The Delhi High Court has recently quashed the look out circular issued by the bank against the loan default.
The court observed that an amicable settlement has been arrived at and the Petitioner has already deposited a sum of Rs.113.50 crore with the State Bank of India, which is the lead member of the consortium, and in view of the fact that there is no criminal case pending against the Petitioner, the Court was of the opinion that the Lookout Circular issued against the Petitioner which has the effect of taking away the Fundamental Right guaranteed under Article 21 of the Constitution of India cannot be permitted to sustain and it is quashed.
“The issuance of lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and 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 syphoning off the loan amounts,” the court remarked.
Facts
The Petitioner is the Managing Director of M/s PC Jewellers Limited, which is a company incorporated under the Companies Act, 1956. The company is the leading jewellery company in India which deals in manufacture, retail and export of gold and diamond jewellery having 56 showrooms and 7 franchisee stores across India.
The Petitioner has been banking with several banks including the State Bank of India and has taken credit facilities from the consortium of about 13 banks of which State Bank of India is the lead Bank.
In the year 2022, PC Jewellers faced financial turbulences and proceedings have been initiated by the State Bank of India and other members of the consortium of banks under Section 19 of the Recovery & Bankruptcy Act, 1993 and Original Applications have been filed against the company and the Petitioner herein before the Debt Recovery Tribunal, Delhi and the State Bank of India has also filed a petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 against the company before the Principal Bench, National Company Law Tribunal, New Delhi.
Since the parties have arrived at a One Time Settlement and the proposal has been accepted by the lead member of consortium, i.e., the State Bank of India, the Petitioner has approached the Court for quashing the Lookout Circular by filing the writ petition.
What Are Look-Out Circulars?
Look out circulars are opened to search for absconding criminals and also to prevent and monitor effectively the entry or exit of anyone who may be sought by law enforcement authorities. When issued, they are sent to all immigration checkpoints in the country.
Case Name : Balram Garg Versus Union Of India & Anr.
Judicial Level & Location : Delhi High Court
Case Number : W.P.(C) 6739/2024 & CM APPLs. 28113/2024, 32279/2024
Date Of Ruling : 12-07-2024
Ruling In Favour Of: Assessee
Coram: Justice Subramonium Prasad
Petitioner Advocate: Mr Anil Kaushik Sr. Advocate with Mr Rajesh Sharma and Rajat Rana Advocates
Respondent Advocate: Mr. Vikrant N Goyal, Mr. Adil Hussain Taqui, GP, Mr. Vikrant N Goyal, Mr. Rajat Srivastava, Advocates
Mr. Rajiv Kapur and Mr. Akshit Kapur, Advocates.
