You Be The Judge

“It’s Mine” - “No, It’s Mine”

This is not to sound racist and must be taken in the right spirit—as a case of mistaken identity. We always used to say that all Chinese look alike, which is that it would be difficult to tell one apart from the other. But, of course, it was an exaggeration.
Yet, that sort of a thing is not far removed from reality.

Sikhs wear turbans. They are also quite hirsute. This is what happened when even the cars they drove were similar.

Remember how banks, till some time ago, used strong-arm methods to recover their dues. When they faced flak from the courts, they shifted the muscular arm-twisting to what was euphemistically termed ‘collection agents’. Many of them turned out to be no less than the guys that the Dons and the Nosa Costra send out.

Accidents happen. Independently, no one even notices the stray occurrences. But a number of them can happen together. One such constellation occurred some years back at Wagle Estate in Thane. A borrower had taken a loan on a car. He was a Sikh gentleman but even gentlemen can default, sometimes. The bank decided enough was enough. It let loose the ‘agents’ who promptly took up their positions outside the Estate.

Soon they saw their quarry. Sikh. Car. Nab him. Only it wasn’t ‘he’. It was another Sikh who did not know what the hell was going on. Unluckily for him, he had an almost identical car.
Now, you be the judge.

The court came down heavily on the bank. Any advocate worth his salt would have foreclosed the bank, instead of the poor guy. The damages should have been so heavy as to make the Sikh gentleman the owner not only of the car but of the bank itself.

Anyway, the net result was such a public outcry that the ‘agents’ were put out of business. Some time back, we had talked of a civilised society and the rule of law. People cannot take the law into their own hands.

We move to America. A woman in Ohio stayed across the street from another house. She went out, leaving her home locked. When she got back, she discovered that the house had been cleared out. And, new locks installed!

Again, it turned out to be a bank. The mistaken identity turned out to be the fault of the GPS system that pointed to the wrong house. And, since the home was not kept up-to-date, the bankers assumed it to be the home of the borrower who they presumed had run away.
The woman sued. As is usual with the big guys compared to the small ones, instead of settling the claim, the bank asked for receipts of all the goods they had ransacked. The woman said that any such receipts would be in the very belongings that the bankers had taken away.

Now, you be the judge. If you were the woman’s lawyer, what would you do? Charge the bank and its managers and directors with house-breaking, theft, destruction of property, unlawfully restricting her entry and compensation for mental and physical cruelty, coupled with loss of reputation. Can you think of any more charges? Maybe we will now have a new bank owner! We shall soon be writing of another such incident of high-handedness in America in the 1950s in Chicago. It happened to the aunt of the writer’s friend, Don Roeslar, then working with the US embassy in Bombay.

Bapoo Malcolm is a practising lawyer in Mumbai. Please email your comments to [email protected] or [email protected]


Banks Increase Fixed Deposit Rates

Close on the heels of the Reserve Bank of India (RBI) taking steps to squeeze liquidity, banks raised deposit rates to attract funds from retail investors.

     Deutsche Bank increased its interest rate offering on the 100-101 days to 180 days buckets to 8.50%. New rates are effective 31 July 2013.

     HDFC Bank raised rates by 1%, for maturities between 15 days to six months one day, and by 0.75% for maturity buckets less than one year but over six months one day, effective 27th July.

     Axis Bank raised interest rate on deposits with maturity between 14-29 days to 8%, while for 7-14 days, rates have increased to 7.5% on bulk deposits above Rs1 crore, effective 31st July. Simultaneously, the Bank raised interest rate by 0.5% to 2.25% across various maturities of less than one year but over 29 days.

     Yes Bank also revised its fixed deposit rates by 0.25%to 0.5% of select tenors.


Publishing defaulters’ photo ‘a recourse to extra-legal means’ rules Calcutta High Court

The judgment pointed out an important fact that default might not always be a willful act and in such a case, the self-respect and honour of a borrower should not be taken away by publishing his photograph

The Calcutta High Court (Court) recently disposed of two writ petitions (WP) by passing an order restricting secured creditors to publish photographs of defaulting borrowers in newspapers/ magazines and termed the act as ‘impermissible’. The Court was of the opinion that such a common practice of the secured creditors is an act which resorts to ‘extra-legal means’ in the process of enforcing their security interest under the Securitisation and Reconstruction of Financial Asset and Enforcement of Security Interest Act, 2002 (SARFAESI Act).

