Mumbai: Look Out Circulars (LOCs) have been issued against its defaulters. public sector banks He had become a judge and an executioner at the same time, and moved the Bombay High Court to cancel the order. LOC And the enabling powers that the Center gave to such banks, ostensibly in the larger public interest. Fundamental Rights In its reasoned judgment of the April 23 announcement, the HC division bench of Justices Gautam Patel and Madhav Jamdar held that by an executive action, personal liberty under Section 21 and the right to travel abroad cannot be abrogated in this manner. Sending the PSBs through their top officials is also clearly arbitrary as it creates an invalid classification and thus also violates the fundamental right to equality, the HC said, and therefore every LOC issued is invalid.
PSB’s case was that, the HC said, “(perhaps because public sector banks They appear to have been more liberal (or less cautious) in lending.” Their problem was ‘more serious in terms of quantity, and may result in a gross violation of the Article 21 rights of PSB borrowers.’ “This borders on absurdity,” the HC said.
When he was asked how many such economic fugitives are there abroad. PSB said there are “five”.
“That’s it. Exactly five: Vijay Mallya, Nirav Modi, Mehul Choksi, Jatin Mehta and the “Sandesaras (Sterling Biotech)” (presumably Nitin Sandesara and family). We are asked to believe, this is such a big problem that Every borrower from the PSB, regardless of status, should be placed together in the class,” Justice Patel wrote in the judgment. Justice Patel retired on April 25.
The HC said the banks were silent on the next question. “Should the court assume that just because a debtor is traveling abroad, he is, therefore, bound to settle abroad and flee the country?”
Rejecting Centre’s argument that bank-triggered LOCs are exceptional cases and in public interest, HC says no one denies this economic offender must be brought to justice, but clearly, “no ‘public interest’ can supersede ‘procedure established by law’ – in the case of deprivation of the right to life a statute, statutory rule or by statutory regulation and “individual liberty is guaranteed under Article 21 of the Constitution of India.”
Public sector banks (PSBs) violated two fundamental legal principles. No person can be judged on his own reason and principles of natural justice – There was no prior hearing in the issuance of LOCs by public sector banks. Both sides must be heard, the judges said, referring to the Bible, the New King James Version – audi alteram partem – a principle so ancient, it has its presence somewhere in every sacred text. “The fact that a public sector bank is directly concerned with the recovery of loans and yet is armed with this unilateral power only makes the matter worse,” the HC said. “Therefore, both the rules are in full and There is a direct violation of natural justice, and resulting prejudice,” the court concluded.
A large batch of petitions challenged the constitutionality of these LOCs issued by the Ministry of Home Affairs (MHA) through its top officials at the behest of various public sector banks.
The HC also said, “Not even once have we been shown that preventing someone from traveling abroad has remotely resolved the issue – that the debt has been recovered because the person was forced to travel. Permission has been refused.” The HC said, “…there is no reason why a person should be prevented from traveling abroad”, but even if a reason is shown, it This would not bring it within the scope of reasonable restrictions of Art 21 – Right to life and personal liberty.
“If the fundamental right to personal liberty is compromised in this manner, we may as well be placed in de facto detention,” the judges said, adding, “the LOC is clearly a means to bypass or circumvent the PSB.” There is nothing else but a strong strategy. “Look at them as inconveniences and troubles – courts of law.”
The Center defended its 2010 Office Memorandum (OM) and all subsequent communications, which empowered chairmen, MDs, CEOs of banks to choose LOC as an arsenal against defaulting borrowers. “India’s economic interest” and “broader public interest” was the Centre’s mantra. The HC said the Centre’s contention that the OM provides only ‘limited powers to be exercised in exceptional cases’ is not tenable. The LOC number rejected the argument of “extraordinary power” and “it is not a ‘limited power’ to curtail a fundamental right under Article 21,” the HC said.
“Each case is being treated as ‘exceptional’,” the HC said, noting that there was no clear or disclosed basis on which the LOC was actually being issued against a borrower.
The argument of ‘larger public interest’ is completely contrary to settled law, the HC said.
“If any fundamental right is to be constrained under Article 19, the restriction must fit exactly within Articles 19(2) to 19(6). The restrictions are narrow and limited; There is no freedom. “They are really infinitely flexible, and nothing demonstrates this better than the steady expansion of the scope of Article 21 over the last six or seven decades,” the judges said.
The Center said the OM was prepared due to a legislative void. The HC said the Fugitive Economic Offenders Act, 2018, to prevent economic offenders from escaping Indian courts is the precise purpose of these PSB-run LOCs and can be enforced by the banks. This is a more lengthy process and the FEO is a person against whom an arrest warrant has been issued by the court.
