Photographs of defaulting borrower cannot be published in newspapers in routine manner for pressurising defaulting borrower to repay dues

High Court of Calcutta : Deciding on an important issue relating to the publication of the demand notice under Section 13(2) of the SARFAESI Act, 2002, apart from being served on the petitioners, was also published in two daily newspapers along with the photograph of the second petitioner, by the second respondent, the Bench comprising of Dipankar Datta,  JJ., observed that that a secured creditor is not entitled to publish the photographs of defaulting borrowers in a routine manner for pressurizing a defaulting borrower to repay the dues rather only if the secured creditor has reason to believe that the borrower is evading service of the demand notice and that alternative modes of service have been exhausted without seemingly positive result in view thereby making it imperative to proceed for the last option i.e. publication in newspapers, that recourse thereto could be taken.

The writ petition has been filed by the petitioner challenging the demand notice issued by the second respondent along with the rejection of the petitioner’s objection to the demand notice. The petitioner alleges that the action of the second respondent of publishing the demand notice along with the photographs of the first petitioner to be illegal, wrongful, and arbitrary, and in abuse of the process of law. However, the second respondent had apparently justified it stating that they had reasons to believe that the “borrowers/directors of the borrowing company are avoiding service of demand notice issued to them” in order to avoid repayment of the dues of the bank further it submitted that since the pleadings submitted by the petitioner does not claim any damages or injury or loss to their reputation and goodwill hence no compensation should be awarded.

The Court relying on  Ujjal Kumar Das v. State Bank of India, 2016 (3) CHN (CAL) 703, held that publishing the photographs of borrowers/defaulters is not a mode contemplated under the SARFAESI Act, 2002 rather the secured creditors should not resort to publication of photographs of borrower/defaulters unless and until there are special circumstances where the borrower/defaulter with malafide intention is committing any of the Acts envisaged in the guidelines of RBI which would categorize him as a willful defaulter or in case if the secured creditor has exhausted all the alternatives modes of serving the demand notice without seemingly positive result in view thereby making it imperative to proceed for the last option i.e. publication in newspapers . The Court disposed the writ petition thereby directing the second respondent to publish an apology in all the newspapers wherein it had published a demand notice with the photograph of the second petitioner . [Metsil Exports Private Ltd.v. Punjab National Bank, 2016 SCC OnLine Cal 6173, decided on 10th November 2016]

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