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C. V. BHASKAR REDDY
Pathuri Praveen – Appellant
Versus
Union of India – Respondent
ORDER :
C.V. Bhaskar Reddy, J.
1. This writ petition is filed by the petitioners seeking to declare the action of the Respondents in issuing Look Out Circular (LOC) against the petitioner No. 1 as illegal, arbitrary and unconstitutional and consequently, prayed this Court to set aside/quash the same and direct the Respondents not to obstruct/restrain the Petitioner No. 1 from travelling to and fro from the country vide Passport No.W2210071.
2. Heard the learned counsel for the parties and perused the record.
3. The petitioner No. 1 claims to be the Managing Director of petitioner No. 2-M/s. Progressive Constructions Limited (for short 'the company'), incorporated under the provisions of Companies Act and engaged in the business of infrastructure construction and developmental activities. It is the case of the petitioners that for the purpose of business, the said company availed various credit facilities from the consortium of Banks and the petitioner No. 1 stood as guarantor. It is further case of the petitioners that the said company suffered losses and could not repay the loans and at the request of the company, the loan was restructured. It is further case of the petitioners that p
The issuance of a Look Out Circular by a bank against a guarantor is unconstitutional if it violates fundamental rights and lacks proper authority under established guidelines.
The central legal point established in the judgment is that the issuance of Look Out Circulars must be based on exceptional circumstances and must conform to constitutional standards, including the r....
Look Out Circulars must be justified by substantial evidence and cannot infringe on fundamental rights without clear, objective criteria.
Issuance of Look Out Circulars must be based on concrete evidence and cannot be justified solely by the default in loan repayment, as it violates fundamental rights without due process.
The specific mention of validity period in a Look Out Circular (LOC) and the application of new guidelines for LOC deletion requests to previously issued LOCs.
Look Out Circulars must adhere strictly to legal frameworks and cannot deny fundamental rights without justifiable grounds.
Lookout Circulars must be periodically reviewed and cannot be misused as debt collection mechanisms against independent directors after they cease their directorship.
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