Banks Can't publish names and photographs of loan defaulters: Kerala High Court Upholds Privacy Rights
Pranav B Prem
In a landmark judgment, the Kerala High Court ruled that publishing the names and photographs of loan defaulters to coerce repayment is a violation of their fundamental rights to privacy and dignity, as enshrined under Article 21 of the Constitution of India.
“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.”
Background of the Case
The case arose when the Chempazhanthi Agricultural Improvement Co-operative Society (the petitioner) challenged a directive from the Assistant Registrar of Co-operative Societies. The directive ordered the removal of a flex board displayed outside the society's head office, which contained the names, photographs, and loan details of defaulting borrowers. The petitioner argued that the measure was a last resort to recover overdue loans, amounting to 59% of their total outstanding.
Despite its efforts, including arbitration cases and personal requests, loan recovery remained a challenge. The publication of borrower details was reportedly effective, prompting some defaulters to settle their dues. However, the Assistant Registrar deemed the act illegal, emphasizing the legal accountability of the society's secretary for any reputational damage caused.
Court's Findings
The Honorable Justice Murali Purushothaman, delivering the judgment, highlighted several key points:
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The Kerala Co-operative Societies Act and its Rules do not authorize the publication of defaulter details as a recovery method. While attachment and sale of property are sanctioned modes of recovery, coercive tactics like public shaming are not permitted.
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The act of displaying defaulters' details infringes upon their right to privacy and reputation, which are integral to the right to life under Article 21 of the Constitution. Any deprivation of personal liberty must follow procedures established by law, which the society failed to adhere to.
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Addressing the petitioner's reliance on Rule 81 of the Kerala Co-operative Societies Rules, 1969—allowing for the "beat of tom-tom" during property attachment—the court noted that such practices are outdated and incompatible with modern society's standards.
Dismissing the writ petition, the Kerala High Court reinforced that recovery processes must align with the law and respect individuals' constitutional rights. The court's decision serves as a reminder to financial institutions and cooperative societies that measures to recover dues should not come at the expense of borrowers' dignity and privacy.
Cause Title: The Mangement Committee of Chempazhanthi Agricultural Improvement Co-operative Society and Another V/S The Assistant Registrar of Co-operative Societies.
Case No: WP(C) 45919 of 2024
Date: December-20-2024
Bench: Justice Murali Purushothaman
[Read/Download order]