The part of the OM which empowers the CMD, CEO of the PSB was struck down by the High Court on the grounds of arbitrary, unreasonable, unreasonable and uncontrolled and excessive power.
The Centre’s counsel had appealed to stay a part of the order for a few weeks. HC rejected such petition.
PSB’s case was that, the HC said, “(perhaps because public sector banks They appear to have been more liberal (or less cautious) in lending.” Their problem was ‘more serious in terms of quantity, and may result in a gross violation of the Article 21 rights of PSB borrowers.’ “This borders on absurdity,” the HC said.
When he was asked how many such economic fugitives are there abroad. PSB said there are “five”.
“That’s it. Exactly five: Vijay Mallya, Nirav Modi, Mehul Choksi, Jatin Mehta and the “Sandesaras (Sterling Biotech)” (presumably Nitin Sandesara and family). We are asked to believe, this is such a big problem that Every borrower from the PSB, regardless of status, should be placed together in the class,” Justice Patel wrote in the judgment. Justice Patel retired on April 25.
The HC said the banks were silent on the next question. “Should the court assume that just because a debtor is traveling abroad, he is, therefore, bound to settle abroad and flee the country?”
Rejecting Centre’s argument that bank-triggered LOCs are exceptional cases and in public interest, HC says no one denies this economic offender must be brought to justice, but clearly, “no ‘public interest’ can supersede ‘procedure established by law’ – in the case of deprivation of the right to life a statute, statutory rule or by statutory regulation and “individual liberty is guaranteed under Article 21 of the Constitution of India.”
Public sector banks (PSBs) violated two fundamental legal principles. No person can be judged on his own reason and principles of natural justice – There was no prior hearing in the issuance of LOCs by public sector banks. Both sides must be heard, the judges said, referring to the Bible, the New King James Version – audi alteram partem – a principle so ancient, it has its presence somewhere in every sacred text. “The fact that a public sector bank is directly concerned with the recovery of loans and yet is armed with this unilateral power only makes the matter worse,” the HC said. “Therefore, both the rules are in full and There is a direct violation of natural justice, and resulting prejudice,” the court concluded.
A large batch of petitions challenged the constitutionality of these LOCs issued by the Ministry of Home Affairs (MHA) through its top officials at the behest of various public sector banks.
The HC also said, “Not even once have we been shown that preventing someone from traveling abroad has remotely resolved the issue – that the debt has been recovered because the person was forced to travel. Permission has been refused.” The HC said, “…there is no reason why a person should be prevented from traveling abroad”, but even if a reason is shown, it This would not bring it within the scope of reasonable restrictions of Art 21 – Right to life and personal liberty.
“If the fundamental right to personal liberty is compromised in this manner, we may as well be placed in de facto detention,” the judges said, adding, “the LOC is clearly a means to bypass or circumvent the PSB.” There is nothing else but a strong strategy. “Look at them as inconveniences and troubles – courts of law.”
The Center defended its 2010 Office Memorandum (OM) and all subsequent communications, which empowered chairmen, MDs, CEOs of banks to choose LOC as an arsenal against defaulting borrowers. “India’s economic interest” and “broader public interest” was the Centre’s mantra. The HC said the Centre’s contention that the OM provides only ‘limited powers to be exercised in exceptional cases’ is not tenable. The LOC number rejected the argument of “extraordinary power” and “it is not a ‘limited power’ to curtail a fundamental right under Article 21,” the HC said.
“Each case is being treated as ‘exceptional’,” the HC said, noting that there was no clear or disclosed basis on which the LOC was actually being issued against a borrower.
The argument of ‘larger public interest’ is completely contrary to settled law, the HC said.
“If any fundamental right is to be constrained under Article 19, the restriction must fit exactly within Articles 19(2) to 19(6). The restrictions are narrow and limited; There is no freedom. “They are really infinitely flexible, and nothing demonstrates this better than the steady expansion of the scope of Article 21 over the last six or seven decades,” the judges said.
The Center said the OM was prepared due to a legislative void. The HC said the Fugitive Economic Offenders Act, 2018, to prevent economic offenders from escaping Indian courts is the precise purpose of these PSB-run LOCs and can be enforced by the banks. This is a more lengthy process and the FEO is a person against whom an arrest warrant has been issued by the court.
The part of the OM which empowers the CMD, CEO of the PSB was struck down by the High Court on the grounds of arbitrary, unreasonable, unreasonable and uncontrolled and excessive power.
The Centre’s counsel had appealed to stay a part of the order for a few weeks. HC rejected such petition.
