In a significant judgment, the Kerala High Court has declared that banks cannot coerce loan defaulters into repayment by publishing their photographs and personal details. Justice Murali Purushothaman emphasized that such actions infringe upon an individual's right to privacy and tarnish their reputation, violating Article 21 of the Indian Constitution, which guarantees the right to life and personal liberty.
The case arose when the Chempazhanthi Agricultural Improvement Co-operative Society displayed a flex board at their headquarters, featuring the names and photographs of defaulting borrowers. This action was challenged following a directive from the Assistant Registrar of Co-operative Societies, who ordered the removal of the display. The bank defended its actions by stating that previous attempts to recover the dues had failed, and that publicizing defaulters' details had led to successful recoveries, prompting plans for further such displays.
The bank further argued that their method was akin to the traditional practice of "tom-tomming," referenced in Rule 81 of the Kerala Co-operative Societies Rules, 1969. This rule permits public announcements during the attachment and sale of immovable properties. However, the court dismissed this comparison, labeling "tom-tomming" as an outdated and primitive method, and refrained from ruling on its legal validity, as it was not directly pertinent to the case at hand.
Justice Purushothaman asserted that borrowers cannot be forced into repayment through threats that damage their reputation and invade their privacy. He stated, "The publication or display of photographs and other details of defaulting borrowers in public will be an invasion on the right of the borrowers to live with dignity and reputation." The court highlighted that such methods are not sanctioned by any existing laws or regulations governing debt recovery.
This ruling underscores the judiciary's commitment to upholding individual rights against coercive and extrajudicial recovery practices. It serves as a reminder to financial institutions to adhere strictly to lawful procedures when dealing with loan defaults, ensuring that recovery efforts do not infringe upon the fundamental rights of individuals.
The court's decision aligns with previous judgments that have condemned similar practices. In 2013, the Kerala High Court deemed the publication of defaulters' photographs in newspapers by the State Bank of India as arbitrary and illegal, emphasizing that such actions lack legislative backing and violate the right to live with dignity.
In conclusion, the Kerala High Court's recent judgment reinforces the principle that while financial institutions have the right to recover dues, they must do so within the bounds of the law, respecting the constitutional rights of individuals. Public shaming tactics not only violate privacy and dignity but also lack legal sanction, rendering them impermissible in a civilized society.
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