PSU lenders do not have the power to issue Look Out Circulars: Bombay HC
Bombay High Court on Tuesday ruled that public sector lenders do not have the power to issue Look Out Circulars (LOCs) against citizens and foreigners under the office memoranda (OM) of the Central government. The division bench of Justice GS Patel and Madhav Jamdar ruled this in a clutch of petitions challenging the LOCs issued to restrain people who are indebted to public sector banks from travelling abroad. A detailed order is awaited.
The court, however, while terming empowerment of the managers of public sector banks to issue LOCs as ‘arbitrary’, clarified that OMs of the central government were not ultra vires to the Constitution. With this ruling, all such LOCs issued at the request of the public sector banks were quashed and set aside by the high court.
The division bench has also clarified in its oral order that this order would not affect any existing order issued by a tribunal or criminal court restraining persons from travelling abroad.
Zulfiqar Memon, managing partner of law firm MZM Legal said, the declaration of Look Out Circulars (LOCs) issued by public sector banks as unconstitutional signifies a pivotal stride towards rectifying a systemic injustice.
“This judicial intervention is not merely commendable but imperative, as it restores balance and underscores the sacrosanct principle that liberty is the foundation of civil society,” Memon. “The misuse of LOCs by banks as a coercive tool to intimidate loan defaulters runs contrary to the principles of justice and equity. Banks, while entitled to
