HC quashes ‘Look Out Circular’ against man issued over non-payment of car loans

High Court quashes LOC against man who defaulted on car loan payments; directs him to present on every date of hearing and deposit security of ₹5,00,000 with Registrar General.

Noting that the fundamental rights of a person cannot be taken away over non-payment of loan for two cars, the Delhi High Court has quashed a ‘Look Out Circular’ (LOC) issued against a man who had defaulted on payment of the loans.

The High Court said it is well settled that the LOC is opened against a person who is accused of a cognisable offence under the Indian Penal Code (IPC) to ensure his/her presence before the investigating authorities and before the court.

As the man has appeared before the court, the order declaring him as a ‘proclaimed person’ no longer exists, the court explained. It said that the LOC against the man was issued earlier by the police as he was not appearing before the investigating authorities or before the courts.

As per the FIR registered in November 2019 at the Kashmere Gate police station, the man was charged for offences under Section 420 (cheating) of the IPC on the ground that he defaulted on the car loans taken by him.

The FIR stated that he took a car loan of ₹13,00,000 from State Bank of India for purchasing a car. The loan was sanctioned in June 2013. Later, the man approached the bank again for another car loan of ₹11,90,000.

The second loan was sanctioned in June 2013. The FIR stated that the payment of instalments became irregular. When the bank officials tried to contact him, he did not respond. When they visited the address provided by him, it was found that he had already moved out of there.

The police stated that the man is working in Dubai and keeps coming to India. It stated that a non-bailable warrant was issued against him but the same could not be executed and thereafter he was declared a proclaimed person by a local court in January 2023. On the basis of the proceedings an LOC was issued against the man.