In a landmark ruling, the Bombay High Court has struck down the powers granted by the Centre to public sector banks (PSBs) to issue lookout circulars (LOCs) against defaulters. The court condemned the practice, stating that PSBs had assumed the roles of both judge and executioner, violating fundamental rights in the process.
The division bench of Justices Gautam Patel and Madhav Jamdar highlighted that the issuance of LOCs by PSBs infringed upon the fundamental rights guaranteed under Article 21, including personal liberty and the right to travel abroad. The court’s reasoned ruling, uploaded Thursday, highlighted the unconstitutional nature of executive action that curtailed these rights.
The judgment, which came in response to pleas challenging the constitutional validity of LOCs issued by the Ministry of Home Affairs at the behest of PSBs, invalidated over 100 such circulars.
The ruling denounced the arbitrary nature of PSBs issuing LOCs to high-profile borrowers such as Vijay Mallya, Nirav Modi, and Mehul Choksi. It highlighted the need for legal safeguards and due process in such matters, ensuring the protection of fundamental rights for all citizens.
The court stressed upon the excessive power wielded by PSBs and the deprivation of citizens’ rights, calling for adherence to legal procedures in dealing with economic offenders.
Furthermore, the Bombay High Court restricted the Bureau of Immigration from acting on PSB-issued LOCs, providing clarity on the implications of the Debt Recovery Tribunal (DRT) and the Fugitive Economic Offenders (FEO) Act.
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Right to travel abroad cannot be abrogated like this… banks playing judge, executioner: HC
