Friday, August 23, 2013

Bank Cannot Hold Back Property Documents

Bank cannot hold back property documentsafter housing loan is repaid: Bombay high court-Times of India 23.08.2013
MUMBAI: A bank cannot hold on to property documents after a person has paid off his housing loan, the Bombay high court ruled on Thursday.

A division bench of Justices B P Dharmadhikari and A S Chandurkar directed the State Bank of India to return title documents to Nagpur resident Surendra Nikose. The bank had refused to return the documents to Nikose, a former employee; as he had allegedly committed financial irregularities and they had filed a recovery claim against him.

"The resort to provisions (of law) for withholding title deeds especially when the relationship of banker and customer has come to an end on clearing the loan account is not legally justifiable," the judges said, adding, "Permitting a banker to extend its right of general lien even after clearance of the debt would result in negating the effects of the words 'as a security for a general balance of account'. In any event, exercise of such general lien after termination of the relationship of banker and customer does not arise at all."

A lien is a security interest over a property.

Nikose, who was sacked in 2010, had taken a loan of Rs6.56 lakh in 2001 and deposited the title documents as security. He paid off the loan and obtained a 'no due certificate' from the bank in 2012. But the bank refused to return his title documents as they had filed a case to recover Rs4.33 crore from him.

The court said the relationship of banker and customer was independent of the relationship of employer and employee. "The recovery sought to be made by the bank was as an employer who had been defrauded by its employee," the judges said.

"The bank cannot exercise such general lien as an employer against an employee, especially when the employee who had borrowed the amounts had repaid it."


http://timesofindia.indiatimes.com/city/mumbai/Bank-cannot-hold-back-property-documentsafter-housing-loan-is-repaid-Bombay-high-court/articleshow/21988076.cms

Tuesday, August 13, 2013

Publishing Photgraph Of Defaulters Is Illegal

Bank can publish defaulter's photo in newspapers: High Court


MUMBAI: Bombay High Court today refused to stop publication of photographs of a defaulter firm in newspapers, saying that it was in larger public interest.

The division bench of Justices V M Kanade and M S Sonak refused to grant relief to the firm D J Exim and its directors. 

 
State Bank of India, on October 10, had issued the firm a letter warning that if it did not repay loan amount, photographs of the directors would be published in national newspapers.

The company moved the High Court against this saying no rule permits banks to publish photos.

"They cannot embarrass the defaulters like this. According to the rule only name and address can be published," the firm's lawyers argued.

However SBI counsel Aspi Chinoy pointed out that the company had defaulted on repayment of Rs 53 crores.
"This is not disputed. They are admitted defaulters. We are only stating this fact to the public," he argued, and said the bank "does not resort to such stringent measures" in each and every case.

Accepting this argument, High Court observed that publishing of photographs serves the purpose of creating awareness and cautioning prospective clients. 
"In our view, there would be no impediment to publication of photos of the defaulters. There is no legal bar which expressly prohibits the bank from publishing photos.

"However, the decision to resort to such measures should be taken by a very senior level official not below the rank of General Manager of the bank. In this case, due process was followed and the decision cannot be faulted," the court said. 

 
It, however, said that SBI's earlier undertaking that it would not publish the photos pending hearing of the petition would remain in effect for three more weeks, to enable the petitioner company to appeal in the apex court.


http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/bank-can-publish-defaulters-photo-in-newspapers-high-court/articleshow/26537585.cms

Publishing photographs of defaulters in newspapers illegal: Kerala High Court--

Business Line 13th August 2013

The Kerala High Court has held as arbitrary and illegal the decision of the State Bank of India to publish the photographs of loan defaulters in newspapers.
Allowing writ petitions filed by two defaulters against the SBI notice, the court on Tuesday observed that the threat held out by banks to publish the photographs of defaulters in newspapers lacked legislative sanction.
Justice V. Chitambaresh said: “The practice of exhibiting a photograph of a person and shamming him in public for the sin of being in an impecunious condition cannot be encouraged in civilised societies like ours.”
The judge further observed that there was nothing immoral in their failure to repay the loans owing to a floundering business or other unavoidable reasons.
The court added that some of the borrowers might even be driven to commit suicide fearing ignominy on account of their photographs being published in newspapers. “It will remain a permanent taboo for their family,” the court observed.
The move was clearly an “affront to the right to live with dignity and honour as well as the right to privacy of the loanees”.
Such publication of photographs therefore, violates the rights guaranteed to the loanees under Article 21 of the Constitution of India, the court held.

SBI’S STAND

However, the SBI justified its stand saying the terms and conditions of the loan agreements allowed them to publish defaulters’ photographs in newspapers.
But the court pointed out that the clause in the agreement at best empowered the bank to reveal only the names of borrowers in the print media or to disclose the information and details relating to the credit facility.
Even if there was such a permissive clause, the loanees would “not (be) stopped” from challenging the action of a bank “on the ground of violation of fundamental rights of loanees”, the court said.
The court also pointed out that there was no provision in the Security Interest (Enforcement) Rules (SARFAESI) that enables banks to threaten to publish photograph of defaulters.