2015 (3) TMI 504 - HC - Indian Laws

Default in repayment of loan - Publication of photographs of defaulters in the newspapers - One time settlement pending adjudication before the Debts Recovery Tribunal - Held that - I pronounce no view with regard to the validity, legality or sufficiency of the one time settlement claim to be arrived at between the parties. The Debts Recovery Tribunal or any other forum competent in law to adjudicate such issue will do so. So far as the publication of photographs of the writ petitioners in the newspapers and other places are concerned, as laid down in Ujjal Kumar Das 2015 (2) TMI 1046 - CALCUTTA HIGH COURT , the bank has no power to do so under the SARFAESI Act, 2002 or the Rules framed thereunder. The Kerala High Court in Venu 2015 (3) TMI 438 - KERALA HIGH COURT has laid down that the bank cannot publish advertisement in violation of Article 21 of the Constitution of India. Significantly both the aforesaid two decisions were rendered against the State Bank of India. State Bank of India in spite of such decisions is persisting in continuing with threats of publication of photographs in the newspapers and other places. In view of the ratio in Ujjal Kumar Das and Venu , the order impugned before me dated September 10, 2014 issued by State Bank of India cannot be sustained and is hereby quashed. - Decided in favour of appellant.

Summary

Issues:
Challenge to letter threatening publication of photographs and names by State Bank of India, validity of one-time settlement, authority to publish photographs of defaulters, adjustment of deposited sum, legality of one-time settlement, publication of photographs, method of adjustment of deposited sum, default consequences.

Analysis:
The writ petition challenges a letter threatening to publish photographs and names issued by State Bank of India. The petitioners sought a one-time settlement, which is disputed and pending before the Debts Recovery Tribunal. The bank claimed authority to publish photographs of defaulters under RBI's Master Circular, alleging the petitioners as wilful defaulters. The petitioners did not make a representation to the Grievance Redressal Committee. The court refrained from deciding the validity of the one-time settlement, leaving it to the Tribunal.

The court ruled that the bank lacked the power to publish photographs of defaulters under the SARFAESI Act or its rules. Referring to previous judgments, the court quashed the impugned order. Regarding the offer to deposit a sum monthly, the court allowed the petitioners to pay Rs. 20 lakhs monthly towards the bank's claim. The payment would be adjusted towards principal and interest, subject to the Tribunal's decision. The court clarified that no judgment was made on the settlement's validity or the pending dispute.

The court emphasized that the payment and acceptance would not affect the parties' rights and contentions. In case of default, the bank could proceed against secured assets. The court disposed of the petition, with no costs awarded, and deemed the respondents to have denied the allegations in the absence of affidavits. The judgment maintained that the Tribunal would provide final directions on the adjustment of payments to the bank.