Disposed

Farooq Ali Khan v. Bureau of Immigration Ministry of Home Affairs

Karnataka HC16 Jun 2023WP/1235/2023

Case brief

AI extract

What is this about?

A director of a company, not an accused in any crime and not a party to recovery proceedings, challenged a Look Out Circular issued by a bank due to loan default. The court held that a LOC cannot be used as a mode of recovery and permitted the petitioner to travel abroad subject to an undertaking to return.

What did the court decide?

Petitioner permitted to travel to Italy and Germany subject to filing an undertaking to return within 12 weeks from the date of journey.

Farooq Ali Khan Vs Bureau of… — Constitutional and Fundamental Rights | Karnataka HC (2023)

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IN THE HIGH COURT OF KARNATAKA AT BENGALURU

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DATED THIS THE 16^TH DAY OF JUNE, 2023 BEFORE

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THE HON'BLE MR. JUSTICE M. NAGAPRASANNA

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WRIT PETITION No.1235 OF 2023 (GM-RES)

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BETWEEN :

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FAROOQ ALI KHAN S/O GULZAR ALI KHAN AGED ABOUT 56 YEARS RESIDING AT NO. 21 BENSON ‘A’ CROSS ROAD BENSON TOWN POST BENGALURU - 560 046. PROMOTER AND SUSPENDED DIRECTOR ASSOCIATE DECOR LIMITED

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... PETITIONER

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(BY SRI C.K.NANDAKUMAR, SENIOR ADVOCATE FOR SRI SIVARAMAKRISHNAN M.S., ADVOCATE)

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AND :

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1 . BUREAU OF IMMIGRATION MINISTRY OF HOME AFFAIRS GOVERNMENT OF INDIA HAVING ITS HEAD OFFICE AT EAST BLOCK -VIII, LEVEL-V SECTOR -1, R.K.PURAM NEW DELHI - 110 001. RERPESENTED BY THE COMMISSIONER OF IMMIGRATION

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2 . BANK OF BARODA STRESSED ASSETS MANAGEMENT BRANCH 1^ST FLOOR, 17/B HORNIMAN CIRCLE, FORT, MUMBAI - 400 001. REPRESENTED BY ITS DEPUTY GENERAL MANAGER

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3 . PUNJAB NATIONAL BANK (FORMERLY KNOWN AS ORIENTAL BANK OF COMMERCE) HAVING ITS CORPORATE BANKING BRANCH AT: MAKER TOWER ‘F’ WING CUFFE PARADE MUMBAI - 400 005. REPRESENTED BY ITS DEPUTY GENERAL MANAGER

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4 . UNION BANK OF INDIA STRESSED ASSETS MANAGEMENT VERTICAL BRANCH: THE EAGLE’S FLIGHT, 3^RD FLOOR, 301-302, SUREN ROAD, ANDHERI KURLA-ROAD, ANDHERI (EAST) MUMBAI – 400 093. REPRESENTED BY ITS DEPTUY GENERAL MANAGER

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... RESPONDENTS

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(BY SRI M.N.KUMAR., CGC FOR R1; SRI NAGARAJ DAMODAR, ADVOCATE FOR R2)

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THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH ANY AND ALL ACTIONS SUBSEQUENTLY TAKEN BY THE R-1 IN PURSUANCE OF THE REQUEST MADE BY THE R-2 TO THE R-1 TO ISSUE LOOK OUT CIRCULAR AGAINST THE PETITIONER, THAT HAS

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THE EFFECT OF PREVENTING THE PETITIONER HEREIN FROM TRAVELLING OUTSIDE INDIA WITHOUT ANY RESTRICTIONS, AS NON-EST, NULL AND VOID, AND IN VIOLATION OF ARTICLES 14, 19 AND 21 OF THE CONSTITUTION OF INDIA.

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THIS WRIT PETITION HAVING BEEN HEARD AND RESERVED FOR ORDERS ON 18.04.2023, COMING ON FOR PRONOUNCEMENT THIS DAY, THE COURT MADE THE FOLLOWING:-

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ORDER

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The petitioner is before this Court calling in question a Look Out Circular issued against him which prevents the petitioner from travelling outside the shores of this nation and has also sought a direction by issuance of a writ in the nature of mandamus seeking recall of the Look Out Circular.

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Heard Sri C.K. Nandakumar, learned senior counsel appearing for the petitioner, Sri M.N. Kumar, learned Central Government Counsel appearing for respondent No.1 and Sri Nagaraj Damodar, learned counsel appearing for respondent No.2.

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Brief facts that leads the petitioner to this Court in the subject petition, as borne out from the pleadings, are as follows:-

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The petitioner claims to be owning certain properties and is a permanent resident of Bangalore. The petitioner avers that he is the promoter, director and personal guarantor of the Associate Décor Limited (‘the Company’ for short), a Company which is in the business of manufacture of wood products particleboards, laminates and other wood panel products. It is the averment that the Company has its manufacturing unit in Malur, Kolar and the petitioner has driven the Company to be one of Asia’s leading manufacturers in wood industry.

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Between the years 2010 and 2015 the Company sought sanction of certain loans from the hands of consortium of Banks/ respondents 2 to 4, the leading of the consortium being the Bank of Baroda. It was not one but the Company sought various term loans and cash credit facilities for the purpose of meeting its capital expenses and working capital requirements. The Company was granted a term loan and working capital facility of `582.85 crores, in furtherance of which, the Company executed various hypothecation agreements and several collateral securities, adequate to cover the term loans and the cash credit facilities

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availed by the Company from the consortium of banks. The petitioner avers that he is the personal guarantor of the Company.

