, strongly expressed its intent of “putting an end” to this practice. “…Banks have right to recover loans, but only through legal means,”
In the case of ICICI Bank v. Shanti Devi Sharma & Others a Bench of the Supreme Court comprising Dalveer Bhandari, J. and Tarun Chatterjee, J. warned ICICI (on May 15, 2008) against the use of musclemen to recover loans.
The Supreme Court went on to remind financial institutions that they are bound by law. The recovery of loans or seizure of vehicles can only be done through legal means; we live in a civilized country and are governed by the rule of law.
Inview of above, you may issue a legal notice to bank to curb their illegal activities and to follow the due process of law for recovery or else criminal complaint would e lodged against them.