Shashwati Chowdhury
Published on: June 20, 2022 at 17:38 IST
The Punjab and Haryana High Court has stated clearly that a borrower’s default to make loan payments cannot be construed as fraud when businesses fail for a number of reasons.
The Bench also stated that the quantum of the alleged default by itself could not be used to seek the issuance of an extreme measure such as a “Look Out Circular” (LOC) restricting the borrower’s personal liberty to travel abroad.
The Bench of Justices MS Ramachandra Rao and Harminder Singh Madaan also ruled that the Bureau of Immigration, MHA, could not issue a LOC to detain a person when, admittedly, no FIR had been made against her and “there is no question of her being ‘accused’ of any non-cognizable offence.”
The Petitioner said her eldest child, who lives in Australia, was ready to give birth in July last week and she wanted to be with her during the pregnancy and postnatal periods.
However, she got a caveat petition filed at the bank’s instance, mentioning that the airport immigration authorities issued a lookout circular against her, her family, and associate directors.
The Bench stated that the respondent-bank appeared to assume that the loan payment default that resulted in the account becoming a non-performing asset was only because to the borrower’s fraud.
The court said, “This court can take note of the fact that businesses can fail for a number of reasons, including market conditions, labour unrest, a lack of raw materials, events such as Covid-19, and so on.”
Allowing the case, the Bench said that the MHA, Bureau of Immigration, and Foreign Regional Registration Office did not follow a fair, just, and reasonable procedure in depriving the petitioner of her fundamental right to travel abroad.
The Bench further added that they did not follow natural justice principles and did not even provide her with a copy of the LOC despite her request. Setting aside the LOC against the petitioner, the Bench ordered the respondents to let her to go to Australia to be with her daughter till the end of August.
The decision was made in response to a petition filed by the director of a shoe manufacturing company owned by her husband and others. The Bench was told that the company availed a loan from a bank, for which the petitioner, along with others, stood as guarantors.