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In the year 2016 certain disputes inter se appears to have arose between the erstwhile promoters of the Company and on account of unexpected changes in the market, the operations of the Company were adversely affected. It is then the Company defaults in repaying the amount resulting in the loans becoming irregular which forced the loans being declared as NPAs. The Banks/respondents 2 to 4 independently initiated proceedings under the provisions of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 (‘SARFAESI Act’ for short) between February and June 2017 by calling upon the Company to discharge in full its outstanding liability in a sum of `277.68 crores including interest up to 31-05-2017. The proceedings were taken further by the Banks by initiating recovery proceedings before the Debts Recovery Tribunal (‘DRT’ for short). The said proceedings are pending consideration at the hands of the DRT.

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The 3^rd respondent/Punjab National Bank initiated insolvency proceedings invoking Section 7 of the Insolvency and Bankruptcy Code, 2016 against the Company before the National Company Law Tribunal (‘NCLT’) and the proceedings are pending before the NCLT.

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In addition to recovery and insolvency proceedings initiated by the Bank against the Company, the personal guarantors including the petitioner herein and several others became subject of Look Out Circulars. The Look Out Circulars were sought to be initiated by the Bank requesting the 1^st respondent/Bureau of Immigration to execute such Look Out Circulars and not permit the subjects of Look Out Circulars to move beyond the shores of the nation. The petitioner who claims to be a reputed businessman and has his business all over the globe seeks to travel outside the shores of the nation. The Bank on account of pendency of proceedings before the DRT and NCLT both initiated by the Bank – one seeking recovery of `277/- crores and the other insolvency proceedings is sticking on to the necessity of subsistence of Look

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Out Circular, as the apprehension of the Bank is that the petitioner is likely to flee justice and run away without clearing loans. It is this Look Out Circular that drives the petitioner to this Court in the subject petition.

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The learned senior counsel appearing for the petitioner

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would vehemently contend that the petitioner is not an accused in any crime. What is pending against the Company is proceedings before the DRT for recovery and insolvency proceedings before the NCLT. The petitioner is no doubt a guarantor to the affairs of the Company, but the proceedings are initiated only against the Company. Unless the petitioner becomes an accused for any offences punishable under any penal law, the Look Out Circular cannot come in the way of the petitioner’s fundamental right to travel abroad. He would seek to place reliance upon the judgment rendered by this Court in the case of HIMAYATH ALI KHAN v.

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MINISTRY OF HOME AFFAIRS – Writ Petition No.24074 of 2022 decided on 16.03.2023 to buttress his submission that the petitioner in the said writ petition is one of the Directors of the very same Company in whose favour this Court has passed an order

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permitting him to travel abroad. He would seek the same relief at the hands of this Court.

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Per-contra, the learned counsel appearing for the originator/Bank would vehemently oppose the submissions to contend that there are two proceedings – one before the DRT initiated by the Bank seeking recovery of money from the Company and the other before the NCLT where insolvency proceedings against the Company are initiated by the Bank. He would submit that the petition before the NCLT has been admitted and, therefore, the petitioner should not be permitted to leave the shores of the nation. It is his submission that the petitioner would not come back and face proceedings that are pending. But, would admit that he is not an accused in any crime.

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The learned Central Government counsel representing the 1^st respondent/Bureau of Immigration would reiterate the submission of the learned counsel appearing for the originator to contend that the Bureau of Immigration would not scrutinize the merit of the request of the originator. They would implement the

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request made by the originator and execute the Look Out Circular. It is exactly what the Bureau of Immigration has done and would do as long as the originator seeks/requests subsistence of Look Out Circular.

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The learned senior counsel representing the petitioner would submit that the petitioner has immediate necessity to travel to Italy for his business, failing which he would lose his business to a large extent and in this regard has produced an invitation to visit the manufacturing facility and business discussions at Italy between 30^th April and 15^th May 2023. He would submit that a request for extension of dates has already been made to the Company at Italy. Likewise, a Company in Germany also wanted to have business talks with the petitioner. Apart from these documents the learned counsel would place reliance upon a judgment rendered by the Division Bench of the High Court of Bombay in SHABANA USMAN DARVESH v. UNION OF INDIA – Writ Petition (L) No.5092 of 2023 decided on 23.02.2023 wherein the High Court of Bombay has permitted travel of one of the Directors of the Company notwithstanding the Look Out Circular against the said Director. He

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would therefore, seek a similar relief contending that the petitioner has roots in India at Bangalore and has many properties and will not flee justice.

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I have given my anxious consideration to the submissions made by the respective learned counsel and have perused the material on record.

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The issue lies in a narrow compass as to whether the 2^nd respondent/Bank could have curtailed fundamental right of the petitioner to travel except in accordance with law. The Company is the borrower from the Bank. The petitioner claims to be a nonfunctional Director. The Bank undertakes review of credit facility extended to the Company on 19-05-2016. While so reviewing the following persons are shown to be persons who stood as guarantors to the loan advanced by the 2^nd respondent/Bank to the Company:

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Security	Primary
	a. Pari-passu first building b. Pari-passu first moveable assets.	charge on factory land and charge on P&M and other
	Collateral : Pledge of	50% of the Promoters share
	holding in the Company	.

