Look out circulars – a pressing need for a look-over

livemint.com:

airport to travel abroad. Recently, the High Court of Punjab and Haryana stepped in and directed that these basic requirements should be read into the OM. However, the Supreme Court stayed the decision of the High Court, and it remains to be seen how the Supreme Court deals with this issue.

Given the far-reaching implications of issuance of LoCs, one would ordinarily expect that these would be used only in exceptional circumstances. On the contrary, in recent times, there has been indiscriminate and hasty use of LoCs without procedural compliances. This has caused immense inconvenience and compelled individuals to get embroiled in the Court process.

LoCs are routinely issued against witnesses who are not accused of any crime. The explanation offered is standard – that investigation is ongoing, and the person may be accused someday. Of course, there is never a response for when an investigation will be closed (it ordinarily stretches over several years).

There have been cases where a person against whom no investigation is pending is stopped at the airport and is then forced to rush to the Court to identify the reasons for issuing an LoC and then go through the arduous process of having it cancelled. Even if Courts cancel the LoC, there is no reversing the reputational and monetary loss. Another major concern is with public banks issuing LoCs.

The OM gives no indication as to when banks can call for an LoC to be issued. Absent any guidelines, the banks tend to formulate their own standards which lack uniformity and are often arbitrary. The only semblance of guidance is that LoCs can be issued to protect the economic interest and larger national interest.