Ms. Usha Rani Maganti vs Uco Bank
2022 Latest Caselaw 5042 Tel

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                                                                KL,J
                                                      W.P.Nos.17271 & 36901 of 2022


                 HON'BLE SRI JUSTICE K. LAKSHMAN

             WRIT PETITION Nos.17271 AND 36901 OF 2022

COMMON ORDER:

       The grievance in both the writ petitions is one and the same and therefore

both the writ petitions are being heard together and disposed of by way of this

common order.


      2. FACTS OF THE CASE:


      i) Petitioner in W.P.No.17271 of 2022 i.e., Dr. Venkata Ramana Rao

Maganti, is the husband of writ petitioner in W.P.No.36901 of 2022 i.e., Ms.

Usha Rani Maganti. Both the petitioners in the aforesaid two writ petitions

sought to declare the action of the respondent Nos.1 to 3 Bank in issuing Look

out Circulars both dated 07.11.2020 as illegal and also sought a direction to the

bank to consider the representations submitted by them to review the Look Out

Circular in terms of guidelines issued by Ministry of Home affairs vide Office

Memorandum dated 22.02.2021.

ii) Petitioner in W.P.No.17271 of 2022 i.e., Dr. Venkata Ramana Maganti

in his personal capacity had availed loan to a tune of Rs.75.00 lakhs from

respondent No.1 Bank and he was the co-applicant for the loans availed by three

other individuals. His wife, the petitioner in W.P.No.36901 of 2022 is a

guarantor. She stood as guarantor for the aforesaid loan by extending property

KL,J W.P.Nos.17271 & 36901 of 2022

admeasuring 1.871/2 cents at Nidamanuru Village, Delhi Public School,

Vijayawada, Krishna district Andhra Pradesh. Since the loanees failed to repay

the aforesaid Loan amount, respondent Bank has initiated proceedings under

SARFAESI Act. Original applications were also filed by Bank and writ

petitioners and others have filed securitization applications under the provisions

of SARFAESI Act before the Debt Recovery Tribunal. According to the

petitioners, respondent Bank had offered one time settlement proposals and the

Bank had agreed to close all four loan accounts for Rs.3,75,00,000/-. They have

paid the same amount. The details of the same are specifically mentioned in the

writ affidavit. However, according to the petitioners they are due and liable to

pay an amount that is Rs.6,36,32,384.21/-. Whereas according to the 1st

Respondent Bank, the petitioners are liable to pay Rs.6,36,32,384.21/-. Both of

them, in their affidavits, counter affidavit, reply affidavit have stated about the

details of the cases pending before the Debt Recovery Tribunal, this Court also

amount due.

iii) However for the purpose of deciding the present writ petitions, the

said issues are not much relevant.

iv) The grievance of the petitioners in the present writ petitions is that the

Respondent Bank had issued Look Out Circular against the petitioners,

continuing the same in violation of the guidelines issued by the Ministry of

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Home Affairs, Union of India vide Office Memorandum dated 22.02.2021.

According to them, there are no criminal proceedings pending against them,

there is no investigation initiated by the Enforcement Directorate. The

proceedings initiated by the Bank are under SARFAESI Act for recovery of the

amount and securitization applications and writ petitions are pending before

Debt Recovery Tribunal and this Court respectively. Therefore issuance of Look

Out Circulars and continuation of the same is in violation of the aforesaid

guidelines dated 22.02.2021. It also amounts to violation of their right

guaranteed under Article 21 of the Constitution of India.

v) According to petitioner in W.P.No.17271 of 2022, he is a technocrat

who is indigenously developed, manufactured and supplied products like LED

Video Display, Digital Loop Carrier on Optical Fiber, Telecom Software, Inter-

Connect Billing personally and through M/s.MIC Electronics Ltd. He was the

promoter and erstwhile Managing Director. He has been awarded several

patents and he has attended seminars. When he was travelling to USA on

27.12.2021, he was prevented from travelling abroad by the Immigration

Authorities on the ground of pendency of Look Out Circular. Therefore, he filed

the present writ petition No.17271 of 2022 and this Court has granted interim

order dated 13.04.2022 in I.A.No.1 of 2022. Feeling aggrieved by the said

order, the Bank had preferred W.A.No.291 of 2022 and the said writ appeal was

disposed of by the Division Bench vide order dated 22.04.2022 on certain

KL,J W.P.Nos.17271 & 36901 of 2022

conditions. Now he is intending to travel abroad i.e., San Francisco, United

States of America from to 02.10.2022 to 21.10.2022 for the purpose of

attending his Grand Daughters aged about 6 years and 2 years. In proof of the

same he has filed his itinerary. It is further submitted that he is owning

substantial assets in India, his entire family is staying in India, he is also the

