Ujjal Kumar Das vs SBI
decided
on 03.05.13 by Calcutta High Court Writ Petition No – 10315 of 2013
Bench: Mr Justice
Dipankar Datta
DRT Solutions
Citation –
DRTS-021-Ujjal
Kumar vs SBI-2013
We have now
numbered the Judgments published on this web site as DRTS-00.
Accordingly all the judgments published so far have been numbered. The judgment
on this page is numbered as DRTS-021.
Comments by DRT Solutions
The above mentioned Calcutta High Court Judgment of 2013 lays down that
Publication of Photographs of the Defaulting Borrowers in news papers is not
permissible in terms of the Securitization Act or any other law
Utility of this Judgment – Whenever the banks threaten to publish the
photographs of the borrowers, the law pronounced in this judgment be pointed out
to the Banks and in case of disagreement, the matter be put up before the DRT.
If there is any adverse decision, matter be taken up in higher courts based on
this judgment.
Comments
The full text of
the judgment is given below which is self explanatory. Important portions have
been marked in Red. Our comments are as under:-
(a)
Past several years,
many of our clients have been facing the threat of the banks to pubish their
photographs in the news papers. We have been advising them to file injunction
suits in the court of law. In some instances, injunctions have been granted. In
some cases when the courts have not granted such injunctions, the Reviews and
Appeals have been filed.
(b)
Even two High Courts
have delivered judgments against our contentions viz MP High Court in the matter
of Archana Chauhan and Madras High Court in the matter of K.J. Doraisamy.
(c)
But now this judgment
has supported our contentions.
(d)
Extract from the
marked Red portions of the following judgment is reproduced below:-
(18) With the deepest of respect I have for the learned Judges who decided the
writ petitions in Archana Chauhan (supra) and K. J. Doraisamy (supra), I have
failed to persuade myself to agree with Their Lordships.
(20)
In my humble view, the opinions recorded in the paragraph extracted supra are
neither backed by any reason nor can be supported with reference to any
provision of the SARFAESI Act or the rules framed thereunder.
(25) - - -There is little doubt that the SARFAESI Act confers wide powers on the
secured creditors to enforce the security interest without judicial intervention
up to the stage of taking measures under Section 13(4) thereof. Classification
of a loan account as non-performing asset, computation of the quantum of dues
and taking over possession of the secured asset upon rejection of the response
to the notice under Section 13(2) are the various steps that are required to be
taken for enforcing the security interest. In course thereof, the secured
creditors may not ordinarily face interference by the courts, since the vires of
the SARFAESI Act has been upheld. It is only at the stage of Section 17(1)
thereof that there is scope for a judicial determination of the issues raised by
a borrower/guarantor by the Debts Recovery Tribunal having jurisdiction. Till
such time the Tribunal is approached and requested to consider a prayer for
interim relief, it is a totally one-sided affair. The secured creditor
unilaterally decides whether one is a defaulter or not and further as to whether
the photograph of such defaulter ought to be published or not. By no stretch of
reasoning can I conceive of the SARFAESI Act conferring on the secured creditor
the unfettered power to act in such manner. If it were accepted that the secured
creditor enjoys the unfettered power of publishing the photograph of a
defaulting borrower/guarantor and does so even before the Tribunal under Section
17 of the SARFAESI Act could be approached, and quite some time thereafter the
Tribunal under sub-section (3) of Section 17 holds that the secured creditor had
acted contrary to the other provisions thereof while enforcing the security
interest under sub-section (4) of Section 13 and ultimately directs restoration
of possession, the damage that could be caused to the reputation and dignity of
an honest borrower/guarantor by reason of publication of his photograph in the
interregnum would be irretrievable. It may not be possible to compensate such
damage by money, if a borrower/guarantor, who has been proceeded against
contrary to law by the secured creditor and whose photograph is published, is
unable to bear the ignominy and takes a drastic step. Since publication of
photograph of a defaulting borrower/guarantor has the potential of exposing him
to irreparable loss, injury and prejudice, publication of photograph cannot be
resorted to in the absence of an express power or an agreed term in this behalf.
