Banks Can't Coerce Borrowers To Repay Loans By Publishing Their Photos And Invading Their Privacy: Kerala HC

The Kerala High Court has held that banks cannot coerce borrowers to repay the loans by publishing their photographs and other details.

The Court was considering a Writ Petition in this regard challenging communication issued by the Assistant Registrar of Co-operative Societies, directing the Secretary to remove the flex board displaying the names and photographs of defaulting borrowers in front of their head office.

The single-bench of Justice Murali Purushothaman observed, "The Kerala Co-operative Societies Act and Rules provides for various modes of recovery of debts due to the Co-operative Societies, execution of orders and awards including attachment and sale. The Act and the Rules do not provide for the display or publication of photographs and other details of defaulting borrowers as a mode of recovery. The borrowers cannot be coerced to repay the loans by threatening to damage their reputation and privacy. The publication or display of photographs and other details of defaulting borrowers in public will be an invasion on the right of the borrowers to live with dignity and reputation. Such deprivation of life and personal liberty cannot be made except according to procedure established by law. The publication or display of the photographs of defaulting borrowers will infringe upon their dignity and reputation, and violate their fundamental right to life, as guaranteed under Article 21 of the Constitution of India."

The Petitioner was represented by Advocate P.N. Mohanan while the Respondent was represented by Government Pleader Resmi Thomas.

The Petitioner, Chempazhanthi Agricultural Improvement Co-operative Society and its Managing Committee deposited amounting to ₹28 crores, loan outstandings of ₹12 crores, and an overdue of 59%. To recover the loan amount, the Society filed 62 arbitration cases and execution petitions before the respondent. However, recovering the loans has proved to be highly challenging. It was stated that, despite repeated demands made by the Society, including personal meetings with the borrowers, the Society, as a last resort, published list of borrowers containing their names, photographs, the loan amounts due and other particulars of loan for the information of the loanees. In response, the Respondent issued communication directing removal of the flex board displaying the names and photographs of the defaulting borrowers and stated that displaying a person's photograph or information without their consent is illegal and informed the Secretary of the Society that the Secretary would be held legally responsible for any damages resulting from the said action.

It was contended that the Society has no funds of its own and the deposits received from members are utilized for the disbursement of loans. The loanees have a corresponding duty to repay the loan amounts on time; otherwise, the Society may collapse or be liquidated and it is the Society's bounden duty to recover the loan, and the respondent cannot dictate terms that interfere with the recovery process if it is in accordance with the law. It was further contended that if the "beat of tomtom" in the village, as per Rule 81 of the Kerala Cooperative Societies Rules, 1969, is permitted while the attachment and sale of immovable property then there is nothing improper in displaying a board containing the details of the defaulting loanees. Therefore, the petitioners sought to set aside the communication and to declare that the respondent has no authority to direct the Society to remove the board.

The Court, however, rejected the contention and observed that putting up boards with details of the defaulting debtors violates their dignity and privacy.

The Petition was accordingly dismissed.

Cause Title: The Managing Committee Of Chempazhanthi vs. The Assistant Registrar Of Co-Operatives (2024:KER:97047)

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