Managing Trustee of a Trust. Therefore, he will come back to India. No

prejudice will be caused to the respondent Bank.

vi) Petitioner in W.P.No.36901 of 2022 is the wife of the W.P.No.17271

of 2022, she also intending to travel abroad along with her husband for the

aforesaid purpose. In view of the pendency of the aforesaid Look Out Circular,

she is also not in a position to travel abroad.

3. Shri Vikram Pooserla, learned counsel appearing for both the

petitioners would submit that the Look Out Circulars both dated 07.11.2020

issued against the petitioners are in violation of guidelines issued by Ministry of

Home Affairs vide Office Memorandum dated 05.02.2017 and also dated

22.02.2021. There are no crimes pending against the petitioners either by State

Police or CBI. No investigation by Enforcement Directorate is initiated and

pending against the petitioners herein. Therefore issuance of Look Out Circular

is in violation of their right guaranteed under Article 21 of the Constitution of

India and also principle lay down by Apex Court.

KL,J W.P.Nos.17271 & 36901 of 2022

4. Whereas, Sri Kalyan Chakravarthi, learned counsel for respondent

Bank on instructions would submit that the respondent Bank had issued Look

Out Circular strictly in terms of guidelines issued by Ministry of Home Affairs

vide Office Memorandum dated 27.10.2010 and 22.02.2021. The Bank had

issued the aforesaid Look Out Circulars for the purpose of protecting economic

interest of bank or economy of the country. Bank is originator of the aforesaid

Look Out Circulars, reviewed the same in terms of guidelines issued by Union

of India vide Office Memorandum dated 22.02.2021. Both the petitioners are

due and liable to pay the aforesaid amount. The Division Bench considering the

said fact only directed the petitioner in W.P.No.17271 of 2022 to furnish

solvency surety to the extent of above said the amount of Rs.6,36,32,384.21/-.

Therefore, the same order may be passed imposing the same conditions.

5. Whereas, learned counsel appearing for Immigration Bureau i.e.,

respondent No.4 would submit that the respondent No.4 only custodian, and it is

maintaining the Look Out Circulars issued by the originators 6th respondent

Bank.

6. ANALYSIS AND FINDING OF THE COURT:

i) The aforesaid facts would reveal that, admittedly there are no criminal

proceedings pending against both the petitioners, registered either by State

Police or by CBI. The said fact was confirmed by Shri Kalyan Chakravarthy,

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learned counsel appearing for respondent bank. Enforcement Directorate had

not initiated any investigation under the provisions of the Prevention of Money

Laundering Act. However, the respondent Bank had initiated proceedings under

SARFAESI Act. Securitization applications, writ petitions are pending between

the petitioners and respondent Bank. The amount debt, pendency of the

aforesaid proceedings is specifically mentioned by both the petitioners and

respondent Bank. As discussed Supra, the facts are not that material for the

purpose of deciding the present two writ petitions. The grievance of the

petitioners in both writ petitions is issuance and maintenance of Look Out

Circulars by the respondents in violation of the aforesaid guidelines.

ii) In view of the same, it is relevant to mention that as on the date of

issuance of Look Out Circulars i.e., dated 07.11.2020, guidelines dated

05.12.2017 issued by Union of India were in operation. The relevant clause

which deals with the issuance of Look Out Circulars in the aforesaid Office

Memorandum is extracted below.