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Personal G	uarantee lf:
“	Mr.Manohar Agicha
“	Mr. Mohammed Farouk Suleman
	Darvesh.
“	*Mr. Farooq Khan*
“	Mr. Srichand Agicha
“	Mrs.Shabana Usman Darvesh
“	Mr. Nooruddin Khan
“	Mr. Ashok Agicha

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(Emphasis added)

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The name of the petitioner does not figure here. The claim of the petitioner is that he is a non-functional Director, to demonstrate which, a document at Annexure-A is appended to the petition. The names of Directors as on 27-02-2017 of the borrower Company are as follows:

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“Directors/Signatory Details:

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*DIN/PAN*	*Name*	*Begin* *Date*	*End* *Date*
00364297	Mohammed Farouk Suleman Darvesh	17-01-2007	-
00364370	Srichand Satramdas Agicha	19-02-2007	-
00364630	Ebrahim Suleman Darvesh	17-01-2007	-
00364700	Manoharlal Satramdas Agicha	19-02-2007	-
00481804	Sidarrtha Agicha	17-01-2007	-
*01087814*	*Farooq Ali Khan*	*17-01-2007*	-
01087889	Nooruddin Khan	17-01-2007	-
01087959	Himayath Ali Khan	17-01-2007	-
ABJPB9144N	Ami Bhandari	18-02-2015	-
02053549	Yahya Mohamed Farouk Darvesh	04-07-2008	-

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AJQPR7863R Kavita Ramesh Rathi 04-09-2013 -

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(Emphasis added)

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The name of the petitioner figures as a Director with effect from 17-01-2007.

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The amount that was borrowed by the Company had become sticky. The Bank initiated proceedings against the Company before the Debts Recovery Tribunal, Bengaluru in O.A.No.629 of 2021. A perusal at the cause title therein would indicate that the petitioner is not even made a party to those proceedings. The facts of the case as narrated before the Tribunal would indicate that the petitioner had no role to play in the borrowing of the amount by the Company from the 2^nd respondent/Bank. The issue now is, in the teeth of the aforesaid facts, where the petitioner is yet to be shown to be involved in any case of embezzlement of funds or fraud played with the Bank being Director of the Company, could lead to issuance of LOC curtailing travel of the petitioner abroad.

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To consider the said issue it is germane to notice relevant guidelines operating for issuance of LOC. The Government of India

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has from to time issued certain official memoranda in the form of guidelines for issuance of LOC. The guidelines are issued from time to time in supercession of earlier guidelines or in furtherance of earlier guidelines. The latest of the guidelines operating in the field is the one issued on 22-02-2021. In terms of guidelines, the originator had to follow certain obligations for issuance of LOC. The guidelines read as follows:

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“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 supersession 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:-

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(A) The request for opening an LOC would be made by the Originating Agency (OA) to the Deputy Director, Bureau of Immigration (BOI), East Block – VIII, R.K.Puram, New Delhi – 110066 (Telefax:01126192883, email:[email protected]) in the enclosed Proforma.

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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 –

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(i) Deputy Secretary to the Government of India; or

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(ii) Joint Secretary in the State Government; or

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(iii) District Magistrate of the District concerned; or

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(iv) Superintendent of Police (SP) of the District concerned; or

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(v) SP in CBI or an officer of equivalent level working in CBI; or

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(vi) Zonal Director in Narcotics Control Bureau (NCB) or an officer of equivalent level [including Assistant Director (Ops.) in Headquarters of NCB); or

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(vii) Deputy Commissioner or an officer of equivalent level in the Directorate of Revenue Intelligence or Central Board of Direct Taxes or Central Board of Indirect Taxes and Customs; or

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(viii) Assistant Director of Intelligence Bureau/Bureau of Immigration (BOI); or

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(ix) Deputy Secretary of Research and Analysis Wing (R & AW); or

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(x) An officer not below the level of Superintendent of Police in National Investigation Agency; or

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(xi) Assistant Director of Enforcement Directorate; or

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(xii) Protector of Emigrants in the office of the Protectorate of Emigrants or an officer not below the rank of Deputy Secretary to the Government of India; or

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(xiii) Designated officer of Interpol; or

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(xiv) An officer of Serious Fraud Investigation Office (SFIO), Ministry of Corporate Affairs not below the rank of Additional Director (in the rank of Director in the Government of India); or

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

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(C) LOC can also be issued as per directions of any Criminal Court in India. In all such cases, request for opening of LOC shall be initiated by the local police or by any other Law Enforcement Agencies concerned so that all parameters for opening LOCs are available.

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(D) The name and designation of the officer signing the Proforma for requesting issuance of an LOC must invariably be mentioned without which the request for issuance of LOC would not be entertained.

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(E) The contact details of the Originator must be provided in column VI of the enclosed Proforma. The contact telephone/mobile number of the respective control room should also be mentioned to ensure proper communication for effective follow up action. Originator shall also provide the following additional information in column VI of the enclosed Proforma to ensure proper communication for effective follow up action:-

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(i) Two Gov/ NIC email IDs

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(ii) Landline number of two officials

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(iii) Mobile numbers of at least two officials, one of

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whom shall be the originator

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(F) Care must be taken by the Originating Agency to ensure that complete Identifying particulars of the person, in respect of whom the LOC is to be opened, are indicated in the Proforma mentioned above. It should be noted that an LOC cannot be opened unless a minimum of three identifying parameters viz. name & parentage, passport number or Date of Birth are available. However, LOC can also be issued if name and passport particulars of the person concerned are available. It is the responsibility of the originator to constantly review the LOC requests and proactively provide additional parameters to minimize

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harazzment to genuine passengers. Details of Government identity cards like PAN Card, Driving License, Aadhaar Card, Voter Card etc, may also be included in the request for opening LOC.

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(G) The legal liability of the action taken by the immigration authorities in pursuance of the LOC rests with the originating agency

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(H) Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed Proforma regarding ‘reason for opening LOC’ must invariably be provided without which the subject of an LOC will not be arrested/detained.

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(I) In cases where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The Originating Agency can only request that they be informed about the arrival /departure of the subject in such cases.

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(J) The LOC opened shall remain in force until and unless a deletion request is received by Bol 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 in Bol immediately so that liberty of the individual is not jeopardized.

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(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

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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 Bol 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.

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(L) In exceptional cases, LOCs can be issued even in such cases, 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.

