The Hon’ble Delhi High Court opined that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offense under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine.
The term ‘detrimental to the economic interests’ must be of such a magnitude that it can significantly affect the economic interest of the country. The issuance of a lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offense for the misappropriation or siphoning off the loan amounts.
Brief Facts:
Metaphor Exports Private Limited approached the erstwhile Bank of Baroda to avail cash credit facilities of Rs.9 crore. The Petitioner executed a Deed of Guarantee for repaying the amount disbursed by Respondent No.2/Bank for the cash credit facilities to be extended by the Bank. It is stated that the amount was misappropriated. Respondent No.2/Bank initiated proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act. The learned DRT held that Respondent No.2/Bank was entitled to recover a sum of Rs. 2,95,74,316/- along with pendente lite interest and future interest @ 12% per annum simple interest from the Petitioner.
A complaint was registered by the Central Bureau of Investigation (CBI) against the Petitioner herein and the Directors of the company under Section 420 and 120B IPC read with Section 13 (1)(d) and Section 13(2) of the Prevention of Corruption Act. A request was made by the Bank of Baroda for opening a Look Out Circular (LOC) against the Petitioner and the Bureau of Immigration being the executor opened a Lookout Circular against the Petitioner.
Contentions of the Petitioner:
It was submitted that the Petitioner was not an accused in any offence. It was contended that the the right of a person to free movement including the right to go abroad has been construed as a Fundamental Right enshrined under Article 21 of the Constitution of India.
Contentions of the Respondent:
It was urged that even if there is no cognizable offence under the IPC or any other penal laws, in exceptional circumstances LOC can be issued whereby the departure of a person from India can be declined if it appears to the authorities that the departure of such person is detrimental to the economic interests of the country.
Observations of the Court:
The Court noted that a Lookout Circular can be issued against a person at the instance of any of the agencies mentioned in the Office Memorandums issued by the Ministry of Home Affairs from time to time.
It was opined that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offense under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine.
The term ‘detrimental to the economic interests’ must be of such a magnitude that it can significantly affect the economic interest of the country. The issuance of a lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offense for the misappropriation or siphoning off the loan amounts.
The Decision of the Court:
Based on the aforementioned reasons, The Hon’ble Delhi High Court allowed the petition and quashed the Lookout circular against the Petitioner.
Case Title: Shalini Khanna v Union of India & Anr.
Coram: Hon’ble Justice Subramonium Prasad
Case no.: W.P.(C) 10951/2022
Advocate for the Petitioner: Advs. Mr. Hrishikesh Baruah, Mr. Kumar Kshitij and Mr. Anurag Mishra
Advocate for the Respondents: Advs. Mr. Ajay Digpaul, Mr. Kamal Digpaul, Ms. Ishita Pathak Mr. Ashish Verma and Mr. Kartikey Bhargava
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