Telangana High Court

Mr.G.Sivakumar Reddy vs Union Of India on 5 August, 2024

      THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY

                    WRIT PETITION No.18660 of 2022

ORDER:

This Writ Petition is filed by the petitioner, seeking following

relief:

"..to issue an appropriate writ order or direction, more particularly one in the nature of Writ of Mandamus:

a) declaring the action of Respondent No.4 in issuing the communication proceeding to Respondents No.1 to 3 for seeking restraining of the Petitioner from traveling outside India including issuance of the Look Out Circular as illegal, arbitrary and unconstitutional and set aside the same,

b) to further declare the actions of Respondents No.1 to 3 in taking note of such communication/ proceeding/ Look Out Circular issued by the Respondent Bank and intimating the officials of Respondent No.3 to restrain the Petitioner from travelling abroad as illegal, arbitrary, unconstitutional and strike down and set aside the same..."

2. The case of the petitioner is that he is the Managing Director of

M/s. GSR Ventures Private Limited, which is incorporated under the

provisions of the Companies Act. It is further case of the petitioner

that for the purpose of business, one M/s.Gayatri Projects Limited

availed credit facility from the respondent No.4-Bank and he is no

way related to day-to-day affairs of the said company. While things

stood thus, it is stated that the petitioner along with other

guarantors received a notice dated 11.11.2021 under Section 13(2) of

the Securitization and Reconstruction of Financial Assets and

Enforcement of Security Interest Act, 2002 (for short "SARFAESI Act,

2002") from the respondent No.4 with regard to credit facilities

availed by M/s.Gayatri Projects Limited due to default committed by

the borrower. It is the case of the petitioner that he submitted a

detailed reply dated 28.12.2021 to the respondent No.4 requesting to

withdraw the said notice dated 11.11.2021. It is further case of the

petitioner is that on 20.11.2021, while he was traveling to Dubai for

business purpose, the respondent No.3-authorities restrained him at

the Rajiv Gandhi International Airport, Hyderabad and informed that

at the request of respondent No.4, a Look Out Circular was issued

against him.

3. The grievance of the petitioner is that in the absence of his

name being placed in the willful defaulter's list and without there

being registration of any crime against him, the respondents cannot

maintain Look Out Circular and restrict his movement and the said

action on the part of the respondents amounts to violation of Articles

19 and 21 of Constitution of India and also various judicial

pronouncements.

4. Considered the submissions of learned counsel for the

respective parties and perused the record.

5. The Ministry of Home Affairs, Foreigners Division, (Immigration

Section), Government of India, has issued Office Memorandum

No.25016/10/2017-Imm(Pt.) dated 22.02.2021 framing consolidated

guidelines for issuance of Look Out Circulars (LOCs) in respect of

Indian Citizens and foreigners. As per the said OM dated 22.02.2021,

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), 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 of time.

Clause 6(B) of the Office Memorandum (OM) dated 22.02.2021

confers power on the Chairman/Managing Director/CEOs of all

Public Sector banks as Originating agency to request for issuance of

Look Out Circulars. The OMs issued are a framework for issuance of

LOCs at the instance of an Originating agency. They are internal

instructions and provide the necessary guidelines and framework.

Office Memorandum (OM) issued on 27.10.2010 is corresponding to

consolidated Office Memorandum(OM) issued on 22.02.2021.

Clauses 8(g) and 8(h) of the OM dated 27.10.2020 corresponds with

Clauses 6(H) and 6(I) of OM dated 22.02.2021. The inclusion of

Chairman/Managing Directors/CEOs of all public sector banks in

Clause 6(B)(xv) of the OM dated 22.02.2021was assailed in Viraj

Chetan Shah vs. Union of India Through the Ministry of Home

Affairs and another 1, wherein the Hon'ble High Court of Bombay

after referring catena of judgments of Hon'ble Apex Court as well as

High Courts, quashed Clause 8(b)(xv) of the OM dated 27.10.2010

bearing O.M.23016/31/2010-Imm equivalent to Clause 6(B)(xv) of

the O.M. dated 22.02.2021 bearing O.M.25016/10/2017-Imm (Pt.).

In the said decision, it was observed as follows:

54. For quick reference, we reproduce the three clauses in question immediately:

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 suppression 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:--

(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--

.........

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

(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.

2024 SCC Online Bom 1195

(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.

xx xx xx

195. Consequently:

(a) Clause 8(b)(xv) of the 2010 amended OM (equivalent to Clause 6(B)(xv) of the 2021 consolidated OM) which includes the Chairmen, Managing Directors and Chief Executive Officers of all public sector banks as authorities who may request the issuance of a Look Out Circular is quashed.

(b) All the LOCs are quashed and set aside.

(c) The Bureau of Immigration will ignore and not act upon any LOCs issued by any public sector banks. All databases will be updated accordingly.

We do not expect the public sector banks to do this, and therefore direct the Bureau of Immigration or MHA to do the needful.

(d) All authorities at all ports of embarkation will be informed and apprised accordingly.

196. Further:

(a) This order will not and does not affect any existing restraint order issued by a competent authority, court, tribunal or investigative or enforcement agency, or in enforcement of any order of a court. Where, for instance, the DRT or a criminal court has issued a restraint order (even if this is at the instance of public sector bank), that order will continue to operate. The invalidation of the present LOCs cannot and will not affect such orders.

(b) The banks are also always at liberty to apply to any court or tribunal under applicable law for an order against an individual borrower, guarantor or person indebted restraining such person from travelling overseas.

(c) In addition, the banks may invoke powers under the Fugitive Economic Offenders Act, 2018, where applicable, notwithstanding this judgment in regard to any LOC.

(d) This judgment cannot and will not prevent the Union of India from framing an appropriate law and establishing a procedure consistent with Article 21 of the Constitution of India.

6. On the similar issue, in a recent decision in Rajesh Kumar

Mehta vs. Union of India and others 2, the Hon'ble High Court of

Delhi followed the aforesaid decision in Viraj Chetan Shah's case

(supra), and quashed the Look Out Circular issued against the

petitioner therein.

7. In the instant case, Look Out Circular was issued against the

petitioner basing on the request made by the Originating Agency i.e,

respondent No.4-bank. In view of quashing of Clause 8(b)(xv) of the

OM dated 27.10.2010 equivalent to Clause 6(B)(xv) of the O.M. dated

22.02.2021 by the Hon'ble High Court of Bombay in Viraj Chetan

Shah's case (supra),the LOC issued against the petitioner at the

request of Originating Agency is liable to be set aside.