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(M) The following procedure will be adopted in case statutory bodies like the NCW, the NHRC and the National Commission for Protection of Children's Rights request for preventing any Indian/ foreigner from leaving India. Such requests along with full necessary facts shall be brought to the notice of law enforcement agencies like the police. The Superintendent of Police (S.P.) concerned will then make the request for issuance of an LOC upon an assessment of the situation, and strictly in terms of the procedure outlined for the purpose. The immigration/emigration authorities will strictly go by the communication received from the officers authorized to open LOCs as detailed in Clause (B) above.

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(N) For effective and better interception of LOC subjects, following guidelines shall be followed by the Originator:

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(i) Specific action to be taken by the Immigration authorities on detection must be indicated in the filled LOC proforma.

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(ii) In case of any change in parameters/actions/ investigating officer/Originator contact details or if any court order is passed in the case, the same should be brought to the notice of the, BoI immediately by the originating agency concerned for making necessary changes in the LOC.

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(iii) For LOCs originated on court orders, the concerned PS/IO should send the identifying parameters of the subject to the BoI as court orders contain only name and parentage of the subject.

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(iv) In case an LOC is challenged and stayed by the concerned court or a court issues any directive with regard to the LOC, the originator must inform the BoI urgently and accordingly seek amendment/deletion of the LOC.

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(v) Whenever the subject of LOC is arrested or the purpose of the LOC is over, a deletion request shall be sent by the Originator immediately to the BoI.

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(vi) The Originator must respond promptly whenever the subject/likely match is deleted at the ICP. The confirmation regarding the identity of the subject and action to be taken must be informed immediately to the ICP.

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(vii) The BoI would form a team to coordinate matters regarding the LOC. This team would contact the LOC issuing agencies to get the status of LOC updated.

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(viii) Each LOC Originating Agency referred in para-6(B) above will appoint a Nodal officer as indicated in Annexure-I for coordination/updation of LOC status with BoI. The said team of BoI [as mentioned in para 6(N) (vii)]would remain in constant touch with this Nodal Officer.

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7. It is requested that the consolidated guidelines as contained in this O.M may be brought to the notice of all concerned for strict compliance.”

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(Emphasis supplied)

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In the recitals of the guidelines, it is clearly indicated that LOC is to

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be opened in the proforma under certain circumstances. Recourse to LOC can be taken in cognizable offences under the IPC or other penal laws. In exceptional cases LOC can be issued regarding economic offences as well. LOC once issued shall remain in force until and unless a deletion request is made by the originator. The originator, in the case at hand, is the 2^nd respondent/Bank. The request dated 25-02-2022 for issuance of LOC against the petitioner reads as follows:

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“ Bank of Baroda

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BCC:SAM:LOC:114/309 The Deputy Director, Bureau of Immigration (BoI), East Block-VIII, Sector-1, R.K.Puram, NewDelhi-110 066 Ph.011-26192796, 011-26192883 (Fax).

25-02-2022

Dear Sir,

Re: Request for issuance/opening of Look Out Circulars against (1) Mr.Mohamed Farouk Suleman Darvesh @ Mohamed Farook Suleman Darvesh, (2) Mr. Manoharlal Satramdas Agicha, (3) Mr. Farooq Ali Khan, (4) Mr. Sidarrtha Srichand Agicha, (5) Mr. Ebrahim Suleman Darvesh, (6) Mr. Nooruddin Khan, (7) Mr. Yahya Mohamed Farouk Darveh, (8) Mr. Srichand Satramdas Agicha, (9) Mr. Himayath Ali Khan, (10) Mrs. Sabana Oosman Darvesh @ Shabana Usman Darvesh, Director and/or Guarantors in M/s Assciate Décor Limited.

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This is with reference to the consolidated guidelines dated 2202-2021 issued by the Government of India, Minsitry of Home Affairs, Foreigners Division (Immigration Section), and Letter dated 22-11-2018 of the Department of Financial Services (DFS) whereby the “Chairman/Managing Director/Chief Executives of all Public Sector Banks” are also empowered to make request for opening of Look Out circular (LOC) against Indian Citizens and Foreigners.

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In terms of the same our Managing Director and CEO, Mr. Sanjiv Chadha has given his sanction for issuance of request for opening of LOC against (1) Mr.Mohamed Farouk Suleman Darvesh @ Mohamed Farook Suleman Darvesh, (2) Mr. Manoharlal Satramdas Agicha, (3) Mr. Farooq Ali Khan, (4) Mr. Sidarrtha Srichand Agicha, (5) Mr. Ebrahim Suleman Darvesh, (6) Mr. Nooruddin Khan, (7) Mr. Yahya Mohamed Farouk Darveh, (8) Mr. Srichand Satramdas Agicha, (9) Mr. Himayath Ali Khan, (10) Mrs. Sabana Oosman Darvesh @ Shabana Usman Darvesh.

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We enclose herewith the proforma/request for issuance of Look Out Circular (LOC) in the name of (1) Mr.Mohamed Farouk Suleman Darvesh @ Mohamed Farook Suleman Darvesh, (2) Mr. Manoharlal Satramdas Agicha, (3) Mr. Farooq Ali Khan, (4) Mr. Sidarrtha Srichand Agicha, (5) Mr. Ebrahim Suleman Darvesh, (6) Mr. Nooruddin Khan, (7) Mr. Yahya Mohamed Farouk Darveh, (8) Mr. Srichand Satramdas Agicha, (9) Mr. Himayath Ali Khan, (10) Mrs. Sabana Oosman Darvesh @ Shabana Usman Darvesh duly signed (DIGITALLY) by our Managing Director and CEO and request you to issue/open LOCs against (1) Mr.Mohamed Farouk Suleman Darvesh @ Mohamed Farook

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Suleman Darvesh, (2) Mr. Manoharlal Satramdas Agicha, (3) Mr. Farooq Ali Khan, (4) Mr. Sidarrtha Srichand Agicha, (5) Mr. Ebrahim Suleman Darvesh, (6) Mr. Nooruddin Khan, (7) Mr. Yahya Mohamed Farouk Darveh, (8) Mr. Srichand Satramdas Agicha, (9) Mr. Himayath Ali Khan, (10) Mrs. Sabana Oosman Darvesh @ Shabana Usman Darvesh at the earliest. Yours faithfully Sd/- A.S.Chakma, Assistant General Manager, Stressed Asset Management Vertical.”

