Case Study – Mrs. Alphonsa Johny v Mahindra & Mahindra Financial Services Ltd.

Facts of the case:

  • This case took place in Ernakulam, Kerala. The petitioner, Mrs. Alphonsa Johny, had borrowed a car loan of Rs.4,65,000/- from the respondent, Mahindra & Mahindra Financial Services Ltd to help set up a business for her son.
  • Due to set back in business, she had not paid Rs. 22,500/- of the monthly EMI and had offered to pay it the succeeding month.
  • The respondents refused to accept this offer and initiated arbitrary proceedings against her in Chennai.
  • Hereafter, the respondent along with its hired illegal recovery agents started harassing the petitioner and coerced her with threats of dire consequences and pressurized her. They seized a Hyundai car from the petitioner as well.

The petitioner filed a petition in the high court of Kerala seeking the following:

  • To restrain the recovery agents and the respondent from using such agents from harassing the petitioner.
  • To direct the respondent to provide police protection to the petitioner and restrain them from taking custody of the car.
  • To set aside all proceedings related to the seizure of the vehicle and direct the respondent to accept the EMI’s.


The court held as follows:

  • Unfair practices, such as using recovery agents or ‘goons’ are banned by RBI and thus the respondent and the recovery agents should stop harassing the petitioner.
  • The residence of the petitioner is in Kerala and initiating arbitrary proceedings in another state (Chennai) is wholly without jurisdiction.
  • The arbitrary proceedings are liable to be stayed and set aside.
  • The respondent will also have to provide the petitioner with police protection so as to stop any form for harassment or coercion.

Learnings from the case:

Financial corporations are subjected to rules under the RBI and cannot use coercion or threats to get the customer to pay back loan. Any such act is liable to be questioned in law. A contract formed between two parties that have no consciousness of its terms is unenforceable. Moreover, the case also highlights the importance of place in the contract. If time and place for a contract is agreed upon, then it should be performed accordingly.