2015 (5) TMI 194 - HC - Indian Laws

Restructuring the loan account - Publish of photographs - Held that - Whatever has to be done fairly and is also regarded as incidental to or consequential upon those things which the legislature has authorised to do ought not to be held by judicial construction to be ultra vires. In the present case, rule 8 specifically authorised the bank to publish the names and addresses of the wilful defaulters. There is no legal bar either in the said rule or under any provisions of the Act which expressly prohibits the bank from publication of photographs and, therefore, the action of the bank in publishing the photographs cannot be held to be ultra vires. Ratio of the judgment 1982 (3) TMI 258 - SUPREME COURT , in our view, squarely applies to the facts of the present case.

Issues Involved:
1. Validity of the impugned letter dated 10.10.2013 issued by the respondents.
2. Legality and constitutionality of publishing the photographs of the petitioners' directors/guarantors.
3. Decision on the proposal for restructuring the loan account of the petitioners.

Detailed Analysis:

1. Validity of the Impugned Letter:
The petitioners sought a writ of mandamus to quash the letter dated 10.10.2013 from the respondents, which threatened to publish the photographs of the petitioners' directors/guarantors if the loan was not regularized within 10 days. The court noted that the petitioners had defaulted on their loan repayments and the bank had initiated proceedings under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. The court found no fault in the bank's actions, as the petitioners admitted their inability to pay the due amounts and had sought loan restructuring. The court upheld the validity of the impugned letter.

2. Legality and Constitutionality of Publishing Photographs:
The petitioners argued that publishing their photographs was illegal, unconstitutional, and violated their right to privacy. They contended that neither the Act nor the rules authorized such publication. The respondents countered that the publication was justified in cases of wilful defaulters and those guilty of misfeasance, and that there was no legal bar against publishing photographs. The court examined Rule 8 of the Securitization Rules, which allows the publication of names and addresses of wilful defaulters to caution prospective buyers and inform the public. The court concluded that publishing photographs served the same purpose and was permissible, especially in cases involving acts of misfeasance. The court referenced the Supreme Court's judgment in V.T. Khanzode v. Reserve Bank of India, which supported the incidental powers of statutory bodies to carry out their authorized functions. Thus, the court ruled that the publication of photographs was not ultra vires and did not violate the petitioners' rights.

3. Decision on Loan Restructuring Proposal:
The petitioners sought a direction for the respondents to decide on their loan restructuring proposal. The respondents argued that the petitioners had committed acts of misfeasance, including diverting funds and obtaining loans without consent, which justified rejecting the restructuring proposal. The court noted that the bank had followed an internal mechanism to assess the petitioners' conduct and had a policy to publish photographs only in cases of wilful default and misfeasance. Given the findings against the petitioners, the court found no grounds to interfere with the bank's decision to reject the restructuring proposal.

Conclusion:
The court dismissed the petition, upholding the validity of the impugned letter and the legality of publishing the petitioners' photographs. The court found no merit in the petitioners' arguments and ruled in favor of the respondents. The bank's statement to refrain from publishing the photographs was extended for three weeks to allow the petitioners to seek further legal remedies.

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