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TMI Blog2016 (12) TMI 461X X X X Extracts X X X X X X X X Extracts X X X X ..... raph of the second petitioner. Interestingly, the second respondent had the photograph of the second petitioner published in the newspapers not at the stage of taking measures under section 13(4) of the Act but at a point of time when at the end of the PNB itself, the right to invoke measures under section 13(4) had not even crystalized. Over and above all these, it appears that the second respondent did not also care to abide by the circular letter dated March 22, 2013 issued by another senior officer of the PNB. It would, therefore, appear that the second respondent has acted in breach of the circular letter dated March 22, 2013. Considering the overall facts and circumstances, it appears to be crystal clear that the second respondent has grossly abused his authority. This is not a fit and proper case for any compensation to be awarded by the court of writ to the petitioners. While declining compensation, liberty to approach the appropriate forum for recovery thereof in accordance with law is reserved. As having regard to the findings recorded above that the second respondent grossly exceeded his authority in publishing the demand notice in the newspapers with, int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment). It also revealed invocation of power by the second respondent conferred on him by rule 3 of the Security Interest (Enforcement) Rules, 2002 (hereafter the Rules). Since the proviso to rule 3(1) ordains reason to believe that the borrower or his agent had been avoiding service as a precondition for publication of a demand notice issued under section 13(2) of the Act in two newspapers having wide circulation, by an order dated July 22, 2015 the Bench had called upon Ms. Rao, learned advocate for the respondents to show how the second respondent had formed the opinion that publication of the demand notice in its entirety in two daily newspapers with the photographs of the directors of the first petitioner was necessary to take the proceedings initiated under the Act to its logical conclusion. On July 29, 2015, Ms. Rao submitted that there was no record from which formation of opinion could be discerned. Such submission was recorded in the order that was passed on that day. Having regard thereto, Mr. Huda, learned advocate for the petitioner was also requested to obtain instructions from the petitioners as to whether an apology of the first respondent (hereafter the PNB), pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and the ingredients connected therewith are fulfilled and satisfied. 3. That, without prejudice to the legal submissions made herein above, the following facts may also be taken into consideration by this Hon ble Court: (a) That the petitioner no. 1 was sanctioned various credit facilities by Punjab National Bank under consortium with State Bank of India as the Lead Bank. The account of the petitioner No. 1 with Punjab national Bank was classified as NPA on 28th February 2015. The present outstanding in the account is ₹ 3,95,25,425.00 (Rupees Three Crore Ninety Five Lacs Twenty Five Thousand Four Hundred and Twenty Five only), charges and further interest at the agreed rate w.e.f. 1.03.2015 till the date of realization. (b) That State Bank of India had issued notice under Section 13(2) of the SARFAESI Act, 2002 to the petitioner Company on 2.1.2015 for recovery of their dues of ₹ 34,23,09,312.11 as on 02.01.2015, while Punjab National Bank issued notice to the petitioner Company on 17.03.2015 under Section 13(2) of the SARFAESI Act, 2002. Although State Bank of India did not publish photographs, the obligants have filed writ petition against State Bank o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Banks can publish the photographs of defaulters. (k) That the order of Calcutta High Court in the case of Ujjal Kumar Das vs. state Bank of India 2013(2) Cal LT 639 is under challenge before the Division Bench of this Hon ble Court. (l) That the Supreme Court did not admit the SLP filed by the party against the judgement of Bombay High Court. (m) That in view of the foregoing, it is respectfully submitted that if compensation is imposed in the present case, such an order will send a wrong signal to the borrowers and guarantors and may even have the effect of encouraging such borrowers and/or guarantors to commit default in repayment of bank dues without fear of any retribution. (n) That having regard to the above, it is once again submitted that this Hon ble Court be graciously pleased to accept the contentions as submitted above and drop the issue of payment of any compensation at this stage. 4. The said affidavit was taken on record and, thereafter, the parties were called upon to exchange their respective affidavits touching the merits of the claim raised in the writ petition. The affidavits having been exchanged, the writ petition was finally listed for hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should not resort to publication of photographs of defaulters unless and until there are special circumstances where the borrower with mala fide intention is committing any of the Acts envisaged in the guidelines of RBI which would categorize him as a willful defaulter. In those circumstances the authority can act for public good/public interest for good reasons by publication of photographs, names and addresses of defaulting borrower(s)/guarantor(s). If publication of photographs is otherwise implemented as a routine, there is bound to be serious impact on economy because if a genuine borrower becomes defaulter for various reasons other than the reasons to treat him as willful defaulter in terms of guidelines of RBI, such genuine defaulter would be faced with situation where no one would come forward to assist him to come out of the financial crisis. There should not be publication of photograph before proceeding with further course of action under SARFAESI Act only with a view to pressurize the defaulter/guarantor to repay the loan. In other words it would amount to undue influence or pressure coming in the way of rights of the borrower attracting Article 21 A of the Constituti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive precedent, some reason ought to be assigned. That is exactly the law laid down by the Supreme Court in the decision reported in (2008) 14 SCC 283 : Pradip J. Mehta v. Commissioner of Income Tax, Ahmedabad. In paragraph 23 of the decision, the Supreme Court stressed the need for the high courts to either record its agreement or dissent with the decision of any other high court that is placed before it. It was also stressed that the high court, which differs with the view taken by the other high court, in all fairness, must record its dissent with the reasons therefor. Being bound thereby, this Bench treads the path of assigning reasons for not being ad idem with the decisions in D.J. Exim (supra), Shri Mohan Products (supra) and K.V. Wall Mount Pvt. Ltd. (supra). 