IN
THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION APPELLATE SIDE
Present :
The Hon’ble Justice Dipankar Datta
W.P. 10315
(W) of 2013
Ujjal
Kumar Das & Anr.
Versus
State Bank
of India & Ors.
With
W.P. 9850
(W) of 2013
Messrs
Allianz Convergence Private Limited & Ors.
Versus
The General Manager, State Bank of India & Anr.
For the
petitioner in : Mr. Suddhasatva Banerjee, Advocate W.P. 10315(W) of 2013 Mr.
Deboki Nandan Maity, Advocate For the petitioner in : Mr. M.S. Tiwari, Advocate
W.P. 9850(W) of 2013 Mr. Sailendra Tiwari, Advocate Mr. Dharmendra Tiwari,
Advocate
Mr. R.K.
Pandey, Advocate
For the
respondents in : Mr. Subrata Kumar Sinha, Advocate W.P. 10315(W) of 2013 Mr.
Sudip Pal Chowdhury, Advocate For the respondents in : Mr. O.N. Rai, Advocate
W.P. 9850(W) of 2013 Mr. P.K. Roy, Advocate Mr. D.K. Singh, Advocate
Hearing
concluded on : April 9, 2013.
Judgment
on : May 3, 2013.
1) Whether
or not a secured creditor, which has initiated action for enforcement of its
security interest in terms of the provisions of the Securitisation and
Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002
(hereafter the SARFAESI Act), is entitled to publish thephotograph(s) of the
defaulting borrower(s)/guarantor(s) in newspapers/magazines etc. is the common
question that arises for an answer on these two writ petitions. In view thereof,
these two writ petitions were heard one after the other and shall stand disposed
of by this common judgment and order.
2) Mr.
Banerjee and Mr. Tiwari, learned advocates representing the two sets of
petitioners contended that publication of photograph(s) of the defaulting
borrower(s) and guarantor(s) as a measure for recovery of the secured debt does
not enjoy legislative sanction and, therefore, the secured creditors may be
permanently restrained from proceeding in that direction.
3) Mr.
Sinha, learned advocate representing the secured creditor in W.P. 10315(W) of
2013 relied on the decisions of the Madhya Pradesh and Madras High Courts,
reported in AIR 2007 Madhya Pradesh 45 : Ku. Archana Chauhan v. State Bank of
India, Jabalpur and [2007 136 Comp. Cas 568 (Mad) : Mr. K.J. Doraisamy v. the
Assistant General Manager, State Bank of India, Erode Branch, respectively to
urge that the point raised by the petitioners in these two writ petitions is no
longer res integra. Both the Courts have, in unambiguous terms, held that
publication of photographs of the defaulting borrowers is not prohibited by the
SARFAESI Act and, therefore, cannot be held to be impermissible.
4) It is
also submitted by him, by inviting reference to a letter of the Deputy General
Manager,Reserve Bank of India (hereafter the RBI) dated July 12, 2007 addressed
to the Chairman, State Bank of India (hereafter the SBI), that publication
of photographs of defaulting borrowers have been permitted and, therefore, there
is no infirmity in the impugned action whereby the petitioners have been
threatened with publication of their photographs, should they fail to repay the
loan within the time fixed by the bank.
5) He,
accordingly, prayed for dismissal of the writ petition.
6) Mr. Rai,
learned advocate for the secured creditor in W.P. 9850(W) of 2013, also relied
on the decisions in Archana Chauhan (supra) and K.J. Doraisamy (supra) in
support of the impugned action.
