"Loan Defaulters Lifestyle Never Suffers; Play With Public Money": Supreme Court

A Bench comprising of Justices Sanjay Kishan Kaul, Justice Abhay Shreeniwas Oka and Vikram Nath orally observed,

"The role of Court is to force the concerned Institution to perform their duties. We can't monitor into how many loans are recovered. That's not our job. How can we monitor a crime?"

The court was considering a petition was filed by the Centre for Public Interest Litigation (CPIL) in 2003 to bring to the notice of Supreme Court the action of HUDCO's officials arbitrarily granting loans for political and extraneous considerations without going in to the merit of each case and even ignoring established procedures, appraisal norms and financial prudence including the advice of Board members.

The Court had earlier referred the matter to the CVC for investigation and the CVC had submitted detailed report in the matter.

During the last hearing in 2017, the Court had made several questions regarding the central government's debt recovery mechanism and how it planned to strengthen infrastructure to speed up retrieval of loans.

During the hearing today, Advocate Prashant Bhushan said that currently, lakhs of crores of loans are written off as bad debts.

He also apprised the Bench that in another PIL filed by him, the Reserve Bank of India was forced to issue a circular on wilful defaulters defining who they are and directed all public sector financial institutions to not further give loans to them.

As the hearing formed shape, the Bench remarked that even though people declare themselves as 'bankrupt', they never really change their lifestyle.

"Their lifestyle never suffers… People play with public money."

"People declare as bankrupt and live like Kings", Bhushan added, citing the example of Indian businessman, Anil Ambani.

Earlier, the RBI was to file as to who are Defaulters who have defaulted over 500 crores, however, haven't done so, he further told the Bench.

Though the National lender gives violation of privacy as an argument, it can't apply to a person who is a defaulter, Bhushan argued.

Adding on, he submitted that only people with selective information can blackmail and that's put to an end when the information is made available in public domain.

The Bench then pointed out that it can't take over aspects of governance.

"I take it that you want to bring accountability in the financial system to ensure that public money is not mishandled?", the Bench asked, to the advocate, who replied in the affirmative.

The Court then directed Bhushan to prepare a brief note of what happened and what is required to be done in the matter within two weeks. The Bench also asked the Additional Solicitor General to examine Bhushan's note, examine what actions have been taken by the government and what actions the government is planning to take.

The matter will next come up in six weeks.

A Timeline - Court Hearings

The Supreme Court had on October 23, 2016 asked the RBI why names of 57 borrowers who have defaulted on bank loans worth a whopping Rs 85,000 crore should not be made public.

"Who are these people who have borrowed money and are not paying back? Why this fact that the person has borrowed money and not paying back be not known to public", a bench headed by the then Chief Justice T S Thakur had asked.

Observing that if people file an RTI query, they must know who the defaulters are, it had asked the Reserve Bank of India (RBI) why the information on defaulters should be withheld. "People should know how much money a person has borrowed and how much money he needs to pay back. The amount payable should be known to public. Why should you withhold the information", the bench said.

In another hearing, the apex court had suggested making public the total outstanding amount without disclosing defaulters' names, but RBI had resisted the proposal citing the confidentiality clause.

CPIL's petition stated that about Rs 40,000 crore of corporate debt was written off in 2015.

The Supreme Court had then directed the RBI to provide a list of companies which had defaulted bank loans of over Rs 500 crore while expressing serious concern over the growth in bad loans. However, the counsel appearing for RBI opposed the suggestion and said that not all defaulters were wilful.

Case Title: CPIL V. Housing and Urban Development Corporation & ors, CWP No. 573 of 2003