Loanees do not mortgage their constitutional rights with banks: Madras High Court
The Madras High Court ruled that taking a bank loan does not strip a citizen of their constitutional rights, specifically the right to travel abroad. The court revoked a Look Out Circular issued against a loan guarantor, stating that banks cannot use such measures to coerce debt repayment.
Why it matters
This ruling sets a legal precedent protecting individual civil liberties against aggressive debt collection practices by financial institutions.
The mere fact that a citizen of the country either raises a loan from a bank or stands as a guarantor for a loan availed by someone else does not mean that he has mortgaged his constitutional and legal rights lock, stock and barrel with the bank, the Madras High Court has observed.
Justice V. Lakshminarayanan made the observation while dismissing an application filed by Bank of Baroda to review his August 24, 2026 order revoking a Look Out Circular (LOC) issued against Kondepati Ganga Prasad who was a guarantor for a high value loan availed by GVR Infra Projects.
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