7)
Additionally, he contended that the first ground on which the impugned act of
threatening to publish photographs, names and addresses of the defaulting
borrowers in the newspapers could be faulted is that it is coercive. Referring
to Section 15 of the Contract Act, 1872 defining coercion, he contended that the
act complained has to fall within any of the mischief mentioned therein. The
expression “any act forbidden by the Indian Penal Code” (hereafter the IPC)
would require consideration of the provisions thereof and the only forbidden act
that could be relevant for the present case or could be complained of as having
been committed by the secured creditor in the given fact situation is
‘defamation’. One has therefore to look to Section 499 of the IPC. According to
him, publication of photograph clearly falls within the first exception provided
in Section 499 of the IPC and, therefore, it cannot be said to be a defamatory
act. The petitioners having borrowed moneyfrom the secured creditor and they
having defaulted in repayment thereof leading to classification of their loan
account (cash credit) as non-performing asset, the publication, if made, would
therefore be a true account of the situation. To bolster his contention that it
is for the ‘public good’, Mr. Rai submitted that although the expression ‘public
good’ has not been defined in the IPC, the Supreme Court defined the expression
‘public interest’ relying on the definition/meaning of the expression given in
Stroud’s Judicial Dictionary and Black’s Law Dictionary while pronouncing its
decision reported in (2004) 3 SCC 349 : Ashok Kumar Pandey v. State of West
Bengal. Taking a cue therefrom, he proceeded to submit that publication
of photographs, names and addresses of the defaulting borrower(s)/guarantor(s)
in the newspapers by public sector banks is really a step satisfying public
interest and can be termed as an act for ‘public good’ for good reasons. India
had a fairly well developed commercial banking system in existence at the time
of independence in 1947. The RBI was established in 1935. While the RBI became a
state owned institution from January 1, 1949, the Banking Regulation Act was
enacted in 1949 providing a framework for regulation and supervision of
commercial banking activity. The first step towards the nationalization
of commercial banks was the result of a report (under the aegis of the RBI) by
the Committee of Direction of All India Rural Credit Survey (1951), which till
today is the locus classicus on the subject. The Committee recommended one
strong integrated state partnered commercial banking institution to stimulate
banking development in general and rural credit in particular. Thus, the
Imperial Bank of India was taken over by the Government and renamed as the SBI
on July 1, 1955 with the RBI acquiring overriding substantial holding of shares.
A number of erstwhile banks owned by princely states were made subsidiaries of
the SBI in 1959. Thus, the beginning of the plan era also saw the emergence of
public ownership of one of the most prominent of the commercial banks. Political
compulsion then partially attributed to inadequacies of the social control, led
to the Government of India nationalizing 14 major scheduled commercial banks in
1969, which had deposits above a cut-off size. In a somewhat repeat of the same
experience, eleven years after nationalization, the Government announced the
nationalization of six more scheduled commercial banks above the cut-off size.
The objective was to serve better the needs of development of the economy in
conformity with national priorities. This very objective, according to him, is
frustrated if public sector banks are compelled to have a stock pile of
non-performing assets. He referred to the decision of the Supreme Court reported
in AIR 2007 SC 712 : Transcore v. Union of India, wherein it was observed that
non-performing asset is cost to the economy. It is, therefore, the duty of the
public sector banks to reduce such cost by resorting to every possible legal
means. The SARFAESI Act is one of such means, which provides effective and
quicker procedure for recovery of the dues of the secured creditor in cases
where the borrower’s account has been classified as non-performing asset.
8) It was
further submitted by Mr. Rai that the other means to reduce such cost is
dissemination of information as regards willfully defaulting borrowers to other
banks and financial Institutions so that they may get alert and refrain from
extending credit facilities to the defaulting borrowers. The RBI has already
felt and recognized the need for such dissemination of information as regards
willfully defaulting borrowers to other banks and financial institutions and has
put in place a mechanism therefor by directing the banks and financial
institutions to forward information as regards willfully defaulting borrowers to
Credit Information Bureau of India Limited. Such being the situation,
publication of information (photographs, names and addresses) of defaulting
borrowers in the newspapers by public sector banks would only quicken the
process of dissemination of information, which cannot be said to be illegal;
more so, since such act of publication has not been prohibited by any of the
legislations relating to recovery of the secured creditor’s dues.