"In exceptional cases, LOC can be issued even in such cases, as would not be covered by the guidelines above, whereby departure of a person from India may be declined, at the request of any of the authorities mentioned in clause (b) of the above-referred OM, if it appears to such authority based on inputs received that the departure of such person is detrimental in the sovereignty or security, integrity of India or that the same is detrimental to the bilateral relation with

KL,J W.P.Nos.17271 & 36901 of 2022

any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and /or that such departure ought not be permitted in the larger public interest at any given point in time".

iii) According to Sri Kalyan Chakravarthy, learned counsel appearing for

bank, the case of the petitioner will fall under the aforesaid category i.e.,

economic interest of India. Whereas, Sri Vikram Poosarla, learned counsel for

the petitioner denied the said fact. It is also relevant to note that in supersession

of the aforesaid guidelines dated 5.12.2017, Union of India had also issued fresh

guidelines vide Office Memorandum dated 22.02.2021. Relevant guidelines are

mentioned below.

"6. The existing guidelines with regard to issuance of Look Out Circulars (LOC) in respect of Indian citizens and foreigners have been reviewed by this Ministry. After due deliberations in consultation with various stakeholders and in supersession of all the existing guidelines issued vide this Ministry's letters/O.M.referred to in para 1 above, it has been decided with the approval of the competent authority that the following consolidated guidelines shall be followed henceforth by all concerned for the purpose of issuance of Look Out Circulars (LOC) in respect of Indian citizens and foreigners:-

A. The request for opening an LOC would be made by the Originating Agency (OA) to the Deputy Director, Bureau of Immigration (BoI), East Block - VIII, R.k. Puram, New Delhi - 110066 (Telefax: 011- 26192883,email:[email protected]) in the enclosed proforma.

KL,J W.P.Nos.17271 & 36901 of 2022

B. The request for opening of LOC must invariably be issued with the approval of an Originating Agency that shall be an officer not below the rank of -

(i) Deputy Secretary to the Government of India; or

(ii) Joint Secretary in the State Government; or

(iii) District Magistrate of the District concerned; or

(iv) Superintendent of Police (SP) of the District concerned; or

(v) SP in CBI or an officer of equivalent level working in CBI; or

(vi) Zonal Director in Narcotics Control Bureau (NCB) or an officer of equivalent level (including Assistant Director (Ops) in Headquarters of NCB]; or

(vii) Deputy Commissioner or an officer of equivalent level in the Directorate of Revenue Intelligence or Central Board of Direct Taxes or Central Board of Indirect Taxes and Customs; or

(viii) Assistant Director of Intelligence Bureau/Bureau of Immigration (BoI); or

(ix) Deputy Secretary of Research and Analysis Wing (R&A W); or

(x) An officer not below the level of Superintendent of Police in National Investigation Agency; or

(xi) Assistant Director of Enforcement Directorate; or

(xii) Protector of Emigrants in the office of the Protectorate of Emigrants or an officer not below the rank of Deputy Secretary to the Government of India; or

(xiii) Designated officer of Interpol; or

(xiv) An officer of Serious Fraud Investigation Office (SFIO), Ministry of Corporate Affairs not below the rank of Additional Director (in the rank of Director in the Government of India); or

(xv) Chairman/Managing Directors/Chief Executive of all Public Sector Banks."

C) --------

D)---------

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H. Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in Column IV in the enclosed Proforma regarding 'reason for opening LOC must invariably be provided without which the subject of an LOC will not be arrested/detained.

I. In cases where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The Originating Agency can only request that they be informed about the arrival/departure of the subject in such cases.

J. The LOC opened shall remain in force until and unless a deletion request is received by BoI from the Originator itself. No LOC shall be deleted automatically. Originating Agency must keep reviewing the LOCs opened at its behest on quarterly and annual basis and submit the proposals to delete the LOC. If any, immediately after such a review. The BOI should contact the LOC Originators through normal channels as well as through the online portal. In all cases where the person against whom LOC has been opened is no longer wanted by the Originating Agency or by Competent Court, the LOC deletion request must be conveyed to BoI immediately so that liberty of the individual is not jeopardized.

