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Sunday, Dec 15, 2019

Reconsider policy allowing banks to issue lookout circulars, says HC

mumbai Updated: Dec 04, 2019 00:14 IST
Kanchan Chaudhari
Kanchan Chaudhari

Observing that the liberty of a citizen cannot be curtailed merely because some legal proceeding is pending against him, the Bombay high court (HC) on Tuesday asked the Central government to reconsider its policy that enables public sector banks (PSBs) to get lookout circulars (LOCs) issued against loan defaulters.

“You cannot curtail fundamental right to liberty of citizens and nullify Article 21 like this,” observed a bench of justice SC Dharmadhikari and justice RI Chagla. “We are not going to tolerate this,” it added.

The bench was hearing a petition filed by city resident Gaurav Tayal challenging a look-out circular issued against Ahmedabad-based Ashahi Fibres on the recommendation of Allahabad Bank. The bank contended that Ashahi Fibres had defaulted in repayment of loan of over ₹100 crore. Gaurav Tayal is a former director of the company.

The petitioner became aware of the LOC on March 21, 2019, when he was stopped at Mumbai airport from flying to Doha. He then sent a representation to the ministry of home affairs (MHA) requesting withdrawal of the LOC, but no action was taken. He then moved the HC.

Tayal’s counsel, advocate Girish Godbole, pointed out that while the petitioner was earlier director of the company, he had resigned three years before Allahabad Bank initiated recovery proceedings in 2016. Tayal is not guarantor to the loan, he added.

“We will not allow this. We don’t want to see any more such cases,” said the bench, adding that if the government failed to withdraw the policy, it will pass an appropriate order.

The court has posted the case for Wednesday.