Vineet Gupta vs Union Of India And Ors. & Anr on 10 February, 2026
21. The decision in the case of Viraj Chetan Shah was also considered by
a coordinate bench of this Court in Sahil Chugh v. Union of India8,
wherein, it was held that LOC issued at the behest of a public sector bank
against borrowers/directors merely on account of loan default or declaration
as wilful defaulters, in the absence of any criminal proceedings, are
unsustainable in law. It was emphasized that the expression "detrimental to
the economic interests of India" under the MHA guidelines is meant for
exceptional cases involving grave, systemic or national economic impact,
and not routine commercial defaults. Since in the facts of the case therein no
FIR, charge-sheet, or cognizable offence was pending against the petitioner,
and the disputes were purely civil and pending before the DRT, the Court
quashed the LOC as arbitrary and disproportionate. The relevant extract of
the aforesaid decision is extracted as under:-