The Supreme Court of India has ruled that banks can publish the names and photographs of willful defaulters in newspapers without violating their right to privacy. This ruling upholds a Bombay High Court decision allowing State Bank of India to publish details of a defaulting company. The Supreme Court found that the larger public interest of curbing loan defaults and banks' own interests in certain circumstances can supersede privacy concerns. This ruling provides clarity and removes legal barriers to banks using this strategy to name and shame willful defaulters across India.

1. NAME AND SHAME: BANKS CAN
PUBLISH THE PHOTOS OF WILFUL
DEFAULTERS SAYS SUPREME COURT
Made by- Drishesh Nair

2. INTRODUCTION
• 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.

3. • 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maintain secrecy is superseded by a larger public interest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.

4. PAST EXPIRIENCES
• 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.

5. • 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.
• Kolkata-headquartered lenders Allahabad Bank and Uco
Bank too will be benefited as they can publish photographs
and other details in local newspapers. UBI, for instance, had
in several earlier occasions published details of Kolkata-
based defaulters in other metros like Mumbai but not in
Kolkata editions of the same newspapers.

6. City Banks to Benefit from SC Ruling on
Defaulters
• Banks had been following this strategy in most states
barring a few like West Bengal and Kerala because of
some legal blockades.
• "The judgment has removed all the barriers in naming and
shaming defaulters. It' a very positive development for the
banking industry," United Bank of India (UBI) Executive
Director Deepak Narang told ET. He said UBI would soon
start doing this in major cities.

7. • The bank has step out to do this to mark Mr. Vijay
Mallya and three other directors of Kingfisher Airlines as
wilful defaulter. The bank’s share in total default of around
Rs. 4000 crores on Kingfisher Airlines, is Rs.350 crore.
• To avoid the initiation of this “name & shame” process by
United Bank of India, Kingfisher Airlines has approached
the Kolkata High Court pleading to refrain bank in doing
so. But its bound to be boomerang as even Supreme
Court has given green signal for a program to embarrass
willful defaulters

8. • So far, the SARFAESI Act has no express provision for
publication of photographs of defaulters. There were
conflicting verdicts between high courts.
The Supreme Court diktat now clears all doubts," a senior
banker said.

9. REFERENCES
• www.financialexpress.com
• economictimes.indiatimes.com
• businesstoday.intoday.in
• www.newindianexpress.com