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(Emphasis added)

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The Bank requests the Bureau of Immigration to issue LOC against the petitioner and several others. The reason for seeking issuance of LOC is conspicuously absent in the communication. The Managing Director of the 2^nd respondent Bank has sanctioned issuance of request for opening a LOC against the petitioner and others is all that the communication mentions. The said request for LOC leads issuance of one which the 1^st respondent seeks to execute. The communication made by the Bank reads as follows:

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“ Bank of Baroda

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BOB:SAMMUM/ADL/03/102 7^th March 2022

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Letter to the LOC Subjects

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Mr. Himayath Ali Khan, 393, 2^nd Main Road, Near Bank of India, 1^st Block, R.T.Nagar, Bengaluru – 560 032.

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Dear Sir,

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Re: A/c M/s ASSOCIATE DÉCOR LIMITED with our Bank.

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Please refer to the captioned Loan Account with our Bank. The account is having outstanding of Rs.163.48 Crore.

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This is to inform you that bank has requested immigration authorities to issue Look Out Circular against you as you have defaulted in repayment of huge dues to the Bank in the above mentioned account.

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Yours faithfully,

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Sd/- Deputy General Manger.”

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The afore-quoted communication is what is communicated to the petitioner by the Bank which reads that the Bank has requested Immigration Authorities to issue LOC against the petitioner for defaulting in repayment of huge dues to the Bank. The petitioner is not an accused in any crime. He is not the Director who had signed on the dotted lines seeking any loan. The petitioner who is described as Director has produced abundant material to demonstrate that he is only non-functional Director. The list of guarantors is also extracted hereinabove. The petitioner is not shown as a guarantor to any kind loan advanced. If the petitioner has no role to play in the entire transaction, issuance of LOC against him can hardly be justified.

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The issuance of LOC which comes about on 07-03-2022 with the 2^nd respondent being the originator is bereft of reasons as to why the Bank wants curtailment of travel of the petitioner. The afore-quoted excerpts of the loan document nowhere indicates that the petitioner is the borrower, criminal proceedings are pending against him, there is an embargo by the Court for him to travel and the petitioner is likely to evade trial if he is permitted to travel. Those circumstances are not present in the case at hand. The petitioner, even if it is construed to be that he is the Director of the Company, for setting the record straight, the travel of a citizen cannot be curtailed by the Bank on the ground that he is in default of loan amount. Issuance of LOC has serious repercussions, first of which is that he will not be able to move out of the shores of the nation notwithstanding no embargo placed by any Court of law. The issue whether a LOC can be issued against a Director of a Company against whom no proceedings are initiated or pending before any Court of law is no longer res integra as the Division Bench of the High Court of Madras in the case of KARTI P.CHIDAMBARAM v.

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BUREAU OF IMMIGRATION¹ , has held as follows:

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1 2018 SCC OnLine Mad 2229

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“ 62. In a Writ Petition (Crl) No. 1315 of 2008 being Sumer Singh Salkan v. Assistant Director, the High Court of Delhi passed a judgment and order dated 11.8.2010 formulating and answering certain questions relating to issuance of Look Out Circulars for the guidance of concerned agencies . In answer to the questions as to what were the categories of cases in which the Investigating agency could seek recourse to Look Out Circular, and under what circumstances, the High Court held that “recourse to Look Out Circular can be taken by the Investigating agency in cognizable offences under Penal Code, 1860 or other penal laws, where the accused was deliberately evading arrest or not appearing in the trial Court despite NonBailable warrant and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest.”

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63. Look Out Circulars are coercive measures to make a person surrender to the Investigating agency or the Court of law. In accordance with the order dated 26.7.2017 of the High Court of Delhi, the Ministry of Home Affairs issued Official Memorandum dated 27.10.2010 laying down the guidelines for issuance of Look Out Circulars. The said Circular provided:

¶152

“Recourse to Look Out Circular is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed proforma or regarding reason for opening LOC's must invariably be provided without which the subject of an LOC will not be arrested/detained.”

¶153

64. The mandate of the Office Memorandum dated 27.10.2010, that a request for issuance of an LOC would necessarily have to contain reasons for such request makes it clear that the condition precedent for issuance of an LOC is the existence of reasons, which should be disclosed in the request for issuance of an LOC.

¶154

65. Pursuant to the directions of this Court, the respondents have filed their counter affidavit. The counter affidavit does not disclose the reasons for making a request for

¶155

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issuance of an LOC. The impugned LOC is liable to be set aside on that ground alone. 66. Sections 41, 41-A and 41-B of the Code of Criminal Procedure, 1973 are set out hereinafter for convenience:

¶157

“41. When police may arrest without warrant.—(1) Any police officer may without an order from a Magistrate and without a warrant, arrest any person—

¶158

(a) who commits, in the presence of a police officer, a cognizable offence;

¶159

(b) against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence punishable with imprisonment for a term which may be less than seven years or which may extend to seven years whether with or without fine, if the following conditions are satisfied, namely:—

¶160

(i) the police officer has reason to believe on the basis of such complaint, information, or suspicion that such person has committed the said offence;

¶161

(ii) the police officer is satisfied that such arrest is necessary—

¶162

(a) to prevent such person from committing any further offence; or

¶163

(b) for proper investigation of the offence; or

¶164

(c) to prevent such person from causing the evidence of the offence to disappear or tampering with such evidence in any manner; or

¶165

(d) to prevent such person from making any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade him from disclosing such facts to the Court or to the police officer; or

¶166

(e) as unless such person is arrested, his presence in the Court whenever required cannot be ensured, and the police officer shall record while making such arrest, his reasons in writing:

¶167

¶168

Provided that a police officer shall, in all cases where the arrest of a person is not required under the provisions of this sub-section, record the reasons in writing for not making the arrest.

