Delhi High Court says Lookout circular should not be issued in Bank Loan Default case

The Delhi High Court recently made an observation regarding the issuance of lookout circulars (LOC) concerning bank loan defaults or credit facilities for business purposes.

Importance of Lookout Circulars:

Lookout circulars are notices used by authorities to prevent individuals from leaving the country. They are typically employed in cases involving serious offenses or risks of flight.

Observation by the Court:

The Delhi High Court emphasized that lookout circulars should not be indiscriminately used for cases of loan defaults or business credit defaults. It emphasized that the right of citizens to travel abroad, a fundamental right, should not be restricted solely due to failure in repaying a bank loan.

Key Points:

1. Targeted Use: The issuance of lookout circulars should be reserved for cases involving severe offenses or genuine risks of absconding. They should not be a knee-jerk reaction to every instance of loan default.
2. Fundamental Rights: The court stressed that citizens have a fundamental right to travel abroad, which should not be infringed upon solely due to financial matters such as loan defaults.
3. Proportionality: It is essential for authorities to consider the proportionality of their actions concerning the seriousness of the offense and the impact on the individual’s rights.

Conclusion:

The Delhi High Court’s observation underscores the need for a balanced approach in the issuance of lookout circulars. While ensuring the integrity of financial systems is crucial, it should not come at the expense of fundamental rights such as the freedom to travel. Authorities should exercise discretion and reserve such measures for cases where they are genuinely warranted, rather than as a routine response to loan defaults.