SARFAESI demand notices cannot routinely carry borrower or guarantor photographs unless substituted service conditions are satisfied.

At the SARFAESI demand-notice stage, a secured creditor may issue notice under section 13(2) only within the limited authority of the Act and Rules, and newspaper publication does not extend to publishing a borrower's or guarantor's photograph unless the narrow conditions for substituted service are met and the record shows the requisite reason to believe that service was being evaded. The article also notes that publication of the second petitioner's photograph was unauthorised where there was no such contemporaneous basis and the bank's own circular prohibited it. Corrective relief and costs were considered appropriate, while compensation was declined for want of proper pleading of specific harm.

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Issues: (i) whether a secured creditor can publish a demand notice under section 13(2) of the SARFAESI Act in newspapers with the photograph of a director or guarantor, (ii) whether publication of the notice with the photograph of the second petitioner was authorised in law, and (iii) what relief, if any, the petitioners were entitled to on the facts.

Issue (i): whether a secured creditor can publish a demand notice under section 13(2) of the SARFAESI Act in newspapers with the photograph of a director or guarantor.

Analysis: Section 13(1) permits enforcement of security interest only in the manner authorised by the Act. At the stage of a demand notice under section 13(2), the creditor merely calls upon the borrower to discharge liability within sixty days, and coercive measures under section 13(4) arise only thereafter. Rule 3(1) of the Security Interest (Enforcement) Rules, 2002 permits publication in newspapers only where the authorised officer has reason to believe that the borrower or agent is avoiding service, and the record must reflect that formation of opinion. The power to publish the contents of the notice cannot be expanded into a general power to publish photographs, especially before recourse to section 13(4) becomes available.

Conclusion: A secured creditor has no routine power to publish a section 13(2) demand notice with a borrower's or guarantor's photograph, and such publication is permissible only within the narrow statutory conditions for substituted service, if at all.

Issue (ii): whether publication of the notice with the photograph of the second petitioner was authorised in law.

Analysis: The record did not disclose any contemporaneous material showing the requisite reason to believe that service had been evaded. The notice had already been received by the concerned petitioner, yet the photograph of another petitioner was published. The action also breached the bank's own circular directing that photographs of directors or other authorised persons in company matters should not be published. The conduct therefore exceeded the authority conferred by the Act and the Rules.

Conclusion: The second respondent acted without authority in publishing the demand notice with the photograph of the second petitioner.

Issue (iii): what relief, if any, the petitioners were entitled to on the facts.

Analysis: Although the publication was held unlawful, the pleadings did not make out a proper basis for awarding compensation in writ jurisdiction, as there was no adequate pleading of specific damage to reputation or goodwill. Nevertheless, the unlawful publication warranted corrective relief and costs.

Conclusion: Compensation was declined, but an apology publication and costs were directed in favour of the petitioners.

Final Conclusion: The publication of the borrower's or guarantor's photograph at the demand-notice stage was held unauthorised, and the writ petition was disposed of by granting corrective relief and costs while rejecting the claim for compensation.

Ratio Decidendi: A secured creditor cannot, at the section 13(2) stage, publish the contents of a demand notice with a borrower's or guarantor's photograph unless the statutory preconditions for substituted service are satisfied and the action remains within the limited authority conferred by the Act, the Rules, and any applicable bank instructions.

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