¶169

(ba) against whom credible information has been received that he has committed a cognizable offence punishable with imprisonment for a term which may extend to more than seven years whether with or without fine or with death sentence and the police officer has reason to believe on the basis of that information that such person has committed the said offence;

¶170

(c) who has been proclaimed as an offender either under this Code or by order of the State Government; or

¶171

(d) in whose possession anything is found which may reasonably be suspected to be stolen property and who may reasonably be suspected of having committed an offence with reference to such thing; or

¶172

(e) who obstructs a police officer while in the execution of his duty, or who has escaped, or attempts to escape, from lawful custody; or

¶173

(f) who is reasonably suspected of being a deserter from any of the Armed Forces of the Union; or

¶174

(g) who has been concerned in, or against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists, of his having been concerned in, any act committed at any place out of India which, if committed in India, would have been punishable as an offence, and for which he is, under any law relating to extradition, or otherwise, liable to be apprehended or detained in custody in India; or

¶175

(h) who, being a released convict, commits a breach of any rule made under sub-section (5) of section 356; or

¶176

(i) for whose arrest any requisition, whether written or oral, has been received from another police officer, provided that the requisition specifies the person to be arrested and the offence or other cause for

¶177

¶178

which the arrest is to be made and it appears therefrom that the person might lawfully be arrested without a warrant by the officer who issued the requisition.

¶179

(2) Subject to the provisions of section 42, no person concerned in a non-cognizable offence or against whom a complaint has been made or credible information has been received or reasonable suspicion exists of his having so concerned, shall be arrested except under a warrant or order of a Magistrate.

¶180

41A. Notice of appearance before police officer.—(1) The police officer shall], in all cases where the arrest of a person is not required under the provisions of sub-section (1) of section 41, issue a notice directing the person against whom a reasonable complaint has been made, or credible information has been received, or a reasonable suspicion exists that he has committed a cognizable offence, to appear before him or at such other place as may be specified in the notice.

¶181

(2) Where such a notice is issued to any person, it shall be the duty of that person to comply with the terms of the notice.

¶182

(3) Where such person complies and continues to comply with the notice, he shall not be arrested in respect of the offence referred to in the notice unless, for reasons to be recorded, the police officer is of the opinion that he ought to be arrested.

¶183

(4) Where such person, at any time, fails to comply with the terms of the notice or is unwilling to identify himself, the police officer may, subject to such orders as may have been passed by a competent Court in this behalf, arrest him for the offence mentioned in the notice.

¶184

41B. Procedure of arrest and duties of officer making arrest.— Every police officer while making an arrest shall—

¶185

(a) bear an accurate, visible and clear identification of his name which will facilitate easy identification;

¶186

(b) prepare a memorandum of arrest which shall be—

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¶188

(i) attested by at least one witness, who is a member of the family of the person arrested or a respectable member of the locality where the arrest is made;

¶189

(ii) countersigned by the person arrested; and

¶190

(c) inform the person arrested, unless the memorandum is attested by a member of his family, that he has a right to have a relative or a friend named by him to be informed of his arrest.”

¶191

67. Section 41(2) clearly provides that subject to the provisions of Section 42, no person concerned in a noncognizable offence or against whom a complaint has been made or credible information has been received or reasonable suspicion exists of his having so concerned is to be arrested except under a warrant or order of a Magistrate.

¶192

68. Section 42 provides for arrest of a person who in the presence of a police officer, has committed or has been accused of committing a non-cognizable offence refuses, on demand of such officer to give his name and residence or gives a name or residence which such officer has reason to believe to be false. Even in such cases, when the true name and residence of such person have been ascertained, he is to be released on his executing a bond with or without sureties to appear before a Magistrate if so required.

¶193

69. The conditions precedent for arrest under Section 41 of the Code of Criminal Procedure without warrant as set forth in sub-sections (a) to (i) of Section 41(1) were wholly absent atleast as on the date of issuance of the Look Out Circular. In any case, there was no attempt to arrest the petitioner without warrant atleast as on 15.06.2017 when notice under Section 41A was issued to the petitioner to appear before the Investigating officer on 29.6.2017. A notice under Section 41A of the Criminal Procedure Code is issued directing the accused to appear before the Investigating Officer, when arrest of a person is not required, as observed by the Supreme Court in Arnesh Kumar, supra.

¶194

¶195

70. The legality and/or validity of a Look Out Circular has to be adjudged having regard to the circumstances prevailing on the date on which the request for issuance of the Look Out Circular had been made.

¶196

71. As observed above, the FIR against the petitioner was lodged on 15.05.2017. Notice was issued on 15.6.2017 calling upon the petitioner to appear before the Station House Officer/Investigation Officer on 29.6.2017. On the very next day i.e., 16.6.2017, the impugned Look Out Circular was issued. As on the date of issuance of the Look Out Circular, there could have been no reason to suppose that the petitioner would not appear before the Station House Officer/Investigation Officer.

