NEW DELHI: The Fundamental Right of an Indian citizen to travel abroad cannot be curtailed only because they failed to repay a bank loan, the Delhi High Court observed while quashing a Look Out Circular (LOC) issued against an individual.
Justice Subramonium Prasad made the observations while quashing the LOC issued by the Bureau of Immigration (BOI)against a person at the insistence of the Bank of Baroda.
The high court said, in every case of bank loan defaults or credit facilities availed for business, the issuance of a lookout circular cannot be resorted to.
“The Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts,” the order read.
As per the case, the petitioner and her husband had executed a Deed of Guarantee for repaying the loan amount disbursed by the bank for cash credit facilities availed by directors of a company.
The cash credit facilities worth Rs 7 crores were released and out of the said amount, Rs 5.95 crores was withdrawn by the directors, as per the petitioner. The bank, however, leveled allegations of misappropriation of the funds following which the legal proceedings were initiated.
The high court, while considering the plea, said, though the Centre’s official memorandum allowing banks to issue a request for opening a LOC, “the said power should be used in exceptional circumstances and not as a matter of routine.”
It can only be issued if departure of such a person is “detrimental to the sovereignty or security of the country, or is a threat to the bilateral relations to any country, or to the strategic or economic interest of the country,” the high court held in its order.
Elaborating on circumstances under which LOCs may be issued, the high court said, “The term ‘detrimental to the economic interests’ must be of such a magnitude that it can significantly affect the economic interest of the country.”
Quashing the LOC issued against the petitioner, the court said, “In the present case, the total loan amount disbursed is about Rs 7 crores and even if one adds the interest to it, it cannot be said that the amount is so large that it will affect the economic interests of the country.”