9)
Furthermore, such publication of information (photographs, names and addresses)
of defaulting borrowers in the newspapers by public sector banks would act as a
deterrent for would be borrowers seeking financial assistance with the evil
intention to evade repayment and keep them away from the national financial
system. Such deterrent measures to stave/fend off potentially defaulting
borrowers from the national financial system are the need of the hour inasmuch
as the Indian economy continues to be challenged by the ongoing financial crisis
which started as a result of debt fuelled consumption.
10) The
prohibition contained in the general law of contract and the penal law, it was
submitted, is thus inapplicable to the facts of the present case or such similar
cases.
11) The
next point, which according to Mr. Rai deserves consideration, is that the banks
share a fiduciary relation with their customers and are, therefore, obliged to
maintain secrecy of the customer’s accounts. The duty to maintain secrecy as
aforesaid which arises from the contract between the bank and its customer is,
however, not absolute but is a qualified one subject to reasonable exceptions.
One of such exceptions is a case where a duty higher than the private duty is
involved. Referring to the decision reported in AIR 1987 Calcutta 29 :
Shankarlal Agarwalla v. State Bank of India, it was submitted that this Court
approved of such exception. Moreover, in its decision reported in AIR 1992
Kerala 351 : Kattabomman Transport Corporation Ltd. v. State Bank of Travancore,
the Kerala High Court also observed that in cases where public fund is involved,
the bank’s public duty would prevail over its private duty to the customer.
12)
Finally, it was submitted that information about loan defaulters would have the
impact of alerting the citizens not only about those who are defaulting on
repayments but also about the fact that a willful defaulter would be similarly
treated. It could thus lead to safeguarding economic and moral interests of the
nation. The benefits accruing to the economic and moral fibre of the country far
outweighs any damage to the fiduciary relationship of bankers and their
customers.
13) The
writ petition, Mr. Rai urged, should therefore be dismissed.
14) I have
heard the parties and perused the decisions cited at the bar.
15) The
reasons assigned by the learned Judges of the Madhya Pradesh and the Madras High
Courts ought to be noticed at this stage, for, if I agree therewith, the writ
petitions would merit dismissal in limine.
16) In
Archana Chauhan (supra), the learned Judge observed as follows:
2. With
respect to the photographs, in the opinion of this Court publication of
photographs of the borrowers cannot be said to be impermissible mode. Action
cannot be said to be arbitrary or illegal in any manner. It cannot be said to be
defamatory publication made, hence I find no ground to quash the publication
(P-3).
17) The
learned Judge of the Madras High Court in K.J. Doraisamy (supra) examined the
issue from the angle of the right to privacy that every individual is entitled
to claim as well as information that one could seek under the Right to
Information Act, 2005 (hereafter the RTI Act). The relevant passages from the
decision read as follows:
29. The
above discussion makes it clear that from the point of view of the individual,
his right to privacy is not absolute and from the point of view of the Bank, the
duty to maintain secrecy is superceded by a larger public interest as well as by
the Bank’s own interest under certain circumstances.