¶197

72. On behalf of the respondents, it has been contended that the petitioner did not appear on 29.6.2017 as directed, but only appeared pursuant to the directions of the Supreme Court. However, as argued by Mr. Subramanium, the very fact that after issuance of the first notice dated 16.06.2017, which was returnable on 29.06.2017, a further notice was issued on 04.07.2017 granting the petitioner time till 21.07.2017, shows that there was no immediate apprehension of his evading investigation, at least on 04.07.2017. There was, thus, no justification for issuance of the impugned LOC on 16.06.2017, the validity whereof has expired, in any case, after one year.

¶198

73. As observed above, the issuance of Look Out Circulars is governed by executive instructions as contained in the Office Memoranda Nos. 25022/13/78-F1 dated 05.09.1979 and 25022/20/98-FIV dated 27.12.2000, as modified by Office Memorandum dated 27.10.2010. Such LOCs cannot be issued as a matter of course, but when reasons exist, where an accused deliberately evades arrest or does not appear in the trial Court. The argument of the learned Additional Solicitor General that a request for Look Out Circular could have been made in view of the inherent power of the investigating authority to secure attendance and cooperation of an accused is contrary to the aforesaid circulars and thus, not sustainable.

¶199

74. It is, in the view of this Court, too late in the day to contend that whether or not to issue an LOC, being

¶200

¶201

a executive decision, the same is not subject to judicial review. It is now well settled that any decision, be it executive or quasi-judicial, is amenable to the power of judicial review of the writ Court under Article 226 of the Constitution of India, when such decision has adverse civil consequences. An LOC, which is a coercive measure to make a person surrender and consequentially interferes with his right of personal liberty and free movement, certainly has adverse civil consequences. This Court, therefore, holds that in exercise of power of judicial review under Article 226 of the Constitution, the writ Court can interfere with an LOC. The question is whether the writ Court should exercise its discretionary jurisdiction to interfere with the impugned LOC.

¶202

75. In view of the finding of this Court that the conditions precedent for issuance of the impugned LOC were absent, and the impugned LOC is liable to set aside on that ground, we need not go into the questions of whether an LOC could have been issued without statutory sanction, or whether the respondents concerned had jurisdiction to issue the impugned LOC. However, in our view, the Look Out Circular was issued in hot haste when the conditions precedent for issuance of such Circular did not exist. The impugned Look Out Circular is, thus, liable to be set aside.

¶203

76. For the reasons discussed above, the impugned LOC is set aside and quashed. It is made clear that the order of this Court setting aside the impugned LOC will not impact the criminal proceedings initiated pursuant to the FIR, referred to above, or any other proceedings initiated against the petitioner.”

¶204

(Emphasis supplied)

¶205

After the judgment in the case of KARTI P.CHIDAMBARAM

¶206

(supra) a fresh set of guidelines are issued by the Union of India. Those guidelines are the ones extracted hereinabove. After the new

¶207

¶208

guidelines coming into force, the Delhi High Court in the case of RANA AYYUB v. UNION OF INDIA² , has held as follows:

¶209

“ 12. In the particular facts of the case, it becomes evident that the LOC was issued in haste and despite the absence of any precondition necessitating such a measure. An LOC is a coercive measure to make a person surrender and consequentially interferes with petitioner's right of personal liberty and free movement. It is to be issued in cases where the accused is deliberately evading summons/arrest or where such person fails to appear in Court despite a Non-Bailable Warrant. In the instant case, there is no contradiction by the respondent to the submission of the petitioner that she has appeared on each and every date before the Investigating Agency when summoned, and hence, there is no cogent reason for presuming that the Petitioner would not appear before the Investigation Agency and hence, no case is made out for issuing the impugned LOC.

¶210

13. The impugned LOC is accordingly liable to be set aside as being devoid of merits as well as for infringing the Human right of the Petitioner to travel abroad and to exercise her freedom of speech and expression. For the reasons discussed above, the impugned LOC is set aside and quashed. However, a balance has to be struck qua the right of the investigation agency to investigate the instant matter as well as the fundamental right of the petitioner of movement and free speech.

¶211

14. Therefore, the instant petition stands allowed in above terms with the conditions that follow hereunder:

¶212

(a) The petitioner shall intimate her travel dates and detailed itinerary to the Investigation Agency forthwith along with the address of the places that the petitioner shall be visiting;

¶213

(b) The petitioner shall deposit an FDR to the tune of Rs. 1 lakh before the Enforcement Directorate at Mumbai;

¶214

2 2022 SCC OnLine Del 961

¶215

¶216

(c) The petitioner shall not attempt to tamper with the evidence or influence the witnesses in any manner;

¶217

(d) The petitioner shall return to India on the date specified i.e. 11^th April 2022; and

¶218

(e) The petitioner shall give an undertaking to appear before the Investigation Agency immediately on her return and on dates that might be fixed by the Investigation Agency for interrogation, if any, after the travel period.”

¶219

The High Court of Delhi in the case of RANA AYYUB holds that the

¶220

LOC is issued against the petitioner therein in the hottest haste as he is not the accused in any crime so registered. The Delhi high Court holds that personal liberty to travel cannot be taken away, except in accordance with law and quashes the LOC.

¶221

It is further germane to notice the order passed by the Division Bench of Bombay High Court in the case of SHABANA USMAN DARVESH (supra) . It reads as follows:

¶222

“1. The Petitioners seek interim reliefs to travel overseas despite the issuance of Look Out Circulars by one or more times including Respondents 3, 4 & 5. These may not be the only banks in question.

¶223

2. The question of such LOCs, the legality and the office memoranda under which they issued is awaiting judgment after the final hearing of a group of matters. In those matters, we have granted temporary permissions. The present permission is sought is to visit UAE from 25th April 2023 to 23rd May 2023. An itinerary as at Exhibit 8 to the Interim Application. The first segment is to visit

¶224

¶225

the United Arab Emirates between 25th February and 20th March 2023. We grant leave until 21st March 2023. This is subject to the usual undertakings.

