Can lenders in India seize a vehicle pledged as collateral without going through the courts, especially if it would cause hardship to the owner?

Under Indian law, you may have grounds to claim compensation for the credit score damage and harassment from the bank. The bank’s actions appear to be unreasonable and may constitute a violation of your rights, especially considering their acknowledgement of the issue and the fact that you are willing to settle the dues. You should consult with a legal professional for specific advice and guidance on pursuing compensation.