Telangana High Court

Kavuru Hemalatha vs Union Of India on 21 August, 2024

     THE HON'BLE SRI JUSTICE C.V. BHASKAR REDDY

            WRIT PETITION No.19491 OF 2024

ORDER:

This Writ Petition is filed by the petitioners seeking to

declare the action of the Respondents in issuing Look Out

Circular (LOC) against them as illegal, arbitrary and

unconstitutional and consequently, prayed this Court to set

aside/quash the same and direct the Respondents not to

obstruct/restrain the petitioners from travelling to and fro from

the country vide Passport Nos.D1103582 and D1103567.

2. Heard the learned counsel for the parties and perused the

record.

3. The petitioner No.1 claims to be Managing Directors of

M/s.Progressive Constructions Limited (for short 'the company'),

incorporated under the provisions of Companies Act and

engaged in the business of infrastructure construction and

developmental activities. The petitioner No.2 is the husband of

the petitioner No.1. It is the case of the petitioners that for the

purpose of its business, the company availed various credit

facilities from the consortium of Banks and they stood as

guarantors. It is further case of the petitioners that the said

company suffered losses and could not repay the loans and at

the request of the company, the loan was restructured. It is

further case of the petitioners that they were stopped by the

immigration authorities on the ground that an 'Look Out

Circular' (LOC) was issued against them.

4. The grievance of the petitioners is that issuing LOC to

prevent them from travelling abroad is an arbitrary exercise of

power, abuse of authority and violative of fundamental rights of

the petitioners guaranteed under Article 14, 19(1)(g) and 21 of

the Constitution of India.

5. Smt.V.Dyumani, learned counsel appearing for respondent

Nos.3 to 5 relying upon paragraph 16 of the counter affidavit has

stated that the LOC issued against the petitioners was last

reviewed by the competent authority of the respondent-Bank on

16.06.2023 and the respondent-Bank has to recover more than

Rs.180.00 crores together with interest thereon from the

borrower and petitioners as the beneficiary of the Bank

Guarantees has already given BG invocation letter to the bank.

It is also submitted that the respondent-Bank is only interested

to recover its dues and the bank has no intention to harass the

petitioners.

6. Considered the submissions of learned counsel for the

respective parties and perused the record.

7. 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 22.02.2021 was

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--

2024 SCC Online Bom 1195

.........

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.

(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.

8. 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.

9. Admittedly, in the instant case, Look Out Circulars were

issued against the petitioners basing on the request made by

the Originating Agency i.e., respondent-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 LOCs issued against the petitioners at the request