30. Coming
to the authority of law, by which the Bank may be allowed to publish the
photograph of the defaulter, it is seen that Section 13(4) of the Sarfaesi Act
authorizes the Bank to take possession of the secured asset and sell it. The
procedure for such sale is prescribed under Rule 8 of the Security Interest
(Enforcement) Rules, 2002. Sub-rule (1) of Rule 8 reads as under:
’8. Sale
of immovable secured assets. – (1) Where the secured asset is an immovable
property, the authorised officer shall take or cause to be taken possession, by
delivering a possession notice prepared as nearly as possible in Appendix IV to
these rules, to the borrower and by affixing the possession notice on the outer
door or at such conspicuous place of the property. Appendix IV to the said Rules
which contains the Form in which the Possession Notice is to be issued by the
Bank, steers clear any doubt that one may have. Para 2 and 3 of the Format of
Notice under Appendix IV reads as follows:
The
borrower having failed to repay the amount, notice is hereby given to the
borrower and the public in general that the under signed has taken possession of
the property described herein below in exercise of powers conferred on him/her
under Section 13(4) of the said Ordinance read with rule 9 of the said Rules on
this …. day …of the year ….. The borrower in particular and the public in
general is hereby cautioned not to deal with the property and any dealings with
the property will be subject to the change of the … (name of the Institution)
for an amount Rs…. and interest thereon.’
Thus the
statutory rules themselves provide for a notice not merely to the defaulting
borrower, but also to the public in general. Therefore, the threat held out by
the Bank to publish the photograph of the borrower and the surety, is also
authorized by the statutory rules.
31.
Lastly, with the advent of the Right to Information Act, 2005, the Bank has
become obliged to disclose information to the public. Section 3 of the said Act
entitles all citizens to a right to information. Section 4(2) of the said Act
provides as follows:
’2. It
shall be a constant endeavour of every public authority to take steps in
accordance with the requirements of Clause (b) of Sub-section (1) to provide as
much information suo moto to the public at regular intervals through various
means of communications, including internet, so that the public have minimum
resort to the use of this Act to obtain information.’
Public
Authority is defined under Section 2(h) of the Act to include ‘any body owned,
controlled or substantially financed’. Therefore, the respondent Bank is a
Public Authority within the meaning of the Act and they owe a duty to
disseminate information even suo moto.
Certain
exemptions are listed out under Section 8 of the Right to Information Act, 2005,
two of which are of significance and they read as follows:
’8.
Exemption from disclosure of information:
1)
Notwithstanding anything contained in this Act, there shall be no obligation to
give any citizen – a) …..
b) …..
c) ……
d) ……
e)
information available to a person in his fiduciary relationship, unless the
competent authority is satisfied that the larger public interest warrants the
disclosure of such information;
f) ………
g) …..
h) ….
i) ….
j)
Information which relates to personal information the disclosure of which has no
relationship to any public activity or interest or which would cause
unwarranted invasion of the privacy of the individual unless the Central Public
Information Officer or State Public Information Officer or the appellate
authority as the case may be, is satisfied that the larger public interest
justifies the disclosure of such information.’ Thus the aforesaid provision
leaves no room for any doubt that the ‘Right to Privacy’ fades out in front of
the ‘Right to Information’ and ‘larger public interest’.
32. If
borrowers could find newer and newer methods to avoid repayment of the loans,
the Banks are also entitled to invent novel methods to recover their dues.
Moreover, the petitioner is not entitled to seek the relief of a writ of
mandamus for the flowing reasons also:
(a) It is
a fundamental principle of the Law of Writs that a Writ of Mandamus can be
issued only to compel the performance of a statutory or public duty. But the
prayer made in the present writ petition is to prevent the Bank from the
performance of its public duty.
(b) What
is challenged in the present writ petition, is a notice under Section 13 of the
Sarfaesi Act.
The
petitioner has a statutory remedy of appeal under Section 17 of the Act, without
exhausting which, he is not entitled to invoke the writ jurisdiction of this
Court.
Hence I
find no violation of any right or legal provision in the threat held out by the
respondent Bank to publish the photographs of the borrower and the surety for
the non repayment of the loan. Consequently the writ petition fails and is
dismissed. No costs. Consequently, connected miscellaneous petitions are also
dismissed.”
18) With the deepest of respect I have for the learned Judges who decided the
writ petitions in Archana Chauhan (supra) and K. J. Doraisamy (supra), I have
failed to persuade myself to agree with Their Lordships.
