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SARFAESI Act - Demand notice published in the newspapers

IN THE HIGH COURT AT CALCUTTA
CONSTITUTIONAL WRIT JURISDICTION ORIGINAL SIDE
PRESENT : Hon’ble Justice Dipankar Datta
Judgment on: November 10, 2016
W.P. No. 862 of 2015
Metsil Exports Private Ltd. & anr. v. Punjab National Bank & anr.
 Section 13(2) – Demand notice published in the newspapers – What is the legal position regarding publication of a demand notice under section 13(2) of the Act in two newspapers having wide circulation with the photograph of a director/guarantor? Held, 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.
Whether the bank transgressed his powers or not in having such demand notice published with the photograph of the guarantor, a director of the Company? In view of the nature of constitution of the Companies / Trust / Society etc., photographs of the authorized persons / official(s) concerned viz. Directors / Chairman / Secretary / Treasurer / Trustee etc. should not be published.
Compensation – this is not a fit and proper case for any compensation to be awarded by the court of writ to the petitioners. While declining compensation, liberty to approach the appropriate forum for recovery thereof in accordance with law is reserved.
In this context, it is worth to recollect that Calcutta High Court in Ujjal Kumar Das and Another v. State Bank of India held that publishing the photographs of loanees is not a mode contemplated under the Sarfaesi Act. Following the Calcutta judgment, Justice V Chitambaresh of Kerala High Court in Venu PR Vs. SBI held that the practice of exhibiting a photograph of a person and shaming him in public for the sin of being in an impecunious condition cannot be encouraged in a civilised society like ours. The High Court of Madhya Pradesh in M/S Prakash Granite Industries vs. The Punjab National Bank held that it is within the propriety of the bank to publish a photograph of defaulter in newspaper in the event of failure on the part of such borrowers.

Read more at: http://www.livelaw.in/calcutta-hc-asks-bank-apologise-publishing-photographs-borrowers-newspapers/
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