States High court

“Public Sector Banks Don’t Have Power To Issue LOCs Against Defaulters”: Bombay HC

The Bombay High Court on Tuesday has ruled that public sector banks do not have the power in law to issue Look Out Circulars against the default borrowers.

The HC’s verdict would render all LOCs issued by such banks against defaulters as quashed.

A division bench of Justices Gautam Patel and Madhav Jamdar held as unconstitutional the clause of an office memorandum issued by the central government empowering chairpersons of the public sector banks to issue LOCs against the default borrowers.

Advocate Aditya Thakker, while appearing for the Union government, sought the HC to stay its order but the bench refused.

COURT ORDER

The court passed its verdict on a bunch of petitions challenging validity of the said clause.

The bench stated that the Bureau of Immigration shall not act upon such LOCs (issued by banks against defaulters).

The court also stated that its judgment would not affect the orders issued against any defaulter by a tribunal or a criminal court restraining them from travelling abroad.

While the office memorandum issued by the Centre was not ultra vires the Constitution, the HC stated the clause empowering the chairperson of a public sector bank to issue LOC was “arbitrary and without power in law.”

The Centre’s office memorandum, in an amendment made in 2018, empowered the public sector banks to issue LOCs in the “economic interest of India”.

This essentially restrained a person from travelling abroad if his/her departure could be detrimental to the economic interest of the country.

The petitioners contended that the words “economic interest of India” can’t be equated with the “financial interests” of any bank.

Read More: Supreme Court, Delhi High Court, States High Court, Other Courts, International

Meera Verma

Recent Posts

Punjab & Haryana HC Notice To Jindal Law School Over AI-Generated Exam Claims

The Punjab and Haryana High Court on Tuesday has issued a notice to Jindal Global…

4 hours ago

ED Files Money Laundering Complaint Against Charanjit Singh Bajaj, 4 Others

The ED on Tuesday has filed a Prosecution Complaint before the Special Court in Mohali…

5 hours ago

Pune Porsche Case: SC Rejects Anticipatory Bail To Father Of Minor Driver’s Friend

The Supreme Court on Tuesday denied bail to Arunkumar Devnath Singh, whose son is a…

6 hours ago

SC Dumps Plea Against Quashing LOC For Sushant Singh Rajput’s Ex-House Help

The Supreme Court on Tuesday dismissed the Centre's appeal against a Bombay High Court order…

6 hours ago

Rape Case: SC Issues Notice On Ex-Army Officer’s Plea For Quashing Charge sheet

The Supreme Court on Tuesday has agreed to review a plea from retired Army Captain…

7 hours ago

Chhattisgarh NAN Scam: FIR Against 2 Retired IAS Officers, Former AG

The Chhattisgarh Anti-Corruption Bureau on Tuesday has registered a case against 2 retired IAS officers…

7 hours ago