Delhi HC permits businessman to travel abroad by suspending lookout circular

New Delhi [India], June 27 : The Delhi High Court has recently permitted a businessman, namely Umesh Shahra, to travel abroad by suspending the lookout circular (LOC) issued against him while following the view taken by the Bombay High Court in the judgement of 'Viraj Chetan Shah vs. Union of India & Ors.', wherein the power of the Chairman, Managing Directors/ Chief Executive of all the public sector banks to request the opening of LOCs against a person was quashed.
Appearing for the applicant, Advocates Ayush Jindal & Pankush Goyal, argued before the Court that of the 3 LOCs issued against the applicant at the behest of the CBI and the Bank of Baroda, none survive and thus the same ought to be quashed at the instant, thereby permitting the applicant to travel abroad.
Adv. Ayush Jindal argued that the LOC at the behest of the CBI was opened in an FIR/RC against the applicant in 2021, however, the said FIR stands quashed by an order of the Madhya Pradesh High Court in November 2023 and no cognizable offence is lying against the applicant; the LOC on the basis of the same does not survive and thus is liable to be quashed.
Advocate Jindal further apprised the Court that prior to the judgement of the Bombay High Court, the banks arbitrarily used to issue LOCs against a person with the sole intention of recovering money without initiating any criminal proceedings.
Adv. Ayush Jindal further submitted that the Ministry of Home Affairs issued an Office Memorandum in 2010 laying down the guidelines for issuing lookout circulars (LOCs); however, as per the said Memorandum, LOCs could not be opened at the instance of the banks. It was only in 2018 that a memorandum was issued by the Ministry of Finance, thereby empowering the heads of public sector banks to issue requests for the opening of lookout circulars. By virtue of this office memorandum, the Chairman (State Bank of India), Managing Directors and Chief Executive Officers (MDs & CEOs) of all public sector banks could request the opening of LOCs against the persons.
Adv. Jindal further went ahead and apprised the Court that in 2021, an Office Memorandum, which now holds the field, was issued by the Ministry of Home Affairs for the issuance of lookout circulars.
In terms of the said OM, an LOC can be issued at the request of the chairman, managing Directors/ or chief executive of all public sector banks. A request is given by a person who is authorised under the said OM to the Bureau of Immigration and then the Bureau of Immigration at the request of the said officer, opens the LOC.
The lawyer further argued that the Division Bench judgement of the Bombay High Court, wherein the Court, vide its judgement in Viraj Chetan Shah vs. Union of India & Ors., has quashed a particular clause of the Office Memorandum of 2010, equivalent to clause 6 of the Office Memorandum of 2021, whereby the Chairman, Managing Directors/ Chief Executive of all public sector banks could request the opening of an LOC.
The lawyer also submitted that the LOC has been issued against the applicant only because of an existing debt and the bank cannot open a LOC as an arm-twisting tactic to recover debt from a person who has even otherwise entered into a one-time settlement (OTS) with the bank to pay off the said debt. A lookout circular is a major impediment for a person who wants to travel abroad.