The much-awaited judgment of the Court came, while simultaneously hearing the matters of Ujjal Kumar Das & Anr v/s State Bank of India & Ors (WP 10315 (W) of 2013) and Allianz Convergence Pvt Ltd v/s The General Manager, State Bank of India & Anr (WP 9850 (W) of 2013). The subject matter of the petitions was that whether a secured creditor who has already initiated action under the SARFAESI Act for the enforcement of their security interest is allowed to publish photograph of the defaulting borrowers in newspapers/ magazines or not? While passing the judgment, Justice Dipankar Dutta strictly adhered to provisions of the SARFAESI Act and Security Interest (Enforcement) Rules, 2002 (Rules) regarding enforcement of security interest. The judgment was based on the following observations of the court:

  • Rule 8 of the Rules and Appendix IV stipulates the form in which the ‘notice of possession’ is to be given. But it does not authorize the secured creditor to publish the photograph of the defaulting borrower.
  • Publishing photograph of the defaulting borrower is neither explicitly mentioned in the provisions of the law nor by necessary implication.
  • Notice to the borrower and public at large can be given in newspapers/ magazines, which shall contain details of the borrower, the loan account and details of the secured asset. But the law does not authorize a secured creditor to publish photographs.
  • A ‘public authority’ cannot act on any particular matter until and unless expressly authorized by the law. A public authority cannot act merely on the fact that ‘something is not prohibited by the law can be enacted’.
  • A secured creditor can act to the extent it is empowered and authorized to act and in the manner as stipulated in the statute. As the Act stipulates the exact procedure for the enforcement of the security interest, any method adopted apart from that will be held as resorting to ‘extra-legal means’. Thus, if the Act does not permit the publication of photographs, such photographs cannot be published.
  • A borrower is entitled to an alternative remedy under section 17 (approaching the Debt Recovery Tribunal or DRT) of the SARFAESI Act only after the secured creditor has initiated action under section 13 of the Act. Now, if the DRT holds that the secured creditor has acted contrary to the provisions of the Act and orders restoration of possession to the borrower, the damage and prejudice caused to the borrower by such publication of his photograph is irreparable.

The Court separated itself from the judgment of the Madras HC (KJ Doraisamy v/s the Assistant General Manager, State Bank of India, Erode Branch, 2007 136 Comp. Case 568) and the Madhya Pradesh High Court (Archana Chauhan v/s State Bank of India, Jabalpur, AIR 2007 Madhya Pradesh 45)  given earlier on similar matters. Both these HCs upheld the contentions of the banks/ financial institutions of publishing photographs ‘permissible’ as it is not prohibited by the law. The Calcutta High Court strictly opined that dissemination of information by the secured credited about the borrower can be done only if it is a ‘public authority’ as per section 2(h) of the Right to Information Act, 2005, and banks being a public authority shall be entitled to such dissemination to the extent authorized by the SARFAESI Act.

“Public authority" means any authority or body or institution of self-government established or constituted-

              (a) by or under the Constitution;
              (b) by any other law made by Parliament;

 (c) by any other law made by State Legislature;
 (d) by notification issued or order made by the appropriate Government, and  includes any-

 (i) body owned, controlled or substantially financed;
(ii) non-Government organisation substantially financed, directly or indirectly by funds provided by the appropriate Government;


The judgment of the Court pointed towards one most important fact that default may not always be a willful act of the borrower and in such a case, the self-respect and honor of a borrower should not be taken away by publishing his photograph in the newspaper/ magazine like a criminal. Default in repaying a loan cannot in any way be regarded as a criminal offence as it is a civil wrong. In the process of enforcing the security interest under the SARFAESI Act, the possession of the secured asset in question is taken by the secured creditor and then the notice of possession is given by the secured creditor. In such a scenario, the borrower first loses his property as a result of his loan account being classified as non-performing asset (NPA) by the bank/ financial institution and thereafter has to face the embarrassment of the photograph published in a negative manner.

Default in paying a loan amount may result from a common person’s inability to pay at that moment of time. Once the photograph of a person is published in a newspaper/ magazine in such negative manner, the social life of that person gets affected. The shame and harassment he has to face is beyond imagination. There are several instances where such publications have resulted in unfortunate incidents. Protecting the privacy and dignity of the customers is the legal and moral responsibility of the banks/ financial institutions. But, the present practice of publishing their photographs depicts the lack of concern which has been rightfully curbed out by the decision given by the Calcutta High Court. Thus, the judgment stands as a landmark of the dynamism, progressive and just nature of our judiciary system. It is by far the first step taken by the system to protect the morale of a borrower who may not have defaulted willfully.

(The writer can be contacted at [email protected] )



AV Bagur

3 years ago

This is by far one the best judgments since 2002 to protect the self interest of borrowers who are being hounded and treated like street dogs by banks. A default can happen due to 10s and 100s of reasons it cannot be attributed to the entrepreneurs lack of professional skills or he being a willful defaulter.

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