TaxTMI 
TaxTMI 
2016 (12) TMI 461
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....published in two daily newspapers (the respective editions of ANANDA BAZAR PATRIKA and THE TIMES OF INDIA, dated April 5, 2015) with the photograph of, inter alia, the second petitioner, a director of the first petitioner. Such publication also contained photographs of two other directors of the first petitioner. 3. The demand notice published in the newspapers at the instance of the second respondent revealed that he had reasons to believe that the "borrowers/directors of the borrowing company are avoiding service of demand notice issued to them". Queerly, the impugned rejection letter dated May 30, 2015 referred to receipt of the demand notice by the petitioners on March 18, 2015 (as per track report of the postal department). 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 c....
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....so the fact that the judgement of this Hon'ble Court rendered in 2013 is also a subject matter of appeal, the issue of publishing of photographs of the defaulting borrowers has to be finally decided by the Hon'ble Apex Court. (d) That though a formal Affidavit in defence to the writ petition is being separately filed by the respondent bank, it is most humbly submitted that the writ petition itself is based on disputed question of facts, which make it not maintainable. As such, at this stage, it is the humble submission of the Deponent that payment of any compensation and its desirability cannot be considered unless other issues are decided against the respondents so as to make out a case for payment of any compensation 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 28....
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....ave suffered any damages or injury or loss to their reputation and goodwill and have not prayed for any damages or compensation. The petitioners are fully aware that they have not paid the amounts due to Punjab National Bank as per the terms they had agreed to while availing the loan and they are not worthy of any compensation. (i) That petitioner No. 2 is guarantor in the account and hence is jointly and severally liable to pay the entire outstanding amount in the loan account. Out of the three guarantors whose photographs were published, only Petitioner No. 2 has filed the writ petition. (j) That the High Courts of Bombay, Madhya Pradesh, Madras, Chhattisgarh & Gujarat have held that 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 wro....
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....ographs. Definitely rule 8 is intended to alert the public that the property is encumbered and one should know such encumbrance if anyone intends to deal with such property. Correspondence between the Indian Bank Associations to Reserve Bank of India, and Reserve Bank of India to the chairman State Bank of India Credit Policy and Procedures Department Mumbai in 2007 and the guidelines issued by RBI as updated on 07.01.2015 clearly indicate how and under what circumstances a borrower could be categorized as a willful defaulter and how the information has to be disseminated to the credit information companies. This clarifies the position that as a matter of routine procedure, one 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....
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....publication of photographs. The decision of a high court is at best a persuasive precedent, which another high court is free not to follow. That applies to this Court too. The decisions of other high courts, even though rendered by an Hon'ble Division Bench, is not binding on a Single Bench of this Court. This is the easy route for not following a decision of another high court. However, it is not proper to side track a decision of another high court on the same point by saying that it is not binding. After all, it is a decision of a high court and every decision of high courts deserve due and meticulous consideration. Should a Bench feel not to be persuaded by a persuasive 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 fair....
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....cult to accept that the decision lays down good law worthy of being followed. 12. The decision in Shri Mohan Products (supra) [as well as the decision in D.J. Exim (supra)] seems to have overlooked the provisions of section 13(1) of the Act (the fundamental guiding principle for recovery of debts in terms of the provisions of the Act) as well as the applicability of the Latin maxim "expressio unius est exclusio alterius". That apart, the difference in wording of rule 6(2) and rule 8(2) of the Rules also went unnoticed. Rule 6, providing for the manner of sale of movable secured assets, expressly enables vide sub-rule (2) disclosure of the name and address of a borrower, 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 ....
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....onclusion that the points involved in this writ petition are different and the CMD, while being under an obligation to comply with the request of the Bench, simply failed to notice it. 18. Turning to the facts giving rise to the writ petition, it appears that while the first petitioner availed of credit facility extended to it by the first respondent, the second petitioner, inter aila, stood as guarantor. The demand notice dated March 17, 2015 was duly responded to by the first petitioner by lodging an objection dated May 16, 2015. However, in the interregnum, April 5, 2015 to be precise, the newspapers carried the demand notice, inter alia, with the photograph 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 whil....
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....eveal the attack of the petitioners being targeted at publication of photographs of the guarantors; on the contrary, the focal challenge is directed against initiation of proceedings under the Act by issuing demand notice and rejection of the objection in terms of section 13(3A) of the Act. According to him, only a negligible portion of the writ petition pertains to publication of photographs and that there is no specific pleading indicating the extent of loss of reputation and damage or injury to goodwill by reason of publication of the photographs of the guarantors. 21. Mr. Saha placed before this Bench circular letters dated March 22, 2013 and 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. S....
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....did not provide for any internal mechanism for consideration and disposal of any valid objection that a borrower/guarantor could raise against such demand. It was as a result of the decision reported in (2004) 4 SCC 311 : Mardia Chemicals Ltd. v. Union of India, that sub-section (3A) came to be incorporated in section 13 providing for a right of representation/objection. The law as it now stands makes it imperative for a secured creditor to consider and dispose of, upon application of mind, any representation/objection that it might receive from a borrower/guarantor and it is only thereafter that recourse could be taken to provisions contained 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....
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....a particular act/thing to be performed/done in a particular manner, it has to be performed/done in that manner alone or not at all. This Bench need not burden this judgment with authorities on the point. Suffice it to record, if a demand notice under section 13(2) of the Act is served on the borrower/guarantor in the manner statutorily provided for and there is no reason at all to believe that service has not been effected, question of publication thereof in the newspapers does not and cannot arise. It is only when an opinion could reasonably be formed that the borrower is evading service of the demand notice and that alternative 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....
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.... of law, the respondents published the notice under section 13(2) of the SARFAESI Act, 2002 in the English daily 'Times of India' on 28th March, 2015 along with the photographs of the petitioner no. 2. A copy of the said paper publication dated 28th March, 2015 is annexed hereto and marked with the letter 'P-26'. While publishing the Notice in the newspaper as well as letters to the petitioners, the respondents has wrongly claimed the properties of the petitioners which are exclusively charged with SBI. Further PNB have failed to:- a) Describe how they arrived at the outstanding amount of Rs. 3,95,25,425/-. 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 urg....