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Jharkhand High Court says lenders publishing loan defaulter’s photo in newspaper invasion of privacy
Allowing the plea, Jharkhand High Court observed that publishing photographs of borrowers in newspapers is a coercive method not recognised under the SARFAESI Act, 2002.
Jharkhand High Court prohibited the lenders from publishing the photograph of the defaulters. (Image generated using AI)
Emphasising that the lenders cannot resort to public shaming as a recovery tactic, the Jharkhand High Court recently restrained LIC housing finance limited from publishing photographs of two loan defaulters in newspapers, holding that such action violates the borrowers’ right to privacy and dignity.
Allowing the plea, Justice Ananda Sen observed that publishing photographs of borrowers in newspapers is a coercive method not recognised under the SARFAESI Act, 2002.
“The act proposed by the respondents to publish photograph of the petitioners would amount to unwarranted invasion of the petitioners’ right to privacy and dignity,” the court noted.
‘Arbitrary and excessive’
It observed that such an action is not a recognised mode of recovery under law and is arbitrary and excessive in nature.
“The said action is not a recognised mode of recovery under law and is merely coercive in nature. The proposed action of publishing the photographs of the petitioners in newspapers is not supported by any provision under the SARFAESI Act, 2002 or the Rules framed thereunder and is arbitrary and excessive in nature and a coercive method not recognised by law,” the court remarked.
Relying on precedent, including a decision of the Calcutta High Court, the court said publication in newspapers may be resorted to only in exceptional cases, such as when borrowers deliberately evade service and all other measures have failed, and must be backed by recorded reasons.
“It can be resorted to only when the borrower is evading service and all other modes have failed. Such action must be based on a recorded and reasonable satisfaction, which is a necessary condition,” the court said.
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Emphasising that such steps cannot be used routinely to pressure borrowers, the court said that the act can only be justified in exceptional cases involving willful defaulters.
It further added that routine publication to pressure borrowers is improper, and may adversely affect genuine borrowers and the economy.
“I find that publication of photographs should not be done as a routine practice and can only be justified in exceptional cases involving willful defaulters. Routine publication to pressure borrowers is improper, violates their right to dignity, and may adversely affect genuine borrowers and the economy,” the court held.
Accordingly, the court set aside the portion of the notice proposing publication of the petitioners’ photographs and restrained the lender from taking such action, while permitting it to pursue recovery through lawful means.
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Background
The petitioners had availed three housing loans of Rs 10 lakh each between 2013 and 2015 by mortgaging their residential property in Dhanbad.
Due to financial difficulties, they defaulted on EMIs between June and September 2023. Despite informing the lender and seeking time, officials pasted a notice at their residence declaring the account as a Non-Performing Asset (NPA) and proposed publication of their photographs in newspapers.
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