19) The
learned Judge deciding Archana Chauhan (supra) was of the opinion that
publication of photographs is not an impermissible mode. It is neither arbitrary
or illegal nor defamatory.
20)
In my humble view, the opinions recorded in the paragraph extracted supra are
neither backed by any reason nor can be supported with reference to any
provision of the SARFAESI Act or the rules framed thereunder.
It is settled law that broadly, every judgment of a superior courts has three
segments, viz. (i) the facts and the point at issue; (ii) the reasons for the
decision; and (iii) the final order containing the decision. The principle on
the basis whereof a legal issue is answered forms the ratio decidendi of a
judgment. It is the ratio decidendi of a judgment and not the conclusion that
operates as a precedent. The principle, on the basis of which His Lordship
reached the opinions as recorded, is conspicuous by its absence. Opinions,
without anything more, cannot be of much persuasive value and hence I am left
with no other option but to decline to be ad idem with the same.
21) The
learned Judge while deciding K. J. Doraisamy (supra) was of the view that right
to privacy is not absolute and that intrusion into privacy may be made by
legislative provisions. For tracing the legislative provision that intrudes into
the right of privacy, the learned Judge referred to Rule 8 of the Security
Interest (Enforcement) Rules, 2002 (hereafter the Rules) and the contents of
Appendix IV, being the form in which the notice of possession is required to be
given. The learned Judge appears to be right in his observation that Rule 8 read
with Appendix IV provides for a notice not merely to the defaulting borrower but
also to the public in general, but fell in error in observing that the threat of
the bank to publish the photograph of the borrower is also authorized by the
statutory rules. Reading the relevant statutory rules as they presently stand, I
am of the considered view that publication of photograph of a borrower is
neither allowed by express provision nor by necessary implication. The public
may be notified in terms of the statutory rules by issuance of notices in
newspapers/magazines etc. giving the details of the borrower, the loan account,
the location of the secured asset, its measurement, the quantum of secured debt,
etc. but there is no provision in the SARFAESI Act or the rules framed
thereunder authorizing the secured creditor to publish photographs of the
defaulting borrowers.
22)
Reliance placed by the learned Judge on the RTI Act, for concluding that it was
the public duty of the secured creditor in that case to disseminate information
regarding the defaulting borrowers, appears to be misplaced. While not
disagreeing with the learned Judge that information relating to the defaulting
borrowers could be made available to the public by a secured creditor, if it
were a public authority within the meaning of Section 2(h) of the RTI Act, His
Lordship appears to have missed the woods for the tree. A secured creditor,
being a public authority, can make public so much of the information that it is
authorized in terms of the SARFAESI Act. If the SARFAESI Act does not permit it
to publish the photograph of a defaulting borrower, a fortiorari, such
photograph cannot be published by taking aid of the RTI Act.
23)
Lastly, the observations made in paragraph 32 extracted supra appear to me to be
based on a misconception of statutory powers that are exercisable by a public
authority. While a natural person has the liberty of indulging in any act of his
choice unless such act is forbidden by law, for a public authority it is the
other way round. It has no power to act in a particular manner unless it is
authorized by law. The observation that the secured creditors are entitled to
invent novel methods to recover their dues, because the borrowers are finding
newer and newer methods to defraud the secured creditors, can never be
countenanced. Should the Court allow the secured creditors to subvert the rule
of law? If the observation is allowed to represent the correct position of law,
a secured creditor on being resisted to take possession of the secured asset in
terms of Section 13(4) of the SARFAESI Act read with Rule 8 of the Rules need
not take recourse to Section 14 thereof and would be encouraged to use musclemen
to overpower the borrower and take possession.
24) Law is
well settled that the State or its executive officers cannot interfere with the
rights of its subjects unless they could point to some specific rule of law
authorizing the act of interference. It is also well settled principle of law
that when a stature requires a thing to be done in a particular manner, it
should be done in that manner alone or not at all. I proceed to hold on the said
principle that a secured creditor is not free to take any action it wishes for
enforcing its security interest; it is empowered and authorized to take such
action that the statute permits it. There is absolute lack of legislative
sanction in relation to publication of photographs of defaulting borrower(s)/guarantor(s).
