2006 (11) TMI 343 - HC - Companies Law

Issues Involved:
1. Right of Bank/Financial Institution to publish the photograph of a defaulting borrower.
2. Violation of Article 21 of the Constitution (Right to Privacy).
3. Fiduciary duty of Banks to maintain secrecy and confidentiality.
4. Applicability of the Right to Information Act, 2005.
5. Availability of statutory remedies under the SARFAESI Act.

Detailed Analysis:

1. Right of Bank/Financial Institution to publish the photograph of a defaulting borrower:
The primary issue is whether a bank or financial institution has the right to publish the photograph of a defaulting borrower in newspapers. The court noted that banks and financial institutions have been compelled to devise innovative methods to recover dues due to the increasing trend of borrowers defaulting on loans. The Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (SARFAESI Act) was enacted to regulate the securitisation and reconstruction of financial assets and enforcement of security interest. Section 13(4) of the SARFAESI Act authorizes the bank to take possession of the secured asset and sell it, and Rule 8 of the Security Interest (Enforcement) Rules, 2002, prescribes the procedure for such sale, including issuing a possession notice to the borrower and the public. The court found that the statutory rules authorize the bank to publish the photograph of the borrower and the surety.

2. Violation of Article 21 of the Constitution (Right to Privacy):
The petitioner argued that publishing the photograph would violate Article 21 of the Constitution, which guarantees the right to life and personal liberty, including the right to privacy. The court discussed the evolution of the right to privacy through various judicial pronouncements, noting that while the right to privacy is part of the right to life, it is not absolute. The court cited several cases, including Govind v. State of M.P. and R. Rajagopal v. State of Tamil Nadu, which held that the right to privacy is subject to case-by-case development and can be lawfully restricted for the prevention of crime, disorder, or protection of health or the rights and freedoms of others. The court concluded that the right to privacy is not absolute and can be superseded by larger public interest or the bank's own interest under certain circumstances.

3. Fiduciary duty of Banks to maintain secrecy and confidentiality:
The court examined the fiduciary duty of banks to maintain secrecy and confidentiality towards their customers. It cited the case of Shankarlal Agarwalla v. State Bank of India, which held that banks are under an obligation to secrecy but can disclose information under certain circumstances, such as compulsion by law, public duty, or the bank's own interest. The court also referred to the case of Kattabomman Transport Corporation Ltd. v. State Bank of Travancore, which reiterated that banking practices in India follow the same principles as in England, allowing disclosure of information to protect against fraud or crime. The court concluded that the duty of secrecy is superseded by larger public interest or the bank's own interest under certain circumstances.

4. Applicability of the Right to Information Act, 2005:
The court noted that with the advent of the Right to Information Act, 2005, banks are obliged to disclose information to the public. Section 3 of the Act entitles all citizens to a right to information, and Section 4(2) requires public authorities to provide as much information suo motu to the public. The respondent bank is considered a public authority under the Act and owes a duty to disseminate information. The court highlighted that certain exemptions under Section 8 of the Act, such as information available in a fiduciary relationship or personal information, can be overridden by larger public interest. The court concluded that the right to privacy fades out in front of the right to information and larger public interest.

5. Availability of statutory remedies under the SARFAESI Act:
The court emphasized that the petitioner has a statutory remedy of appeal under Section 17 of the SARFAESI Act, which he has not exhausted. The court noted that a writ of mandamus can only be issued to compel the performance of a statutory or public duty, but the petitioner is seeking to prevent the bank from performing its public duty. The court found no violation of any right or legal provision in the bank's threat to publish the photographs and dismissed the writ petition.

Conclusion:
The court concluded that the bank's threat to publish the photograph of the borrower and the surety is authorized by statutory rules and does not violate any right or legal provision. The writ petition was dismissed, and the petitioner was advised to exhaust the statutory remedy of appeal under the SARFAESI Act.

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