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NBFC (Claimant) V Mumbai-based Rickshaw Driver (Respondent)


This case was of a dispute between an auto rickshaw driver based in the suburbs of Mumbai who was funded by an NBFC to purchase a rickshaw. While the RBI-approved entity has been in the field of providing business loans to small businesses and low-income individuals, the borrower had been an auto-rickshaw driver for over a decade and aspired to purchase and run a service through an online aggregator.

While the borrower had approached the NBFC, the loan was approved basis of the projections of business that he had received from the aggregator, and the affordability of the EMIs was established.

The loan advance was 80% of the ex-showroom price of the vehicle, and also, the cost of upholstery, which in the case of auto-rickshaws, needed to be completed post-delivery of the vehicle.

The biggest reason for the loan approval was the fact that the borrower had managed to get a license for a rickshaw which in recent times has been difficult to come by.


In due course, after the loan was sanctioned, all payments were made directly to the dealer and the upholstery maker, and the borrower was pretty regular in the repayment of the loans.

The borrower also had let the auto be driven by another driver for the night shift at a cost, and through the first one and a half years of the loan tenure, managed to repay the loan on time.

Problems occurred when the driver who had been driving at night started attracting customer complaints, and eventually, the services of his vehicle were terminated by the aggregator. This also meant that a week's payments, which were to be received by the borrower from the aggregator, were also stuck. This sent him into disarray, and he sought time for repayment of EMIs which the NBFC agreed to for the first month of default. However, he was unable to make any payment in subsequent months, and eventually, the loan became an NPA which also led the bank to initiate the repossession of the vehicle.

Repossession of a commercial vehicle and resale of the same is generally tedious and time-consuming, and as the borrower also was in a state of disarray as his sole source of income would be taken away from him, the NBFC entrusted PrivateCourt to negotiate a settlement.

Our Philosophy

श्लोकेन वा तदर्धेन तदर्धार्धाक्षरेण वा।

अबन्ध्यं दिवसं कुर्याद्दानाध्ययनकर्मभिः॥ ०२-१

Let not a single day pass without your learning a verse, half a verse, or a fourth of it, or even one letter of it; nor without attending to charity, study and other pious activity.

ऐसा एक भी दिन नहीं जाना चाहिए जब आपने एक श्लोक, आधा श्लोक, चौथाई श्लोक,

या श्लोक का केवल एक अक्षर नहीं सीखा, या आपने दान, अभ्यास या कोई पवित्र कार्य नहीं किया।

PrivateCourt Proceedings

The case and the documents related to the same were quite simple to understand, and the next step was to initiate a discussion with the respondent. This discussion was initiated in person, and the respondent, who was barely educated, was almost on his knees asking to be given a chance to pay back the loans. The borrower barely seemed to understand the legal logic of the case and needed to be explained his liabilities and penalties in as much detail as possible.

The negotiator tried to break down his daily income now that he was driving the rickshaw as a stop-and-hail model completely detached from the aggregator. What came through was that while he may not be able to pay the same amount of EMI, if he put away a small sum into a savings account daily, he would be able to manage almost 90% of his EMIs

The Settlement Agreement

It was agreed by the NBFC that a complete waiver of all penalties would be given, and the loan would be restructured with an extra 8 months for repayment of the loan. The borrower agreed to the lowered EMI and also agreed to make a daily payment into his savings account, which was allocated to the ECS clearance.

The total outstanding due on his loan was Rs. 2,35,683/-, which was to be paid over three years; the same was now extended to an extra eight months with a lowered EMI.