Look Out Circulars Have Inexplicably Long Shelf-Life, Banks Cannot Use Them In Absence Of Acceptable Apprehension: Calcutta HC
The Calcutta High Court has quashed an impugned Look out Circular issued by Indian Overseas Bank and others preventing the petitioners to travel outside India. Noting that the petitioners were not declared economic offenders, therefore, leaving the country for a specific period of time would not affect the economic interest of India. While allowing the petition, the Court was of the opinion that the writ courts must check on the untrammeled powers of the Bank as the. It observed,
“…Once a Look Out Circular is issued, it remains alive and kicking for almost all times to come. This spells dangerous repercussions on the person’s right to freely move across and beyond the country and remain mobile”.
“…the respondent no. 8 Indian Overseas Bank cannot have any continuing reason to interfere with the petitioners’ travel outside the country. The interference sought to be imposed by way of the Look Out Circular is arbitrary and without any rational basis. The CBI Courts, where the cases are pending, are free to pass orders or impose conditions as the Courts may deem fit. The petitioners have not claimed any reliefs against those proceedings in the writ petition. This Court however sees no reason to allow the impugned Look Out Circular to remain or be used against the petitioners in the absence of any acceptable apprehension, let alone evidence, shown on behalf of the Bank”, Justice Moushumi Bhattacharya observed in the matter.
Advocate Sudip Deb appeared for the petitioners, DSG Billwadal Bhattacharya appeared for the Union of India, Advocate Suhrid Sur appeared for respondent no. 6 and Advocate Shiv Mongal Singh appeared for respondent no.8-Bank.
In the present matter, petitioner no. 1 was a Director of Jain Infra Private Limited and Prakash Vanijya Private Limited and the petitioner no. 2 was an erstwhile Director of Jain Infra and PrakashVanijya.
The petitioner no. 1 in the original prayer in petitioner sought permission to travel to the U.K. for academic compulsions of his son. It was alleged that he was denied permission to travel to the U.K. and were deboarded from the aircraft without any reason being assigned for the same.
Further, it was submitted that the petitioners were informed about the Look out Circular during the course of proceedings in the writ petition and not before. Therefore, they urged the petition to be amended.
However, the respondents contended that the writ petition, as it was originally filed, cannot be amended to seek the quashing of the Look out Circular and further that the Central Bureau of Investigation (CBI) should be impleaded as a necessary party to the proceedings
Therefore the question before the Court to adjudicate upon was, whether the Look Out Circular can continue to prevent the petitioners from travelling outside India or should it be quashed on the facts which have been brought to the notice of the Court.
The Court refuting the first contention by the respondents, noted that the petitioners could not have challenged the Look Out Circular as they were made aware of it only subsequent to filing of the writ petition, and thus opined, “The law with regard to permitting amendments is liberal and appropriately so since the purpose of an amendment under Order VI Rule 17 of The Code of Civil Procedure, 1908, is to determine the real questions of controversy between the parties. Hence, if the petitioners are chained to the initial writ petition and the limited cause of action and reliefs therein, the Look Out Circular which is the basis of the petitioners’ travel-curtailment would remain un-challenged. This Court is hence of the view that the objection to the amendment changing the nature and character of the original writ petition is untenable, illogical and contrary to law”.
On the second contention, the bench highlighted that the petitioners did not raise any grievance against the CBI either before or after the amendment, and that the respondent no. 8 Indian Overseas Bank is the originator and not the CBI.
The bench further observed, “It is also undisputed that the CBI has not curtailed or denied permission to the petitioners to travel outside India. In fact, the CBI Court granted permission to the petitioner no. 1 to travel abroad as many as 19 times after which the petitioners travelled outside India. There is no complaint that the petitioner no. 1 has failed to comply with the conditions imposed on the said petitioner for travelling abroad”.
The Court on apprehension, noted, “The apprehension is that the person concerned cannot be allowed to travel since the person, presumably in search of a safe haven, will not return to India for the logical culmination of the proceedings. The recent trend however is of banks issuing Look Out Circulars as a recovery mechanism for outstanding monetary dues. The reasoning of the Bank is that the person may frustrate settlement of the dues by not returning to India”.
Accordingly, the Court disposed of the petition.
Cause Title: Mannoj Kumar Jain & Anr. v. Union of India & Ors
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