Telangana High Court

Ms. Usha Rani Maganti vs Uco Bank on 31 January, 2023

Bench: K.Lakshman

             HON'BLE SRI JUSTICE K. LAKSHMAN

           WRIT PETITION Nos.1531 AND 1534 OF 2023

COMMON ORDER:

      Heard Mr. Vikram Poosarla, learned senior counsel representing

Mr.Abhinay Reddy, learned counsel for the petitioner in W.P.No.1531 of

2023 and Ms. Shreya Devaki, learned counsel for the petitioner in W.P.

No.1534 of 2023, Ms. Shalini, learned Standing Counsel appearing for

respondent Nos.1 to 3, and Mr.Gadi Praveen Kumar, learned Deputy

Solicitor General of India appearing on behalf of respondent Nos.4 to 6.

2. The grievance in both the writ petitions is one and the same

and, therefore, they were heard together and disposed of by way of this

common order.

3. FACTS OF THE CASE:

i) Petitioner in W.P.No.1531 of 2023 i.e., Dr. Venkata Ramana

Rao Maganti, is the husband of writ petitioner in W.P.No.1534 of 2023

i.e., Ms. Usha Rani Maganti. The petitioner in W.P. No.1531 of 2023

sought a direction to the respondents to permit him to travel abroad viz.,

Sapin from 30.01.2023 to 05.02.2023 and to USA from 10.02.2023 to

28.02.2023, while the petitioner in W.P.No.1534 of 2023 sought

permission to travel abroad viz., USA from 10.02.2023 to 22.03.2023.

KL,J W.P.Nos.1531 & 1534 of 2023

ii) The petitioner in W.P.No.1531 of 2023 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.1534 of 2023 is a guarantor. She stood as guarantor for the

aforesaid loan by extending property 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, the respondent Bank has initiated proceedings under the

Securitisation and Reconstruction of Financial Assets and Enforcement

of Security Interest Act, 2002 (for short 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 Debts Recovery Tribunal. According to the petitioners, the

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 in W.P. Nos.17271 and 366901 of 2022.

However, according to the petitioners they are due and liable to pay an

KL,J W.P.Nos.1531 & 1534 of 2023

amount that is Rs.6,36,32,384.21/-. Whereas according to respondent

No.1 Bank, the petitioners are liable to pay Rs.6,36,32,384.21/-.

iii) While so, the Respondent Bank had issued Look Out Circular

against the petitioners, continuing the same in violation of the guidelines

issued by the Ministry of Home Affairs, Union of India vide Office

Memorandum dated 22.02.2021. Challenging the same, the petitioners

have filed writ petitions vide W.P. Nos.17271 of 2022 and 366901 of

2022 contending that 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.

iv) According to petitioner in W.P.No.1531 of 2023, he is an

indigenously developed technocrat, manufactured and supplied products

like LED Video Display, Digital Loop Carrier on Optical Fiber, Telecom

KL,J W.P.Nos.1531 & 1534 of 2023

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 LookOut Circular. After hearing both sides, this Court

vide common order dated 12.10.2022 disposed of the said writ petitions

suspending the said LOCs for a period from 13.10.2022 to 30.11.2022

on certain conditions.

v) Challenging the said common order, dated 12.10.2022, the

respondent bank preferred appeals vide W.A. Nos.768 and 770 of 2022.

A Division Bench of this Court vide order dated 09.12.2022 dismissed

the said appeals with costs.

vi) After dismissal of the aforesaid writ appeals, the petitioners

approached the respondent bank to lift/delete the LOC issued against

them as they do not fall under any of the categories of persons against

whom LOC may be issued as per the guidelines dated 22.02.2021, but

the respondent bank failed to respond.

KL,J W.P.Nos.1531 & 1534 of 2023

vii) According to the petitioners, the petitioner in W.P.No.1531 of

2023 is required to travel Barcelona, Spain on 30.01.2023 to attend the

Integrated Systems Europe (ISE) 2023, which is an International Trade

Show showcasing the World's leading technology innovators and

bringing together a range of industry organizations. The said trade show

is a crucial marketing opportunity for him to show-cause his business on

an International Platform. Further, he is also required to travel USA

from 10.02.2023 to 28.02.2023 to visit manufacturing facilities of and

have techno commercial discussions with Advanced Energy Materials

LLC, Kentucky, U.S.A for exploring potential collaboration of the MIC

College of Technology of which the petitioner is the Chairman to

establish Micro LED Display FAB facilities and Ecosystem in India and

also to visit his daughter residing in San Francisco, USA.

viii) The petitioner in W.P. No.1534 of 2023 intends to travel

USA to visit her daughter and relatives residing there and also to

accompany her husband.

ix) It is further submitted that they own substantial assets in India.

Their entire family is staying in India. The petitioner in W.P. No.1531

of 2023 is also the Managing Trustee of a Trust. Therefore, they will

come back to India. No prejudice will be caused to the respondent Bank.

KL,J W.P.Nos.1531 & 1534 of 2023

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 registered 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 laid down by the Hon'ble Supreme Court.

5. On the other hand, Ms. Shalini, 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 Lookout Circulars for the

purpose of protecting economic interest of bank or economy of the

Country. The Bank is originator of the aforesaid Lookout 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.

