HC to Financial Institutions
Srinagar, Apr 1: Here is an advice and directions for banks and financial institutions from the High Court.
Financing is serious business and Finance Institutions should not make mockery of this “serious business” by beating drums outside houses of defaulters.
The High Court has observed that Financial Institutions would indulge in ugly and unethical road shows “unworthy of right thinking and serious people,” by resorting to drum beating outside the houses of defaulters.
The Court has passed the orders in a writ petition vide number OWP 608 of 2005 filed by petitioners who are defaulters to State Financial Corporation (SFC).
They had borrowed a loan for purchase of Tourist vehicles in 1990. However, they failed to repay the loan and held the “disturbed public order prevailing in Kashmir” responsible for it. They pleaded that SFC was denying no objection certificates required for renewal of their permits by the concerned RTO’s and sought help of Court in this regard.
However when the case was sub-judice, the SFC decided to take legal action against them by seizing the mortgaged properties of defaulters. The corporation also decided to sent official teams along with drum-beaters to houses and offices of defaulters, forcing them to move to the court to prohibit the proposed action.
“I have heard learned counsels and considered the matter. The respondents are within its right to take recourse to legal remedy available for recovery of amounts from petitioners. But what presently attracts attention is unusual idea of respondent Corporation to send drum-beaters to residence and offices of defaulters for recoveries,” observed single bench of Justice Bashir A Kirmani.
“Providing loans and recovering them are matters which are covered by different statutes and terms of the loan. So ordinarily all measures of recoveries should flow thereform only,” the Court observed.
The Court said State Financial Corporation Act, governs advancement and recovery of loans and it contains extremely effective provisions under section 30 and 31, which includes attaching of property for realizing outstanding.
The Court said in such situation there was no room for “shrill measures like drum beating to harass the defaulters.”
“It is ridiculous that instead of resorting to legal action, the respondents have conceived extremely cheap and undignified mode of seeking repayment of loans which currently does not look civilized. By beating drums on doorsteps of defaulters they would only be indulging in ugly and unethical road shows unworthy of right thinking and serious minded people. Besides, this could be construed as extra-systemic arrangement, which signifies of having no confidence in the system,” the Court said.
Asking the banks and other financial institutions to behave like “welfare functionaries,” the Court said all defaulters could not be defaulters by choice and reminded the respondents about inertia in commercial activities in recent years.
The Court advised the Financial Institutions that it would be wise on their part if they behave as welfare functionaries rather than indecent moneylenders and advised them to discard drum-beating plans forthwith.