The Delhi High Court (HC) has said that the fundamental rights of a human can’t be taken away over non-payment of loans. The high court made this observation while quashing a Look Out Circular (LOC) issued by public lender State Bank of India (SBI) against one Sushil Kumar Sehgal over car loan repayment default. A Look Out Circular is issued by enforcement agencies to prevent loan defaulters from leaving the country.
Sushil Kumar Sehgal versus Union of Indian & Others
In 2013, two care loans were sanctioned by SBI’s Kashmere Gate to Sehgal for the purchase of two cars. While the first loan for the purchase Renault Duster was worth Rs 13 lakh, the second one for the purchase of a Verna CRDI was Rs 11.90 lakh. Even as payment of instalments became irregular, SBI officials were unable to contact Sehgal, who was employed in Dubai.
An FIR was registered against Sehgal on November 15, 2019, at the Kashmere Gate Police Station for offences under Section 420 of the Indian Penal Code IPC on the ground he defaulted on the car loans taken by him. Since a notice under Section 41A CrPC and a non-bailable warrant could not be served to Sehgal, he was declared as a proclaimed person by the metropolitan magistrate on January 30, 2023. On the basis of said proceedings, a Look Out Circular was also issued.
On May 29, 2023, the additional session judge, stayed the order by the metropolitan magistrate. However, since Sehgal did not file the requisite process fee, the interim stay granted to him was vacated in July 2023. This order was also challenged by Sehgal before this HC, which directed the additional session judge to decide the revision petition filed by him. In the meantime, it was directed that no coercive action be taken against the petitioner. Since the order declaring Sehgal as a proclaimed person was set aside, the HC had to decide whether the LOC against him would continue or not.
What the HC said?
“It is well settled that an LOC is opened against a person who is accused of a cognizable office under the Indian Penal Code to ensure his/her presence before the investigating authorities and before the court. Since the petitioner was not appearing before the investigating authorities or before the courts, he was declared as a proclaimed person. This court cannot find fault with the respondents for opening the LOC against the petitioner,” the HC said in its order dated October 18, 2023.
“However, in the present case, the facts point out that the petitioner has appeared before the Court and the Order declaring the petitioner as a proclaimed person no longer exists. This court is of the opinion that for non-payment of loans in respect of two cars, the fundamental rights of the petitioner cannot be taken away,” it added.
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An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.
In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
sunita.mishra@proptiger.com
