• Vehicle under hypothecation

A person went bankrupt who owes money to me.  After multiple follow-ups, he handed over his car and the Original RC to me saying that he will take it back once he repays the loan amount.  Now this person is not traceable for almost 2 years.   I received a call from the Bank who gave loan to this CAR in year 2007 claiming that the car is under their Hypothecation.   Do I have any legal stand on retaining this vehicle?  I have a promissory note signed by this person 3 years back.
Asked 3 years ago in Property Law from Bangalore, Karnataka
Issue a legal notice to him for recovering the amount and then file a suit for recovering the amount. Find out whether he has any property if so attach it .Call to them and ask how they got your number.
Jeshma Mohandas KP
Advocate, Kozhikode
567 Answers
1 Consultation

4.5 on 5.0

You can not keep this car as the bank is the first borrower and it has lien on the car before you.
If bank sells this car and after deducting its dues something is left , you can get your money from it.

Another option is to sell this car right now so you get some of your money back. Once bank reaches this car, you will have no option.
Devajyoti Barman
Advocate, Kolkata
12577 Answers
162 Consultations

5.0 on 5.0

1. You have no legal stand as regards the said vehicle is concerned,

2. Hypothecated vehicle can not be pledged before the said rehypothecation is released,

3.You have a promissory note which states that he promises to pay you. It does not entitle you to retain the vehicle which has been a property of the Bank being hypothecated with it,

4. Trace out your  friend to recover your loaned amount from him.
Krishna Kishore Ganguly
Advocate, Kolkata
18164 Answers
439 Consultations

5.0 on 5.0

1) car is hypothecated to the bank . in case of failure of the borrower to make payment the bank can auction the car and recover its dues . 

2) since the car is over 7 years old bank will hardly recover any amount from sale of the car . 

3) you have no rights on said car . only if amount recovered by bank from sale of car is more than loan amount can you claim the surplus amount . 

4) since promissory note is issued 3 years back even if you take legal proceedings to recover the amount mentioned in promissory note your claim would be barred by limitation .
Ajay Sethi
Advocate, Mumbai
44485 Answers
2586 Consultations

5.0 on 5.0

Hi, when the car has been   hypothication then you have no right to claim the car as the bank is the owner of the car and secondly you have a promissory note if the date has been filed you have to issue the legal notice for the recovery of money provided you have to file a suit with in 3 years from the date of the instrument.
Pradeep Bharathipura
Advocate, Bangalore
4538 Answers
202 Consultations

4.5 on 5.0

sell the car before bank find out it and get whatever money you get after selling it.
R.K. Nanda
Advocate, New Delhi
457 Answers

4.7 on 5.0

As the car has been hypothecated to the Bank, the bank has first lien on it and hence you can not stake claim on the car.Your claim is only secondary as your lien is secondary.
If the promissory note is less than 3 years old you can proceed with recovery proceedings against your debtor.
Try to trace the person as you will need to furnish his address to serve summons on him as otherwise your exercise will prove futile.
S J Mathew
Advocate, Mumbai
2233 Answers
110 Consultations

5.0 on 5.0

A. The bank has created a first charge over the movable property i.e Car. Hence, you are entitled to receive the amount after obtaining dues from the bank.

B. You have no authority or right to keep the custody of the vehicle when the first preferential right was exist over the Car. 

C. You can file the suit against him by presenting the promissory note before the court of law.
B.T. Ravi
Advocate, Bangalore
831 Answers
55 Consultations

5.0 on 5.0

When one property has been mortgaged two times then previous mortgagor has better right over the property against the subsequent mortgagor. So the bank has better right over the car then you. You can claim surplus amount after complete satisfaction of the bank if mortgaged property has auctioned. 

You have inferior right and it is superseded by the bank. Your right is time barred but that property is in your possession then you can easily condone limitation period.
Shivendra Pratap Singh
Advocate, Lucknow
4989 Answers
78 Consultations

4.9 on 5.0

1. Since the vehicle is under hypothecation to the bank you have no rights on it. Bank has created a charge on the car, in view whereof it has the right to auction the car to recover its dues from the owner. As a corollary thereto, the right which accrued to you from the promissory note executed by the debtor in your favour, is eclipsed by the right of the bank.

2. If after appropriating the auction money towards realisation of its dues, any surplus is left, you will be entitled to it.
Ashish Davessar
Advocate, Jaipur
22966 Answers
631 Consultations

5.0 on 5.0

since said car is hypothecated in the bank you have no right to retain it with you.and execution of promissory note can be against debtor.with the consent and negotiations with bank vehicle can be sold out in legal procedure and compensate bank debt .
Brijendra Kumar Vishwakarma
Advocate, Kanpur
117 Answers

4.5 on 5.0

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