Telangana High Court
M/S.Crimson Sky Vewntures Pvt.Ltd Amp 5 ... vs The Reserve Bank Of India., Another on 1 July, 2019
Author: Sanjay Kumar
Bench: Sanjay Kumar, P.Keshava Rao
THE HON'BLE SRI JUSTICE SANJAY KUMAR
AND
THE HON'BLE SRI JUSTICE P.KESHAVA RAO
WRIT PETITION No.36177 of 2013
ORDER:(Per Justice Sanjay Kumar) The core issue that arises for consideration in this case is whether a secured creditor who seeks to initiate proceedings under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (for short, 'the SARFAESI Act'), has the right to publish/display the photographs of borrowers in default along with their names and addresses in newspapers or other places.
By order dated 11.12.2013, a learned Judge of the erstwhile High Court of Andhra Pradesh interdicted the second respondent/secured creditor from doing so.
While so, we are of the opinion that the matter does not require adjudication on merits at this stage in the light of the guidelines issued by the Reserve Bank of India on the subject.
By Circular No.DBR.CID.BC.No.17/20.16.003/2016-17 dated 29.09.2016 addressed to all the scheduled commercial banks and financial institutions, the Reserve Bank of India, while referring to the Master Circular on Wilful Defaulters dated 01.07.2015 issued by it, took note of the fact that some lending institutions had been publishing photographs of defaulters/guarantors in newspapers and issued the following instructions:
"(i) A lending institution can consider publication of the photographs of only those borrowers, including proprietors/ partners/ directors/ guarantors of borrower firms/companies, who have been declared as wilful defaulters following the mechanism set out in the RBI 2 instructions referred to above. This shall not apply to the non-whole time directors who are exempted from being considered as wilful defaulters unless the special conditions, in accordance with these instructions, are satisfied.
(ii) The lending institutions shall formulate a policy with the approval of their Board of Directors which clearly sets out the criteria based on which the decision to publish the photographs of a person covered in paragraph (i) above will be taken by them so that the approach is neither discriminatory nor inconsistent.
The lending institutions shall not publish photographs of any other defaulting borrowers."
In the light of the aforestated instructions of the Reserve Bank of India, secured creditors under the SARFAESI Act cannot resort to publication of photographs of 'borrowers' as defined in the Act unless they have been declared wilful defaulters in terms of the Master Circular on Wilful Defaulters dated 01.07.2015. The said Master Circular demonstrates that a detailed procedure has to be adhered to before declaring a borrower a wilful defaulter. Unless such procedure is followed, a borrower cannot be categorised as a wilful defaulter whereby the secured creditor would have the right to cause publication/display of his or her photographs along with relevant data, in terms of the guidelines of the Reserve Bank of India.
The writ petition is accordingly disposed of directing the secured creditor, the second respondent, to scrupulously adhere to the guidelines of the Reserve Bank of India, as set out in the Circular dated 29.09.2016 and the Master Circular dated 01.07.2015. Needless to state, we have not ventured into the issue of the legal validity of the aforestated Circulars as they are presently not under challenge and the same is left open. 3
Pending miscellaneous petitions, if any, shall stand closed in the light of this final order. No order as to costs.
_____________________ SANJAY KUMAR, J _____________________ P.KESHAVA RAO,J Date:01.07.2019 GJ