The Bombay High Court has said that issuance of a Look Out Circular (LOC) at the instance of public sector banks against alleged default borrowers in the absence of a statute or law is violative of a person's fundamental rights.
The court made the observation on April 23 while quashing the Centre's decision empowering such banks to seek issuance of LOCs.
A division bench of Justices Gautam Patel and Madhav Jamdar had on April 23 held as unconstitutional the clause of an Office Memorandum issued by the Central government empowering the Chairman, Managing Directors and Chief Executive Officers of public sector banks to seek issuance of LOCs against default borrowers or even persons who stood guarantee for such borrowers.
