IMPORTANT POINT
Secured creditor is not entitled to publish photographs of defaulting borrowers in a routine manner.

Dipankar Datta, J.—This writ petition dated July 8, 2015, mounts a challenge to a demand notice dated March 17, 2015 issued under section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (hereafter referred to as ‘the Act’) by the Authorized Officer, Punjab National Bank (hereafter the second respondent), and the rejection of the petitioners’ objection dated May 16, 2015 to such demand notice by the second respondent by his letter dated May 30, 2015.

2. At the time the writ petition was first considered by this Bench, it was found to be unusual that the demand notice under section 13(2) of the Act, apart from being served on the petitioners, was also published in two daily newspapers (the respective editions of ANANDA BAZAR PATRIKA and THE TIMES OF INDIA, dated April 5, 2015) with the photograph of, inter alia, the second petitioner, a director of the first petitioner. Such publication also contained photographs of two other directors of the first petitioner.

3. The demand notice published in the newspapers at the instance of the second respondent revealed that he had reasons to believe that the “borrowers/directors of the borrowing company are avoiding service of demand notice issued to them”. Queerly, the impugned rejection letter dated May 30, 2015 referred to receipt of the demand notice by the petitioners on March 18, 2015 (as per track report of the postal department). It also revealed invocation of power by the second respondent conferred on him by rule 3 of the Security Interest (Enforcement) Rules, 2002 (hereafter the Rules). Since the proviso to rule 3(1) ordains “reason to believe” that the borrower or his agent had been avoiding service as a precondition for publication of a demand notice issued under section 13(2) of the Act in two newspapers having wide circulation, by an order dated July 22, 2015 the Bench had called upon Ms. Rao, learned advocate for the respondents to show how the second respondent had formed the opinion that publication of the demand notice in its entirety in two daily newspapers with the photographs of the directors of the first petitioner was necessary to take the proceedings initiated under the Act to its logical conclusion. On July 29, 2015, Ms. Rao submitted that there was no record from which formation of opinion could be discerned. Such submission was recorded in the order that was passed on that day. Having regard thereto, Mr. Huda, learned advocate for the petitioner was also requested to obtain instructions from the petitioners as to whether an apology of the first respondent (hereafter the PNB), printed in the same newspapers, would satisfy them or not. On the next date i.e. August 12, 2015, Mr. Joy Saha, learned senior advocate for the respondents regretted the respondents’ inability to apologize. Hearing progressed and the writ petition was heard-in-part. The Bench having been prima facie satisfied that publication of the demand notice under section 13(2) of the Act together with the photograph of the second petitioner in the newspapers was not in accordance with law, the Chairman and Managing Director of the first respondent (hereafter the CMD) was requested to consider the desirability of adequately compensating the petitioners for the perceived irresponsible act of the second respondent. The CMD, after seeking an adjournment, filed an affidavit. Relevant portion thereof is quoted below:—

“2. Preliminary Submissions

With due respect to this Hon’ble Court and its judgement rendered in the matter of Ujjal Kumar Das vs. State Bank of India, the Deponent wishes to state, after legal consultation, the following submissions:—

(a) That the bank renders financial assistance to the borrowers and expects the borrowers/guarantors to honour their commitment as per the contractual terms.

(b) That the Banking Industry underwent substantial changes with the nationalization of banks but thousands of crores of public