L. In exceptional cases, LOCs can be issued even in such cases, as may not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (B) above, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an Act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point in time.

iv) In view of the aforesaid guidelines this Court directed the learned

counsel appearing for respondent Bank to get specific instructions as to whether

Respondent Bank has complied with the aforesaid guidelines or not in

conducting review of the same. In compliance of the said order, the Respondent

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Bank had filed additional counter affidavit stating that the Bank had issued the

aforesaid Look Out Circulars both dated 07.11.2020 against the petitioner

herein strictly in terms of the aforesaid guidelines issued by Union of India vide

Office Memorandum dated 27.10.2021 and 22.02.2021. They have issued the

aforesaid Look Out Circulars and maintaining the same only in the economic

interest of the country. According to them, there is no irregularity.

"In Menaka Gandhi v. Union of India1, it was held by the Apex Court that no person can be deprived of his right to go abroad unless there is a law enabling the State to do so and such law contains fair, reasonable and just procedure. Paragraph No.5 of the said judgment is relevant and the same is extracted below:-

Thus, no person can be deprived of his right to, go abroad unless there is a law made by the State prescribing the procedure for so depriving him and the deprivation is effected strictly in accordance with such procedure. It was for this reason, in order to comply with the requirement of Article 21, that Parliament enacted the Passports Act, 1967 for regulating the tight to go abroad. It is clear from the provisions of the Passports, Act, 1967 that is lays down the circumstances under which a passport may be issued or refused or cancelled or impounded and also prescribes a procedure for doing so, but the question is whether that is sufficient compliance with Article

21. Is the prescription of some sort of procedure enough or must the procedure comply with any particular requirements? Obviously, procedure cannot be arbitrary, unfair or unreasonable. This indeed was conceded by the learned Attorney General who with his usual

. (1978) 1 SCC 248

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candour frankly stated that it was not possible for him to contend that any procedure howsoever arbitrary, oppressive or unjust may be prescribed by the law."

Therefore, such a right to travel abroad cannot be deprived except by just, fair

and reasonable procedure.

v) Referring to the said principle and also the principles laid down by the

Apex Court in several other judgments, considering the guidelines issued by the

Union of India from time to time, the Division Bench of High Court of Punjab

and Haryana at Chandigarh in Noor Paul Vs. Union of India2 held that a right

to travel abroad cannot be deprived except by just, fair and reasonable

procedure. Without communicating the LOC to the subject of LOC, the

authorities cannot seek to enforce it as it would not have any effect in law.

vi) On examination of the facts therein, it had declared that issuance of

LOC against the petitioner therein, a Guarantor to the loans, as illegal and set

aside the LOC issued against the petitioner therein.

vii) It is also relevant to note that the Bank of India, respondent therein,

the Originator of the LOC had preferred Special Leave to Appeal (c) No(s).

7733 of 2022 wherein the Apex Court, vide order dated 05.05.2022 declined to

stay the operation of said judgment except for the direction in the operative part

. (2022) SCC online P&H 1176

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of the order that the respondent Nos.1, 3 and 4 therein shall serve a copy of the

LOC and also reasons for issuing it to the persons against whom it is issued as

soon as possible after it is issued, and also provide a post - decisional

opportunity to him and those requirements shall be read into the OMs issued by

the respondents concerning the issuance of LOCs. The Apex Court also granted

stay of the direction for payment of costs. The Apex Court however directed the

Originator and custodian to ensure that the petitioner therein shall not be

prevented from travelling abroad to pursue her studies by reason of the LOC.

However, the Apex Court has also directed the respondent No.1/Writ Petitioner

therein to give an undertaking to the Court not to dispose of her assets if any.

She shall also keep the Bureau of Immigration informed of the dates of her

departure from and entry into India.

viii) It is also relevant to note that in supersession of its earlier Office

Memorandum/guidelines, the Government of India, had issued guidelines vide

Office Memorandum, dated 22.02.2021 with regard to issuance of LOC. In the

said guidelines, the details of the Officers who have to issue LOC and other

procedures were explained. As per the said guidelines, the Chairman/Managing

Directors/Chief Executive of all Public Sector Banks can request for opening an

LOC to the Deputy Director, Bureau of Immigration (BOI) custodian of the

LOC for issuance of the LOC until and unless there is specific request from the

Originator, LOC shall not be deleted automatically. The Originating Agency

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must keep reviewing the LOCs opened at its behest on quarterly and annual

basis and has to submit the proposals to delete the LOC, if any, immediately

after such a review. A guideline similar to that of the above referred guideline is

also there, in OM, dated 05.12.2017. Therefore, the 2nd respondent, Originating

Agency, shall review the said LOC."

