Keywords – Defrauded, Fled, Bank, Uncivilized , Look Out Circulars, One Time Settlement ,Calcutta High Court.
The Calcutta High Court has ruled [Manoj Kumar Jain v. Union of India] that banks cannot use the fact that a small number of people have cheated banks and departed India as a consistent justification for issuing Look Out Circulars (LOC) in an indiscriminate manner.
Justice Mosheim Bhattacharya, a single-judge, stated that the issuing of LOCs should be governed and shouldn’t be the standard procedure for recovering unpaid debts. The Calcutta High Court ruled,The severe consequences of issuing a Look Out Circular must thus be regulated to give it structure and certainty and prevent it from becoming the standard method for recovering unpaid debts to the bank. Isolated and infrequent instances of people leaving the country cannot serve as the standard justification for the widespread distribution of Look Out Circulars.
Relevantly, the Court stated that abruptly deboarding a passenger from a flight based on such a LOC is harsh and barbaric. Deboarding someone from an aircraft without giving them a solid reason for doing so has a stringent and uncivilised quality to it. The passenger in question is typically only given a piece of paper and instructed to board the plane at the last minute without being informed of the cause. The fundamental rights to travel and life are inevitably menace and violated with impunity in this situation, which goes against natural justice and fair play norms.
The Court stressed that LOCs should only be provided in exceptional cases when the borrower is likely to escape the country and not repay the undone loan because they have the effect of restricting a person’s freedom of movement and right to travel. “Look Out Circulars cannot be issued at random or in response to the smallest provocation, particularly when a bank requests travel restrictions as a safety net for payments still owed to the bank. The only plausible explanation, while difficult to prove, is that a borrower might leave the country and not come back to pay back the debt. The bench ruled that this cannot be the general rule and that a borrower’s qualifications and reasons for making a payment must be taken into consideration.
Director of Jain Infra Private Limited,i.e. Manoj Jain had filed a petition, and the bench had been made aware of it. He had missed payments on a loan which he had got from a group of 11 banks. He was denied boarding a flight in 2022 that was headed to the United Kingdom after the Immigration Authorities notified him that a LOC had been filed against him at the request of the Indian Overseas Bank. The Court noted that Jain had paid off all of the bank’s outstanding debts and had further provided two banks—Andhra Bank and IDBI Bank—with a One Time Settlement (OTS) plan.
Regarding the Indian Overseas Bank, the Court observed that the bank had already made 86 lakh rupees from the sale of a home that had been trothed by the petitioners, and that the entire value of immovable securities delivered to the said bank was 5.45 crores. In addition, it was also pointed out that the CBI Court had granted the petitioner 19 travel authorizations and that no charges had been brought against him for remonstrance with the terms of the travel concurrence or for failure to return to India on time. As per the Court, the claim that the petitioner still poses a threat to the nation’s economic interests is absurd and lacks any supporting evidence. The Court has also noted a recent tendency of banks using LOCs as a means of collecting pastdue financial obligations. The bank bases this argument on the possibility that the person’s refusal to return to India will prevent the payment of the debt. The argument made is that the person’s sincerity in paying back the debts is best ensured if they stay accessible, i.e. in Indian territory, the Court stated. “The Banks had a fear that the person will leave the nation permanently and that their loans will be written off may be justified. However, this logic cannot be universally applied to all debtors without exception. The standards for judging a borrower’s creditworthiness and his or her integrity in reimbursement must be decided on a case-by-case basis. Before denying someone’s fundamental right to travel, the ability and willingness of the borrower to pay must be considered, as well as the means and manner of repayment, the Court ruled. It further pointed out that the petitioners were being denied on the basis of India’s economic interests. 1However, there is no proof that the petitioners’ planned departure from the nation for a set amount of time would harm India’s economic interests. It was emphasised that the petitioners had not been docketed as fraudsters, economic violators,or even money launderers. The Court invalidated the LOC granted against the petitioner after making these findings. Atorneys Sudip Deb, Riju Ghosh, Sumitava Chakraborty, Aranyak Saha, and Ipsita Ghosh represented the petitioner. The Central government was represented by attorney Narendra Prasad Gupta and deputy solicitor general Billwadal Bhattacharya. The banks were represented by solicitors Shiv Mongal Singh and Moriam Sanfui.
Written by- Drishti Pandey College – S.S. Khanna Girls Degree College, University of Allahabad Semester – 4 th an intern under legal vidhiya
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