Violation of Privacy and Dignity
The Court observed that coercing borrowers by threatening their reputation and privacy is unconstitutional. Justice Purushothaman remarked,
The Court emphasized that such actions infringe on the fundamental rights guaranteed under Article 21 of the Constitution and are not authorized by any law or rule for loan recovery.
Background of the Case
The case arose from a petition filed by the Chempazhanthi Agricultural Improvement Co-operative Society. The society challenged a directive by the Assistant Registrar of Co-operative Societies to remove a flex board displaying the names and photographs of defaulting borrowers outside their head office.
The bank argued that it resorted to this method after repeated demands for repayment failed. It claimed that many borrowers repaid their loans after their details were published and that the success of this method encouraged them to prepare another set of displays for their premises
Reference to “Tom-Tom” Practice
The bank compared this practice to the “beat of tom-tom” mentioned in Rule 81 of the Kerala Co-operative Societies Rules, 1969, which is allowed during the attachment and sale of immovable properties.
However, the Court dismissed the comparison, calling tom-tomming an outdated and primitive method. While the Court refrained from ruling on the legality of tom-tomming, as it was not a direct issue in this case, it highlighted the irrelevance of such practices in modern times.
Court’s Directive
The High Court directed the society to remove the flex boards, upholding the principle that recovery actions must follow due process and respect individuals’ fundamental rights. This ruling reaffirms that banks and financial institutions cannot bypass legal recovery mechanisms by resorting to public humiliation.
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