The Kerala High Court upheld borrowers' privacy and declared public shaming as an unlawful method for debt recovery.
The Single-Judge Bench of Kerala High Court Justice Murali Purushothaman addressed a petition and held that publishing photographs and personal details of defaulting borrowers as a recovery measure violates their fundamental rights to privacy and dignity under Article 21 of the Constitution and is not a lawful mode of debt recovery under the Kerala Co-operative Societies Act and Rules.
The Chempazhanthi Agricultural Improvement Co-operative Society and its Managing Committee filed a writ petition challenging a directive issued by 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 1,750 defaulting borrowers. The petitioners argued that the flex board was a necessary step taken as a last resort to recover overdue loans, amounting to 59% of the Society’s total loan portfolio. They claimed the board had proven effective, prompting borrowers to approach the Society for repayment or restructuring of their debts.
The petitioners contended that the Kerala Co-operative Societies Act and Rules permit practices such as the "beat of tom-tom" under Rule 81 for recovery purposes, and thus, a similar display of borrower details should not be deemed improper. They further asserted that the Society, lacking its own funds, relied entirely on member deposits to disburse loans, making it imperative to recover the overdue amounts. They sought to nullify the Assistant Registrar’s directive, which deemed the display illegal and warned of legal consequences for the Society’s Secretary.
The Kerala High Court dismissed the petitioners’ arguments, holding that the publication or display of borrower photographs and details infringes on their dignity and fundamental rights to privacy and reputation, protected under Article 21 of the Constitution. The court emphasized that coercive tactics, such as public shaming, are not recognized as lawful recovery methods under the Kerala Co-operative Societies Act or its Rules. It observed that borrowers cannot be compelled to repay loans through actions that damage their reputation or invade their privacy.
Addressing the petitioners’ reliance on the "beat of tom-tom" analogy, the court noted that the practice is outdated and unsuited to modern times but refrained from ruling on its validity since it was not directly challenged. The court concluded that the Society’s actions lacked legal backing, and the flex board’s display was impermissible under existing law. The writ petition was dismissed, and the directive to remove the flex board upheld, reaffirming the principle that debt recovery must adhere to lawful, dignified, and privacy-respecting procedures.
Mr. P.N. Mohanan, Mr. C.P. Sabari, Ms. Amrutha Suresh and Mr. Gilroy Rozario, Advocates represented the Petitioner.
Mrs. Resmi Thomas, GP appeared for the Respondent.
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