11. In D.J. Exim (supra), a demand notice under section 13(2) of the Act was issued on October 1, 2013 whereafter by a letter dated October 10, 2013, the secured creditor threatened to publish the photographs of the directors and the guarantors in the newspapers. It was at that stage that the writ petition was presented challenging the letter dated October 10, 2013. The threatened action of the secured creditor was s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wer, whereas rule 8(2) does not expressly so enable. Disclosure of the name and address of a borrower when immovable secured assets are to be sold could at best be construed as an implied power flowing from clause (f) under the proviso, and not as a right that clearly flows from rule 8 (as held in paragraph 19 of the decision). There being absolutely nothing in the parent enactment conferring authority on the secured creditor to publish the photograph of a defaulting borrower, it would amount to stretching the Rules to absurd limits to read into it the authority of a secured creditor to do so. It is well-known that a subordinate legislation supplements and cannot supplant the enactment to which it owes its origin. The Act being a self-contained code, it would be disastrous to read it and the Rules in a manner that would confer on authorized officers unfettered, unbridled and unchartered power while issuing sale notices. The rule framing authority must have been conscious of the consequences if an express power to publish photographs of defaulting borrowers were conferred on the authorized officers, and bearing the same in mind must be presumed to have chosen not to confer such powe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tograph of the second petitioner. Such paper publications were attacked by the first petitioner in such objection by terming it to be illegal, wrongful, and arbitrary, and in abuse of the process of law. That apart, several contentions were raised by the first petitioner and it was ultimately prayed that each and every point raised may be dealt with and should the second respondent be not agreeable to accept the points of objection, rescheduling/restructuring may be worked out for putting things in order. The second respondent while rejecting the objection of the first petitioner by his letter dated May 30, 2015, observed as follows: The said demand notice addressed to Shri Susil Kumar Pal, Director of the Company was returned undelivered by the postal authorities. As such, the said demand notice was published in the newspapers Times of India and Ananda Bazar Partika on 05.04.2015. 19. Referring to the above extract, Mr. Chowdhury contended that nonacceptance of the demand notice under section 13(2) of the Act by the said Sushil Kumar Pal could not have afforded any ground to the respondents to publish the demand notices in two newspapers having wide circulation without ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... August 21, 2015, issued by the PNB on the issue of publication of photographs of defaulting borrowers and contended that the sentiments expressed by this Bench earlier had been noted with due care and seriousness and instructions had been issued not to publish photographs of defaulters in the print media. He also submitted that since the instructions were being duly followed since then, the petitioners are not entitled in law to cash on a slip on the part of an authorized officer and seek compensation by invocation of public law remedy. Several decisions were cited by him to support the contention that the petitioners ought to approach the civil court claiming compensation, if at all, and that the writ court is not the appropriate forum for such purpose. 22. Based on the relevant pleadings and the arguments that were advanced, the limited points that have emerged for decision are : (i) what is the legal position regarding publication of a demand notice under section 13(2) of the Act in two newspapers having wide circulation with the photograph of a director/guarantor? (ii) whether the second respondent transgressed his powers or not in having such demand notice published w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in section 13(4). Invocation of power is, thus, not at the fancy and whims of a secured creditor. The guidelines flowing from judicial pronouncements have to be scrupulously followed. Reading a power to publish photograph along with the demand notice in a newspaper before a stage is reached where the secured creditor is legally authorized to enforce the security interest without intervention of the court or tribunal, would not only be anomalous but in clear derogation of the limited rights that are available to a defaulting borrower/guarantor. 26. The first point is thus answered by holding that the statute does not conceive conferring power on a secured creditor/its authorized officer to publish a demand notice in a newspaper without having reasons to believe that such publication is imperative having regard to the facts and circumstances before it and that at such stage, there is no question of reading a power of publication of photograph in the newspapers along with the demand notice. The manner of service of the demand notice is provided by rule 3 of the Rules. Rule 3 reads as follows: 3. Demand Notice.- (1) The service of demand notice as referred to in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnative 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 requirement of formation of opinion, which must be available in the record, is the sine qua non and the law cannot be observed in the breach. 29. As has been recorded in the order dated July 29, 2015, referred to above, there appears to be no record maintained by the respondents in relation to having reasons to believe that publication of the demand notice in the newspapers has become absolutely essential for making the borrower/guarantor aware of what is required of him/them. The sine qua non is thus conspicuous by its absence. That apart, no answer could be given by Mr. Saha as to why the photograph of the second petitioner was published despite the admitted fact of he having received the demand notice. Evasion of notice by the said Sushil Kumar Paul, if at all, could not have given rise to any situation warranting publication of the photograph of the second petitioner. There cannot thus be any doubt that the second respondent has conducted himself in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25/-. b) How while issuing notice under Section 13(2) of the SARFAESI ACT 2002, how the petitioners have not complied with the provisions of Section 13(9) of the said Act. c) How as per their Notice dated 17.03.2015 under Section 13(2) of SARFAESI ACT 2002 table given in page 2, claiming facilities availed by Petitioner from Respondent Branch. The statement of accounts, documents and earlier correspondences from Respondent No. 1 contradicts schedule of facilities claimed were made available to petitioner. Their Notice is defective to that extent. 34. Insofar as the grounds urged in support of the relief claimed in the writ petition are concerned, it appears that Grounds XXIII and XXIV pertain to the action of the respondents in publishing the photograph of the second petitioner. These are all in the writ petition with regard to publication of the photograph of the second petitioner in the two newspapers. 35. Mr. Saha s submission that any pleading of the second petitioner suffering damage/loss/injury to his reputation and goodwill is conspicuous by its absence, appears to be correct. 36. This Bench, therefore, holds that this is not a fit and proper case for any com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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