Ghulam Hassan Sofi and another vs State and others

The petitioner's are in arrears to respondent/Financial Corporation (State Financial Corporation) on account of loan borrowed by them in 1990

for purchase of Tourist vehicles repayment whereof allegedly suffered due to lack of sufficient income, attributable to the disturbed public order

prevalent then, and claiming that said corporation was denying issuance of no objection certificate required for renewal of their permits by the

concerned RTOs, they have instituted a writ petition being No. 608 of 2005 for certain directions to enable renewal of their route permits after

which only they can ply their vehicles and liquidate the due outstanding etc.

During pendency of aforementioned petition, the respondent/State Financial Corporation appears to have decided to seize the mortgaged

properties of defaulters besides taking legal action against them. In addition, they have also decided to send teams of officials' alongwith drum

beaters to residence of defaulters who would beat the drums before their residential and official premises, as reflected in a news item carried by

daily ""Alsafa"" in its issue of 15.02.2006, a photocopy whereof has been furnished for record, and aggrieved thereby, the petitioners have instituted

this petition for prohibiting the proposed action of respondent/Corporation. During course of his brief submissions the petitioner's counsel has

contended that for liquidation of loan in case of petitioners the Central Government has under a package relief scheme provided necessary funds to

State Government, for helping failed loanees, benefit whereof is due to them also and under consideration at the appropriate level and accordingly

the action proposed by respondents was not warranted.

I have heard learned counsel and considered the matter. In so far as the question of taking recourse to legal remedy available for recovery of

amounts due from petitioners is concerned, the respondent/Corporation would no doubt be within its rights for doing the same as much as the

petitioners would be to project all defenses available to them alongwith whatever benefits the Central or State Government may extend. So, that

part of the matter cannot perhaps be considered at this stage when the proposed legal action is yet to be taken, what presently attracts attention is

the unusual idea of respondent/Financial Corporation to send drum beating officials to residential and official premises of defaulters albeit as a

measure of recovery proceedings. In this behalf it would be appropriate to observed that advancement of loan by financial institutions and

recoveries in cases of default are all matters very well covered by different statutes and terms of the loan, so, ordinarily all measures of recoveries

should flow there from only. Any method outside their orbit can or be incidental thereto.

What specific reference to the matter in hand it would be appropriate to notice that the ""State Financial Corporation Act"" which governs

advancement and recovery of loans contains extremely effective provisions under Section 30 and 31 thereof including attachment of the properties

even before issuance of formal notices at the threshold, for realizing outstanding amounts, which does not leave any room for shrill measures like

drum beating to harass the defaulters. It is ridiculous that instead of taking resort to legally provided for and commercially acknowledged modes, or

the contractual terms, the mandarins of respondent/Corporation have conceived an extremely cheap and undignified mode of seeking repayment of

loans which currently does not look civilized society. There is absolutely no doubt that the respondent/Corporation or for that matter any other

financial institution is certainly within its rights to seek repayments of debts but that has to be within the bounds of law and procedure provided

therefore. By beating drums on door steps of defaulters, they would only be indulging in ugly and unethical road shows unworthy of right thinking

and serious minded people that they are supposed to be. Besides that this sort of an extra systemic arrangement may also amount to a tacit

expression of no confidence in the system; which in addition of having adverse social implications may even breed similar reactions. What requires

to be understood, especially in view of all that this society has gone through in the recent past, and the resultant inertia in commercial activity is that

all debtors would certainly not be defaulters by choice which should ordinarily convince money mangers that they would be acting more wisely by

behaving as welfare functionaries rather than indecent money lenders, even while doing the unpleasant jobs of demanding, which would perhaps

help in better discharge of the serious and sacred duty of social and economical uplift of society that they are charged with.

With these observations I feel that the idea of beating drums of defaulters in public not being in keeping with legally provided, contractually

expected and commercially acknowledged modes of seeking repayment of outstanding debts needs to be discarded forthwith, if well accepted

modes and methods do not appear to be effective in any particular case, than those responsible for recoveries could think of something more

decent and dignified rather than making a mockery of the serious business that financing it.

The application stands accordingly disposed of.