The SARFAESI Act and the rules framed thereunder not having conferred any power
on the secured creditors to publish their photographs, they cannot resort to
such action on the ground that publication of photograph is not prohibited. For
the secured creditors, the test is not as to whether publication is prohibited
by the statute but whether such publication is permitted by it. Prohibition has
to be inferred in the absence of express authorization. If the arguments
advanced by the respective learned counsel for the secured creditors were
accepted, the secured creditors would have the carte blanche to invent any
method for recovery of their secured debt throwing asunder the provisions of the
SARFAESI Act.
25) That
apart, the problem could be looked at and answered from a different angle.
There is little doubt that the SARFAESI Act confers wide
powers on the secured creditors to enforce the security interest without
judicial intervention up to the stage of taking measures under Section 13(4)
thereof. Classification of a loan account as non-performing asset, computation
of the quantum of dues and taking over possession of the secured asset upon
rejection of the response to the notice under Section 13(2) are the various
steps that are required to be taken for enforcing the security interest. In
course thereof, the secured creditors may not ordinarily face interference by
the courts, since the vires of the SARFAESI Act has been upheld. It is only at
the stage of Section 17(1) thereof that there is scope for a judicial
determination of the issues raised by a borrower/guarantor by the Debts Recovery
Tribunal having jurisdiction. Till such time the Tribunal is approached and
requested to consider a prayer for interim relief, it is a totally one-sided
affair. The secured creditor unilaterally decides whether one is a defaulter or
not and further as to whether the photograph of such defaulter ought to be
published or not. By no stretch of reasoning can I conceive of the SARFAESI Act
conferring on the secured creditor the unfettered power to act in such manner.
If it were accepted that the secured creditor enjoys the unfettered power of
publishing the photograph of a defaulting borrower/guarantor and does so even
before the Tribunal under Section 17 of the SARFAESI Act could be approached,
and quite some time thereafter the Tribunal under sub-section (3) of Section 17
holds that the secured creditor had acted contrary to the other provisions
thereof while enforcing the security interest under sub-section (4) of Section
13 and ultimately directs restoration of possession, the damage that could be
caused to the reputation and dignity of an honest borrower/guarantor by reason
of publication of his photograph in the interregnum would be irretrievable. It
may not be possible to compensate such damage by money, if a borrower/guarantor,
who has been proceeded against contrary to law by the secured creditor and whose
photograph is published, is unable to bear the ignominy and takes a drastic
step. Since publication of photograph of a defaulting borrower/guarantor has the
potential of exposing him to irreparable loss, injury and prejudice, publication
of photograph cannot be resorted to in the absence of an express power or an
agreed term in this behalf.
26) The
learned Judge’s further observation in K.J. Doraisamy (supra) that a writ of
mandamus can be issued only to compel the performance of a statutory or public
duty and not to prohibit performance of a public duty does not appear to me to
be legally sound, in the given circumstances. It is not the public duty of a
secured creditor to publish photograph of a defaulting borrower and, therefore,
a writ of mandamus may well issue restraining it from indulging in an act which
is manifestly unauthorized.
27) For
the reasons aforesaid, I hold that the decisions in Archana Chauhan (supra) and
K. J. Doraisamy (supra) are not persuasive precedents.
28) Since
legislative sanction is absent, it would be an academic exercise to examine the
other issue as to whether publication of photograph, even if it were authorized
by the statute, would offend Article 21 of the Constitution or not. I allow the
issue to rest here.
