LOCs cannot be issued as a general norm by the bank for its loan defaulters: Calcutta HC

The Calcutta High Court (Calcutta HC) has held that merely because few loan defaulters have defrauded the banks and fled from India, the same cannot be used as a uniform rationale for banks to issue Look out Circulars (LOC) in every case. Apart from causing immediate and irrevocable violation of a person’s fundamental right of movement, LOC also have an inexplicably long shelf-life, as they can only be revoked at the instance of the originator. Thus, the Calcutta HC held that – “The only acceptable logic – albeit with some effort – is that a person may flee the country and not return to repay his/her outstanding loan. This, however, cannot be the rule across the board and a borrower’s credentials and circumstances for making payment must be taken into account.