Court’s Ruling on Loan Defaulters
The Kerala High Court has unequivocally held that banks are not permitted to publish the photos and details of defaulting borrowers to compel loan repayment. Justice Murali Purushothaman observed that such measures infringe upon a person’s fundamental right to live with dignity and reputation.
- Invasion of Privacy: Publishing borrowers’ photos and details in public constitutes a violation of their right to privacy and dignity.
- Article 21: The act infringes upon the right to life and personal liberty under Article 21 of the Constitution.
- Legal Framework: Such practices are not recognized as a mode of recovery in any law or rule.
Background of the Case
The case arose when the Chempazhanthi Agricultural Improvement Co-operative Society filed a petition challenging a directive from the Assistant Registrar of Co-operative Societies. The directive ordered the removal of flex boards displaying photos and names of defaulters at the society’s head office.
- Bank’s Argument: The bank argued that they had repeatedly sought repayment and resorted to this method after some success with prior displays. They likened the practice to the “beat of tom-tom” permitted under Rule 81 of the Kerala Co-operative Societies Rules, 1969.
- Court’s Observation: The court dismissed this analogy, describing the practice of tom-tomming as outdated and primitive.
Key Legal Points
- Violation of Rights: Coercing borrowers through public shaming invades their fundamental rights.
- Procedural Safeguards: Recovery of loans must follow procedures established by law, without resorting to tactics that harm personal dignity.
Case Details
- Case Number: WP(C) 45919 of 2024
- Case Title: The Management Committee of Chempazhanthi Agricultural Improvement Co-operative Society and Another v The Assistant Registrar of Co-operative Societies
- Citation: 2024 LiveLaw (Ker) 823
- Petitioner’s Counsel: Advocates P. N. Mohanan, C. P. Sabari, Amrutha Suresh, Gilroy Rozario
- Respondent’s Counsel: Advocate Resmi Thomas
Implications of the Judgment
This judgment reinforces the principle that financial recovery methods must respect constitutional rights. Public shaming or invasion of privacy, even if effective, cannot override the dignity and reputation of individuals. Banks and financial institutions are urged to adhere strictly to legally prescribed recovery mechanisms.