29)
Adverting to the letter issued by the Reserve Bank of India, it appears that the
decisions in Archana Chauhan (supra) and K. J. Doraisamy (supra) were duly
noticed. It is considered necessary to reproduce the letter of the Deputy
General Manager of the Reserve Bank of India in its entirety. The same reads as
follows:
Wilful
Defaulters – Publication of Photographs
Please
refer to your letter No. CPP/KKK/120 dated June 06, 207 on the captioned
subject.
2. In this
connection, we advise that on a reference made to IBA, we have been advised by
IBA vide their letter dated June 09, 2007 (copy enclosed) that publishing of
photographs of defaulter borrowers had been challenged in two High Courts
(Madras and Madhya Pradesh) in the recent past and in both cases the courts had
upheld the action of banks. Banks resort to newspaper advertisement (giving
known address, photographs etc.) only when their efforts to serve notices under
the Act fail and communications sent to known postal addresses are returned
undelivered.
3.
Further, they have opined that banks exercise utmost care while dealing with
this sensitive issue. While publishing photos of borrowers along with notices
issued under SARFAESI Act of wilful defaulters/fraudsters etc. could be
justified, it may not be desirable to consider publishing photographs of
defaulter borrowers merely for the reason that dues are outstanding and as a
matter of routine.
4. It may
be added that the SARFAESI Act, 2002 does not mention about publication of
photographs of defaulters. The Possession Notice provides for description of the
immovable property more as a caution to the public at large not to deal with the
property and any such dealings with the property will be subject to the charge
of the Secured Creditor.
5. We,
therefore, concur with the views of IBA in the matter that publishing of
photographs of defaulters should not be resorted to as a matter of routine and
utmost care is to be exercised while dealing with this sensitive issue.
You are
requested to take necessary action in this regard.
30) The
RBI was conscious, despite the decisions in Archana Chauhan (supra) and K. J.
Doraisamy (supra), that the SARFAESI Act does not permit publication of
photograph of a defaulting borrower. The letter at best can be regarded as an
advice rather than expressing any direction or order, having the force of law.
In fact, what the letter observes is to deal with the sensitive issue with
utmost care. The same thus cannot also come to the rescue of Mr. Sinha.
31)
Turning to the contentions raised by Mr. Rai, I record my appreciation for his
valiant effort to defend the indefensible. The purpose(s) which the secured
creditor(s) could achieve by publication of photograph(s) are no doubt laudable
but as submitted by him, resort to legal means would only be permissible to cut
down the losses suffered by the public sector banks and other financial
institutions because of the newer and newer methods adopted by the borrower(s)/guarantor(s)
to deceive. As of now, publication of photograph(s) of defaulting borrower(s)/guarantor(s)
by the secured creditor has to be viewed as taking recourse not to legal but to
extra-legal means.
32) The
decisions cited by Mr. Rai lay down principles of law, which are not in doubt.
But the principles do not apply here because of want of legal authority of the
secured creditors to act in the manner they have threatened to act.
33)
For the reasons aforesaid, the petitioners’
challenge restricted to the threat of publication of their photographs is
upheld. Publication of photographs in newspapers, magazines etc. neither being
permissible in terms of the SARFAESI Act or the rules framed thereunder nor
under any other rule/notification/guideline having binding effect, I further
hold that the threat to publish photographs borders on extra-legal means to
recover the dues. The secured creditors are, accordingly, restrained by a
prohibitory order from taking such recourse.
34)
Insofar as the other reliefs claimed in the writ petitions are concerned, I am
inclined to keep my hands off. Should there be failure on the part of the
defaulting borrowers/guarantors to repay the loan advanced by the secured
creditors, the latter shall be free to proceed against the former strictly in
accordance with law for recovery of the secured debt.
35) The
writ petitions stand disposed of, without costs.
36)
Photocopy of this order, duly counter-signed by the Assistant Court Officer,
shall be retained with the records of W.P. 9850(W) of 2013. Urgent photostat
certified copy of this judgment and order, if applied for, may be furnished to
the applicant at an early date.
(DIPANKAR
DATTA, J.)