ix) As discussed supra admittedly there are no criminal cases pending

against the petitioner herein and Enforcement Directorate has also not initiated

any investigation against both the petitioners here in. The 1st respondent - Bank

- originator had issued the aforesaid Look Our Circular only in the economic

interest of the country.

x) As discussed supra, both the petitioners are intending to travel abroad

to see their grandchildren aged about 2 years and 6 years. Bank is not in a

position to explain as to why they are continuing the issuance of Look Out

Circulars against the petitioners. Bank is also not in a position to explain as to

why it required the physical presence of the petitioners for the purpose of

continuation of recovery proceedings and to recover the amount by initiating

proceedings under the provisions of the SARFAESI Act. Pleadings in writ

petition, counters and reply affidavit would reveal that recovery proceedings are

pending. Therefore physical presence of petitioners is not required for the

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purpose of continuation of the aforesaid recovery proceedings. Therefore, this

Court is inclined to grant relief to both the petitioners herein.

xi) It is relevant to note that this Court vide order dated 13.04.2021 in

IA.No.1 of 2022 in W.P.No.17271 of 2022, suspended the Look Out Circular

notice dated 07.11.2020 issued and permitted him to travel to United States of

America on 18.4.2022 to 21.5.2022. Feeling aggrieved by the said order,

respondent Bank had filed W.A.No.291 of 2022 and this Court vide order

22.04.2022 modified the said order granted by learned Single Judge on the

condition the petitioners furnish solvency surety to the extent of

Rs.6,36,32,384.21/-. The aforesaid writ appeal was filed against the aforesaid

interim order. In the aforesaid writ appeal order there is no consideration of the

principle laid down by the Honorable Apex Court in Menaka Gandhi1 case. It

is only Intra Court filed under Clause 15 of Letters Patent. Therefore, the said

order is not final and it is not prima facie view expressed by the Hon'ble

Division Bench. Therefore, the said order will not come in the way of granting

protection to the petitioners herein.

xii) In State of Assam v. Barak Upatyaka D.U. Karmachari Sanstha3,

the Apex Court held that, a precedent is a judicial decision containing a

principle, which does not finally and conclusively decide an issue cannot be a

. (2009) 5 SCC 694

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precedent. Any reasons assigned in support of such non-final interim order

containing prima facie findings, are only tentative. Any interim directions

issued on the basis of such prima facie findings are temporary arrangements to

preserve the status quo till the matter is finally decided, to ensure that the matter

does not become either infructuous or a fait accompli before the final hearing.

7. CONCLUSION:

i) Both the writ petitions are disposed of with the following directions:

a) Look out Circulars (LOCs) both dated 07.11.2020 issued against

the petitioners in both the writ petitions by 1st respondent - Bank

are suspended for a period from 13.10.2022 to 30.11.2022.

b) Respondent bank shall inform/communicate this order to the 4th

respondent - Immigration Bureau in terms of Office

Memorandum dated 22.02.2021.

c) Petitioners shall inform their arrival/departure to the respondent -

Bank in terms of the aforesaid Office Memorandum dated

22.02.2021. Petitioners shall cooperate with the respondent -

Bank by furnishing the information/documents if any as and

when required.

d) Respondent - Bank/Originating Agency shall review both the

Lookout Circulars (LOCs) dated 07.11.2020 issued against both

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the petitioners on quarterly and annual basis, submit proposals if

any immediately after such review in terms of the said Office

Memorandum dated 22.02.2021. Both respondents shall comply

with the guidelines issued by the Union of India vide Office

Memorandum dated 22.02.2021.

e) Liberty is granted to respondents to take action against the

petitioner in the event of violation of any of the aforesaid

conditions.

ii) In the circumstances of the case, there shall be no order as to costs.

As a sequel, miscellaneous petitions, if any, pending in the writ petitions,

shall also stand closed.

__________________ K. LAKSHMAN, J Date:12.10.2022 Vns/Mgr