Name & shame: Banks can publish photos of wilful defaulters, says SC-Financial Express 18th July 2014
In a move that may discourage firms from defaulting on bank loans, the Supreme Court has allowed lenders to publish names and photographs of wilful defaulters in newspapers in the larger public interest. The apex court said that the decision to resort to this measure would be taken by officers of the rank of general managers and above.
By giving the ruling on the matter, a bench headed by justice Fakkir Mohamed Ibrahim Kalifulla upheld the Bombay High Court’s November 2013 order that allowed State Bank of India (SBI) to publish names and photographs of directors and guarantors of Mumbai-based defaulter firm DJ Exim (India) in newspapers on the grounds that Rule 8 framed under the Securitisation Act specifically authorised the banks to publish the names and addresses of wilful defaulters and there is also no legal bar that prohibits them from publishing such information. The SC accepted the bank’s stand that the move does not violate the defaulter’s right to privacy as the same is not absolute. From the bank’s point of view, the duty to maintain secrecy is superseded by a larger public interest as well as by the bank’s own interest under certain circumstances, it held.
In the past, while the Bombay, Madras and Madhya Pradesh HCs had allowed banks to publish the names and photographs of defaulters, the Calcutta and Kerala HCs held such moves as unconstitutional and impermissible in law while ruling on some cases.
In the matter under review, DJ Exim had failed to pay SBI more than Rs 53.18 crore with interest despite repeated requests. The bank in October last year warned the company that if it failed to pay, names and photographs of its directors and guarantors would be published in national newspapers and action would be taken under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002.
The company moved the high court stating that the SBI letter was highly coercive in nature and no rule permitted banks to publish photos to embarrass the defaulters.
United Bank to 'name and shame' wilful defaulters: Deepak Narang
State-owned United Bank of India will soon embark upon process to 'name and shame' its wilful defaulters as part of its effort to recover dues.
"Since the Supreme court has recently permitted banks to name and shame wilful defaulters. Now the bank would initiate process," United Bank of India executive director Deepak Narang told PTI.
As part of this, the bank will publish photographs of defaulters and other details in newspapers and at notice boards of bank branches.
Kolkata-based lender was the first PSU lender to initiate the process of declaring Vijay Mallya and three other directors on the grounded Kingfisher Airlines as wilful defaulter.
However, Kingfisher Airlines approached the Kolkata High Court seeking permission of being represented by a lawyer in the proceedings of the Grievance Redressal Commission of the bank.
Hearing on the matter before the division bench of the Kolkata High Court is scheduled on July 21.
Earlier on July 10, Justice Dipankar Dutta of the High Court rejected Kingfisher Airlines' plea to send an external legal practitioner to appear before the grievance redressal committee.
The bank had served a notice, asking Mallya and three other directors of Kingfisher Airlines to appear before its grievance panel on July 9.
If declared a wilful defaulter, the person would not be able to borrow in future and lose director-level positions in companies.
The bank's exposure to Kingfisher Airlines was around Rs 350 crore as part of consortium lead by State Bank of India. Outside consortium, the bank gave about Rs 60 crore loan for Pre-Delivery Payment.
The consortium of 17 banks, led by SBI, has an outstanding debt of about Rs 4,022 crore from the now-grounded carrier.
As part of the recovery process, banks in February last year decided to sell a portion of the collateral with them, including shares of group companies United Spirits Ltd and Mangalore Chemicals & Fertilizers Ltd, Mallya's Goa villa, Kingfisher House in Mumbai and the Kingfisher brand, which was valued at over Rs 4,000 crore at the time it was pledged.
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