Telangana High Court

Mr. Satya Murthy Pudipeddi vs Indian Overseas Bank on 11 July, 2024

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

               WRIT PETITION No.9681 OF 2024

ORDER:

This writ petition is filed seeking the following relief:

"....to issue a writ, order or a direction particularly one in the nature of a writ of Mandamus declaring all the issuances of Look Out Circulars against petitioner No.1 bearing Passport Number V1344372 and petitioner No.2 bearing Passport Number Z5800970 as illegal, arbitrary, unconstitutional, in gross violation of principals of natural justice and in contravention of the Look Out Circular guidelines bearing Ref.No.25016/10/2017 (Imm.Pt) dated 22.02.2021 issued by respondent No.5 and against the constitutional and fundamental rights of the Petitioners and consequently set aside the Look Out Circulars issued against the Petitioners..."

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

record.

3. The petitioners herein are the former Directors of M/s.

SEW LSY Highways Limited, incorporated by its promoters SEW

Infrastructure Limited for executing the infrastructure work.

The case of the petitioners is that they have entered into

financing agreements with lenders, which were prepared by the

lenders legal counsel, i.e., the counsel appointed on behalf of all

the lenders, including respondent No.1-bank. It is the further

case of the petitioners that, when the petitioners have not paid

the loan amounts, the account of the company was declared as a

Non-Performing Asset (NPA) and various proceedings are

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pending for recovery of the said amounts. While the matter

stood thus, on the request of respondent No.1-bank, the

respondent authorities have issued Look Out Circulars (LOC)

against the petitioners. The grievance of the petitioners is that

continuation of the LOC for an indefinite period for recovery of

the alleged debts, which is exfacie malafide and illegal.

4. This Court, vide interim order, dated 18.04.2024, directed

respondent Nos.1, 2 and 5 to furnish the information/disclose

the details of Look Out Circulars pending against the petitioners.

5. Mr. A. Krishnam Raju, learned counsel appearing for

respondent No.1, submits that vide letter, dated 10.07.2024, the

bank authorities have requested the competent Government

authority for deletion of Look Out Circular against 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

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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

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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:--

2024 SCC Online Bom 1195

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(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.

(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.

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(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 No.1-bank. In view of

quashing of Clause 8(b)(xv) of the OM dated 27.10.2010

Order dated 28.05.2024 passed in W.P (C) No.11707/2012 by the Hon'ble High Court of Delhi at New Delhi

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equivalent to Clause 6(B)(xv) of the O.M. dated 22.02.2021 by