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TMI Blog2024 (11) TMI 705X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner has been banking with several banks including the State Bank of India and has taken credit facilities from the consortium of about 13 banks of which State Bank of India is the lead Bank. 4. It is stated that in the year 2022, PC Jewellers faced financial turbulences and proceedings have been initiated by the State Bank of India and other members of the consortium of banks under Section 19 of the Recovery & Bankruptcy Act, 1993 and Original Applications have been filed against the company and the Petitioner herein before the Debt Recovery Tribunal, Delhi and the State Bank of India has also filed a petition under Section 7 of the Insolvency & Bankruptcy Code, 2016 against the company before the Principal Bench, National Company Law Tribunal, New Delhi. 5. Material on record indicates that during the pendency of the proceedings before the Debt Recovery Tribunal and the National Company Law Tribunal, a One Time Settlement has been arrived at and the State Bank of India at whose instance LOC has been opened, informed the Petitioner that majority of the lenders have moved forward with the compromise offer to their respective internal authorities for approval. The Petitioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding to the said Office Memorandum dated 27.10.2010, Lookout Circulars could not be opened at the instance of Banks and, therefore, an amendment was sought to the Office Memorandum dated 27.10.2010 and an amended Office Memorandum dated 05.12.2017 was issued and Paragraph No.8 (j) of the Office Memorandum dated 27.10.2010 was amended which reads as under: "In exceptional cases, LOCs 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 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 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. Instead of: "In exceptional cases, LOCs can be issued withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Managing Directors/ Chief Executives of all Public Sector Banks. (c) Paragraph 8 (j) of MHA's OM dated 27.10.2010 (amended through MHA's OM dated 05.12.2017) states that "In exceptional cases, LOCs 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 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 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 parson 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. 3. It is requested that the instructions contained in MHA's OM dated 27.10.2010 (as amended by MHA's OMs dated 05.12.2017 and 12.10.2018), vide which the heads of PSBs have now been empowered to issue requests for opening of Look ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diately 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. (K) On many occasions, persons against whom LOCs are issued, obtain Orders regarding LOC deletion/ quashing/ suspension from Courts and approach ICPs for LOC deletion and seek their departure. Since ICPs have no means of verifying genuineness of the Court Order, in all such cases, orders for deletion/ quashing/ suspension etc. of LOC, must be communicated to the BoI through the same Originator who requested for opening of LOC. Hon'ble Courts may be requested by the Law Enforcement Agency concerned to endorse-/convey orders regarding LOC suspension/ deletion/ quashing etc. to the same law enforcement agency through which LOC was opened. (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 decline ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of India. xxx 57. In Mr. Chaitya Shah v. Union of India [2021 : BHC-AS : 16392-DB.] , a learned Division Bench of the Bombay High Court was dealing with a case where a substantial amount had been invested in a company called M/s. Gitanjali Gems of Rs. 50 crores and various banking operations and transfer of money was found. The court observed that the words "economic interest of India" and "larger business interest" are not empty words. The relevant paragraph of the said judgment is extracted below: "32. In the present case the Serious Fraud Investigation Office is investigating into the affairs of the aforementioned companies and its investigation overrides the investigations by other investigating agencies. Therefore recourse to look-out circular was not unfounded as the petitioner has definite connection with the investigation as discussed hereinabove. From the facts of the case it is clear that clause (L) of these guidelines clearly covers the petitioner's case as it is detrimental to the „economic interests of India‟ and that his departure ought not to be permitted in the larger public interest. The words „economic interests of India‟ and &b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the phrase "detrimental to the economic interests of India" was introduced for the first time in the Office Memorandum (hereinafter "OM") dated December 5, 2017. The said phrase did not exist in the previous Office Memorandum dated October 27, 2010. However, it continues to exist in all the subsequent Office Memoranda. In this context, the court observed as under (page 137 of 442 ITR): "36. However, the matter does not end here and the crucial issue which needs to be now determined is as to whether the clause 'detrimental to the economic interests of India' introduced vide the amendment in 2017, with a specific rider that the same would be used only in exceptional circumstances, could have, in the facts of the present case, been resorted to, for issuing the impugned look-out circular, as also whether the impugned look-out circular could be continued for the last almost three years without any proceedings under the Penal Code, 1860 or any other penal law being initiated against the petitioner. It has to be kept in mind, that the issuance of a look-out circular necessarily curtails the rights of an individual to travel abroad and therefore, I am of the view, that for invocati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir participation in a business, whether in a professional or a non-executive capacity. The circumstances have to reveal a higher gravity and a larger impact on the country." (emphasis supplied) 19. It is well settled that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offence under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine. 20. This Court in Apurve Goel v. Bureau of Immigration & Anr., W.P.(C) 5674/2023, has held as under:- "22. The Look Out Circulars cannot be opened merely on the request of the banks. There has to be some application of mind by the authority concerned opening the Look Out Circular since the opening of Look Out Circular results in restraining a person‟s right to travel abroad. The authority opening the Look Out Circular must satisfy itself that the departure of a person against whom Look Out Circular has been opened would be detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relationship with any country o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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