¶226

3. Accordingly, the LOC or LOCs in question are stayed until 23rd March 2023. This is subject to the usual conditions:

¶227

(i) the Petitioner is to file an undertaking to return to this country at the end of this period, if not already done;

¶228

(ii) As far as itinerary is concerned, a revised limited itinerary is required to be filed;

¶229

(iii) The Petitioner must file an undertaking (if not already done) not to apply for renewal or extension of this order until he returns to this country.

¶230

4. Subject to these conditions, the LOCs in question against the Petitioner are stayed until 23rd March 2023.

¶231

5. The immigration authorities at all ports of departure including all airports will permit the Petitioner passage and permit the Petitioner to take his flights out of the country irrespective of whether the banks have notified them or not and irrespective of whether this suspension is noted in the immigration authorities' systems or not.

¶232

6. The immigration authorities will not ask for a certified copy of this order but will act on presentation of an authenticated or digitally signed copy of this order.

¶233

7. We further make it clear that it does not matter whether there is an LOC issued only by the Union Bank of India, Bank of Baroda or the Punjab National Bank. By this order, all LOCs by any bank against the present Petitioner/Applicant are stayed for the duration of these dates.

¶234

8. The Interim Application is kept pending for the remaining itinerary.

¶235

¶236

9. We expect the immigration authorities not to detain or delay the Petitioners during the continuance of this order while passing through immigration either leaving India or re-entering India.”

¶237

(Emphasis supplied)

¶238

In the light of the afore-quoted judgments of the High Court of Madras and High Court of Delhi and the interlocutory order passed by the Division Bench of High Court of Bombay, what would unmistakably emerge is, taking recourse of Look Out Circular against a person like the petitioner, on alleged role of the petitioner in default of payment of loan by the Company cannot become an impediment leading to curtailment of fundamental right of the petitioner. All that the petitioner is now seeking is to travel to Italy and Germany for the purpose of business and come back to the shores of the nation. It is his grievance that the Look Out Circular has come in his way. Therefore, following the judgments rendered by the High Courts of Madras, Delhi and Bombay as also, this Court in the case of HIMAYATH ALI KHAN (supra) concerning another subject of the Look Out Circular, the petitioner and having regard to the peculiar facts of this case, I deem it appropriate to permit the petitioner to travel beyond the shores of this nation, subject to the

¶239

¶240

petitioner filing an affidavit of undertaking of his return to the shores of the nation.

¶241

This order is rendered in the peculiar facts where the petitioner is neither an accused in any crime nor the Bank is seeking to array the petitioner as accused in any crime. It is not that the petitioner is not co-operating with the proceedings pending either before the NCLT or before the DRT which are pending against the Company. The petitioner has averred that he is the guarantor for the Company. It is further germane to notice a judgment of coordinate Bench of this Court in MRS. LEENA RAKESH v. BUREAU OF IMMIGRATION – W.P.No.11213 of 2022 decided on 20-06-2022 wherein this Court after referring to all the circulars/guidelines issued by Government of India with regard to the Look Out Circular holds that issuance of Look Out Circular or preventing a person from travelling abroad cannot be a mode of recovery of dues to the Bank. The law that is declared by the coordinate Bench of this Court would equally applicable to the case on hand on all its fours.

¶242

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For the aforesaid reasons, I pass the following:

¶244

O R D E R

¶245

(i) Writ Petition is disposed.

¶246

(ii) The petitioner is authorized to travel to Italy and Germany for a brief period which is made subject to filing an affidavit of undertaking before this Court that he would complete his work and come back to the shores of the nation within 12 weeks from the date he starts his journey.

¶247

(iii) The affidavit of undertaking shall be filed before the Registry of this Court, before his intended date of journey.

¶248

(iv) The affidavit of undertaking once filed would be in force so long as the current Look Out Circular issued by the 2^nd respondent/Bank is operating and would be applicable for travel of the petitioner as binding conditions.

Sd/JUDGE

bkp/CT:SS

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶253

[FAROOQ ALI KHAN VS. BUREAU OF IMMIGRATION MINISTRY OF HOME AFFAIRS AND OTHERS]

¶254

MNPJ

¶255

07.07.2023

¶256

(VIDEO CONFERENCING / PHYSICAL HEARING) ORDER ON I.A.NO.1/2023

¶257

Learned counsel for the petitioner has moved this application

¶258

seeking modification of the order dated 16.06.2023,

¶259

Heard Sri C.K.Nandakumar, learned senior counsel for the petitioner, Sri M.N.Kumar, learned Central Government Counsel for respondent No.1 and Sri Nagaraj Damodar, learned counsel for respondent No.2.

¶260

The subject petition was heard by this Court and disposed by an order dated 16.06.2023.

¶261

Based upon the submission made by the petitioner that he would want to travel Italy and Germany, this application is moved seeking modification of the final order insofar as itinerary is concerned. A memo is filed with a detailed itinerary of his travel from 10.07.2023 up to 21.08.2023.

¶262

Both the learned Counsel appearing for the respondents are served with the copy and the originator has no objection to such

¶263

¶264

modification as the petition is already allowed, granting permission for the petitioner to travel.

¶265

In the light of the aforesaid submissions and the reasons rendered while passing the order, I deem it appropriate to allow the application and modify the itinerary, as is obtaining in the memo so filed by the petitioner, subject to all conditions stipulated in the order dated 16.06.2023.

¶266

This order shall be treated as part and parcel of the order dated 16.06.2023.

¶267

Sd/JUDGE

¶268

NVJ

¶269

List No.: 2 Sl No.: 6

Farooq Ali Khan v. Bureau of Immigration Ministry of Home Affairs

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Farooq Ali Khan v. Bureau of Immigration Ministry of Home Affairs

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