KL,J W.P.Nos.1531 & 1534 of 2023

i) She also vehemently opposed the relief sought in the present

writ petitions. Referring to the Office Memorandums, dated 23.03.2022

and 08.04.2022, she would submit that the respondent bank considered

the guidelines and also the guidelines issued by the Union of India,

Ministry of Home Affairs, dated 22.02.2021 and consideration of the

same, the Bank has decided to continue the LOCs issued against the

petitioners. There is every possibility of the petitioners not coming back

to India in which event the respondent bank will not be in a position to

recover the aforesaid amount. Referring to the orders 22.04.2022

passed by a Division Bench in W.A. Nos.291 of 2022, she sought to

impose same conditions on the petitioners of furnishing bank guarantee.

6. Whereas, learned Deputy Solicitor General of India appearing

on behalf of respondent Nos.4 to 6 would submit that the respondent

No.4 is only custodian and it is maintaining the Look Out Circulars

issued by the originator, the respondent Bank.

7. 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 the CBI. The said fact was confirmed by Ms.

KL,J W.P.Nos.1531 & 1534 of 2023

Shalini, learned counsel appearing for respondent bank. There is no

dispute that Enforcement Directorate has 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 due and

pendency of the aforesaid proceedings are specifically mentioned by

both the petitioners and the respondent Bank.

ii) The grievance of the petitioners in the present writ petitions is

only to permit them to travel abroad on business and personal works.

But, continuation of Look Out Circulars by the respondents is in

violation of the aforesaid guidelines.

iii) 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

KL,J W.P.Nos.1531 & 1534 of 2023

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 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) According to Ms. Shalini, 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 senior

counsel appearing on behalf of the petitioners denied the said fact.

v) 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

KL,J W.P.Nos.1531 & 1534 of 2023

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.

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

KL,J W.P.Nos.1531 & 1534 of 2023

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)---------

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.

KL,J W.P.Nos.1531 & 1534 of 2023

vi) 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 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."

. (1978) 1 SCC 248

KL,J W.P.Nos.1531 & 1534 of 2023

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

just, fair and reasonable procedure.

vii) Referring to the said principle and also the principle 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 right to travel abroad of a citizen 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.

viii) 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.

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

therein, the Originator of the LOC had preferred Special Leave to Appeal

05.05.2022 declined to stay the operation of said judgment except the

direction in the operative part of the order that the respondent Nos.1, 3

. (2022) SCC online P&H 1176

KL,J W.P.Nos.1531 & 1534 of 2023

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.

x) 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

KL,J W.P.Nos.1531 & 1534 of 2023

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 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."

xi) As discussed above, admittedly there are no criminal cases

pending against the petitioners herein and Enforcement Directorate has

also not initiated any investigation against both the petitioners herein.

Respondent No.1 - Bank - originator had requested opening of the

aforesaid Look Out Circular only in the economic interest of the

Country.

x) Further, there are no changed circumstances from the date of

the order dated 12.10.2022 passed by this Court in W.P. Nos.17271 of

2022 and 366901 of 2022. Even there is no allegation that the

petitioners have violated the conditions imposed by this Court in the

aforesaid orders.

KL,J W.P.Nos.1531 & 1534 of 2023

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

12.10.2022 in W.P.Nos.17271 and 366901 of 2022, suspended the Look

Out Circular notice dated 07.11.2020 issued against both the petitioners

by respondent No.1 bank for a period from 13.10.2022 to 30.11.2022

and permitted them to travel USA. Feeling aggrieved by the said order,

the respondent Bank had filed appeals vide W.A.Nos.768 and 770 of

2022 and the same were dismissed by a Division Bench of this Court

with costs this Court vide order 09.12.2022.

xii) As discussed above, both the petitioners are intending to

travel abroad on business and personal purposes. The Bank is not in a

position to explain as to why they are continuing the issuance of Lookout

Circulars against the petitioners except saying in the economic interest of

India. The 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. Therefore

physical presence of petitioners is not required for the purpose of

continuation of the aforesaid recovery proceedings. Therefore, this Court

is inclined to grant relief to both the petitioners herein.

KL,J W.P.Nos.1531 & 1534 of 2023

8. CONCLUSION:

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

directions:

a) Look out Circular (LOC) dated 07.11.2020 issued by

respondent No.1 - Bank against the petitioner in W.P.

No.1531 of 2023 is suspended for a period from

31.01.2023 to 28.02.2023.

b) Look out Circular (LOC) dated 07.11.2020 issued by

respondent No.1 - Bank against the petitioner in W.P.

No.1534 of 2023 is suspended for a period from

10.02.2023 to 22.03.2023.

c) Respondent bank shall inform/communicate this order to

respondent No.4 - Immigration Bureau in terms of Office

Memorandum dated 22.02.2021.

d) The petitioners in both the writ petitions shall inform their

arrival/departure to respondent No.1 - Bank in terms of

the aforesaid Office Memorandum dated 22.02.2021, and

they shall cooperate with the Bank by furnishing

information/documents, if any, as and when required.

KL,J W.P.Nos.1531 & 1534 of 2023

e) Respondent - Bank/Originating Agency shall review both

the Lookout Circulars (LOCs) dated 07.11.2020 issued

against both 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.