Dipankar Datta, J. - (1.) 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 Authorised 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 v. 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 nationalisation of banks but thousands of crores of public money got locked up in litigations while seeking to recover debts from the borrowers/guarantors. (c) That this Hon'ble Court is fully aware of the fact that a claim for damages is a claim in tort for violation of the rights of an individual. In the present case, in view of conflicting judgments of different High Courts, as also the fact that the judgement of this Hon'ble Court rendered in 2013 is also a subject matter of appeal, the issue of publishing of photographs of the defaulting borrowers has to be finally decided by the Hon'ble Apex Court. (d) That though a formal Affidavit in defence to the writ petition is being separately filed by the respondent bank, it is most humbly submitted that the writ petition itself is based on disputed question of facts, which make it not maintainable. As such, at this stage, it is the humble submission of the Deponent that payment of any compensation and its desirability cannot be considered unless other issues are decided against the respondents so as to make out a case for payment of any compensation and the ingredients connected therewith are fulfilled and satisfied. 3. That, without prejudice to the legal submissions made herein above, the following facts may also be taken into consideration by this Hon'ble Court: (a) That the petitioner no. 1 was sanctioned various credit facilities by Punjab National Bank under consortium with State Bank of India as the Lead Bank. The account of the petitioner No. 1 with Punjab national Bank was classified as 'NPA' on 28th February 2015. The present outstanding in the account is Rs.3,95,25,425.00 (Rupees Three Crore Ninety Five Lacs Twenty Five Thousand Four Hundred and Twenty Five only), charges and further interest at the agreed rate w.e.f. 1.03.2015 till the date of realization. (b) That State Bank of India had issued notice under Section 13(2) of the SARFAESI Act, 2002 to the petitioner Company on 2.1.2015 for recovery of their dues of Rs. 34,23,09,312.11 as on 02.01.2015, while Punjab National Bank issued notice to the petitioner Company on 17.03.2015 under Section 13(2) of the SARFAESI Act, 2002. Although State Bank of India did not publish photographs, the obligants have filed writ petition against State Bank of India as well, making it very clear that the petitioners have filed the writ petition only to delay the recovery proceedings. (c) That as is manifest from the writ petition itself, there is no denial on merit to the claim of the bank. As a matter of fact, disbursement and acceptance of loan/facility and the failure to repay the same stands admitted in the writ petition. (d) That it is given to understand that, in order to avoid repayment of the dues of the bank, the company has created many sister concerns and have shifted their business to other line of products. The sale proceeds are not routed through the loan accounts and thereby did not adhere to financial discipline. (e) That as per the CIBIL report, the Directors of the Company have raised House Building Loans of Rs. 1.06 crore from INDIABULLS HFC at original tenure of 120 months, out of which they have repaid a sum of Rs. 1.00 crore between 2012 and 2015. Between the years 2012 and 2015, the loan account of the petitioner with the bank turned into stressed asset indicating that the credit facility granted by the bank for business purposes has been wilfully diverted by the Directors/guarantors to acquire personal assets. (f) That huge amount of public money is due and recoverable from the petitioners and the petitioners are trying to delay recovery proceedings. (g) That on a perusal of the writ petition, it is clear that the allegations therein do not centre around the matter concerning the publication of photographs of the guarantors. (h) That the writ petition contains no submission or claim or pleadings to the effect that, by reason of publication of the photographs, the guarantors have suffered any damages or injury or loss to their reputation and goodwill and have not prayed for any damages or compensation. The petitioners are fully aware that they have not paid the amounts due to Punjab National Bank as per the terms they had agreed to while availing the loan and they are not worthy of any compensation. (i) That petitioner No. 2 is guarantor in the account and hence is jointly and severally liable to pay the entire outstanding amount in the loan account. Out of the three guarantors whose photographs were published, only Petitioner No. 2 has filed the writ petition. (j) That the High Courts of Bombay, Madhya Pradesh, Madras, Chhattisgarh & Gujarat have held that the Banks can publish the photographs of defaulters. (k) That the order of Calcutta High Court in the case of Ujjal Kumar Das v. State Bank of India 2013(2) Cal LT 639 is under challenge before the Division Bench of this Hon'ble Court. (l) That the Supreme Court did not admit the SLP filed by the party against the judgment of Bombay High Court. (m) That in view of the foregoing, it is respectfully submitted that if compensation is imposed in the present case, such an order will send a wrong signal to the borrowers and guarantors and may even have the effect of encouraging such borrowers and/or guarantors to commit default in repayment of bank dues without fear of any retribution. (n) That having regard to the above, it is once again submitted that this Hon'ble Court be graciously pleased to accept the contentions as submitted above and drop the issue of payment of any compensation at this stage. ;