The Karnataka High Court has ruled that the Office Memoranda issued by the Ministry of Home Affairs regarding Look Out Circulars are invalid, prohibiting banks from utilizing them for loan recovery purposes. Despite the absence of a formal challenge to these Memoranda, the Court emphasized that it can reject their validity if their inherent flaws are evident upon examination.
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The Karnataka High Court has ruled that the Office Memoranda (OMs) issued by the Ministry of Home Affairs (MHA) regarding Look Out Circulars (LOCs) are invalid. This judgment has significant implications, particularly for banks that have been utilizing these circulars as a means to recover loans.
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The court’s ruling underscores the importance of adhering to statutory provisions and the protection of fundamental rights, setting a precedent that could influence future legal interpretations and enforcement actions related to LOCs.
Justice Krishna S Dixit examined the validity of the OMs that were being used by public sector banks to prevent foreign travel of persons with pending loan default cases.
The Court looked into Section 21 of the Passports Act, 1967, which enables the Central government to delegate its powers to any officer subordinate to it, State governments, or the officer of the Indian Consul abroad.
“Thus, there can be can be no delegation to any other entity like the Chairman/Managing Director/Chief Executive of Public Sector Banks,”
-Justice Dixit said.
The case came under the scrutiny of Justice Dixit, who pointed out that despite the absence of a formal challenge against the OMs, it does not preclude the Writ Court from exercising its authority.
“OMs on LOCs can be said to be non est and therefore, they would not come to the aid of the banks.”
-Karnataka High Court
The court acts as a guardian of the Constitution and a protector of fundamental rights, a role that it takes seriously.
The judgment emphasized-
“When such instruments are pressed into service by the State Entities under Article 12, to repel the complaint of violation of Fundamental Rights, Constitutional Courts cannot blindfoldedly accept the same as being valid & enforceable, merely because no challenge in the pleadings is laid to their vires.”
This statement is pivotal, highlighting the court’s stance on the importance of constitutional validity over procedural technicalities. The court further elaborated that the OMs in question have not been demonstrated to be issued under any specific provision of the Passports Act or any other statute, which raises questions about their legal standing.
The crux of the court’s decision lies in its assertion that instruments lacking clear statutory backing, when used by state entities to counter allegations of fundamental rights violations, cannot be automatically deemed valid and enforceable. This principle is particularly relevant in a democratic society where the protection of individual rights is paramount.
No LoC can be issued for the mere recovery of loans.
-Karnataka High Court
The court’s ruling, therefore, not only addresses the specific issue of LOCs and their use by banks for loan recovery but also sets a broader legal precedent regarding the enforcement of government directives that may impact fundamental rights.
The Karnataka High Court’s decision is a reminder of the judiciary’s role in ensuring that the exercise of power by state entities is within the bounds of law and constitutionality. It reaffirms the importance of legal scrutiny and the need for government actions to have a solid legal basis, especially when they have the potential to affect individual freedoms and rights.
This ruling could have far-reaching implications, particularly for financial institutions and other entities that have relied on LOCs as a tool for enforcing loan recoveries. It calls into question the validity of using such circulars without explicit statutory authorization and highlights the necessity for a more nuanced approach that balances the need for security and the protection of individual rights.
In conclusion, the Karnataka High Court’s judgment is a significant development in Indian jurisprudence, emphasizing the supremacy of the Constitution and the protection of fundamental rights over procedural technicalities and government memoranda lacking statutory support.
This decision is likely to influence future legal debates and practices related to the issuance and use of Look Out Circulars and similar instruments by state entities.
CASE TITLE:
Dr. Bavaguthu Raghuram Shetty vs Bureau Of Immigration
Read Judgment
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