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Look Out Circulars (LOCs): A Comprehensive Analysis

Ensuring accountability for accused individuals is crucial, but the evasion of justice by fleeing jurisdiction poses challenges. The Look Out Circular ('LOC') serves as a government tool to prevent such flights, empowering immigration authorities. Despite lacking a statutory definition, LOCs have gained widespread use, prompting concerns. This article explores these concerns and analyses pertinent case laws, navigating through the evolution of LOC regulations. From the 1979 memorandum to recent amendments involving public sector banks, the article emphasizes the pressing need for legislative reform.


I. Introduction

Bringing to justice persons accused of a crime is a priority for every legal system. On the other hand, escaping the legal process in anticipation of penalties and punishments by fleeing from the enforcing jurisdiction is desirable for many criminals, especially those who can afford to maintain themselves abroad. A LOC is an instrument issued by the government as a directive to its immigration authorities to prevent the flight of such persons. A LOC prevents a person from deliberately attempting to abscond from the country against an ongoing investigation or criminal trial and serves as an executive document aiding the officers at airports and seaports in determining whether a traveller is wanted or banned by any law enforcement agency within the nation.

LOC as a term, is not clearly defined in statutes, yet has gathered popular understanding because of its frequent and prevalent use by government authorities. Indeed, it is a coercive measure taken by the executive authorities and hence ought to be exercised and issued with due care and caution. The relative ease of its issuance, coupled with limited avenues for getting it revoked, raises concerns. This article attempts to address these concerns and analyse case laws holding the field presently on this litigious subject matter.

II. Overview of the LOC regime

In 1979, the Ministry of Home Affairs (‘MHA’) issued an Office Memorandum (‘OM’) dated 05.09.1979 [1] (‘1979 OM’), which stated that LOCs could be issued to monitor the arrivals and departures of citizens whose travel/movement is banned by various authorities. Government authorities could thus open an LOC through permission from entities such as the foreign ministry, customs authorities, income tax department, CBI, Interpol, Regional Passport Officers, and the police. This 1979 OM provided a very narrow scope for issuing LOCs, wherein only certain authorities could issue them and that too only for a period of one year.

Later, in the year 2000, the MHA issued an OM dated 02.12.2000 (‘2000 OM’), laying down the steps to be followed to issue a LOC against an Indian Citizen. In comparison to the 1979 OM, this OM included proper administrative supervision for the issuance of the LOC process. The 2000 OM was challenged before the Hon’ble High Court of Delhi in the case of Vikram Sharma v. UOI [2] and Sumer Singh Salkan v. Asst. Director [3]. While deciding these cases, the Hon’ble High Court added further conditions and provisions to the issuance of LOCs and regularized certain issues that led to the misuse and abuse of such LOCs. Therefore, the MHA issued a detailed and comprehensive OM dated 27.10.2010 [4] (‘2010 OM’).

The MHA further amended the 2010 OM through the OM dated 19.09.2018 [5], (‘2018 OM’), which empowered the officers of the Serious Fraud Investigation Office (‘SFIO’) to open/issue LOCs. This 2010 OM underwent changes again in 2018, empowering the officials of Public Sector Banks to issue LOCs. The 2018 amendment only came to the knowledge of the public when MHA released it through a press release dated 24.07.2019, specifying that the officials of public sector banks have been empowered to request the issuance of LOCs in respect of wilful loan defaulters or fugitive economic offenders. Due to the present framework, the procedure governing the issuance of LOCs in India is primarily based on the aforementioned letters, circulars, and OMs.

Thus, as the LOC regime stands today, various government authorities and ministries such as the MHA, MEA, customs department, income-tax department, CBI, Interpol, Regional Passport Officers, police authorities, and even banks could issue a LOC for their respective investigation, enforcement, or recovery purposes.

III.  Persons against whom LOC can be issued

LOCs can be issued against persons who are deliberately evading arrest in courts or when a non-bailable warrant has been issued against them and there is a likelihood of their evading arrest/trial. In accordance with the requirements outlined in the 2010 OM, the authorities responsible for issuing LOCs must adhere to strict conditions. LOCs cannot and should not be opened routinely.  Considering that the issuance of an LOC can impact the fundamental rights of the individuals involved, it is crucial to exercise utmost caution. Unfortunately, in certain cases, this caution is not being observed. As a matter of practice, it is observed that LOCs are opened against individuals as early as when the investigation into a cognizable offence is initiated either by way of an FIR or an administrative order, e.g., initiation of investigation by the SFIO vide orders under s. 219 of the Companies Act, 2013. Even banks would open LOCs against borrowers and their guarantors when their loan accounts would be declared as non-performing assets (‘NPAs’) – this would be prior to even the declaration of fraud or wilful default by such borrowers.

IV. Multiplicity of LOCs

The power of issuance of a LOC has been given to multiple agencies. More often than not, and almost always in cases involving economic offences, there are multiple government agencies, banks, and other forums which initiate investigations in such cases. It is commonplace that all agencies initiate their own LOCs against the accused persons or defaulters. This happens even though even one LOC is adequate enough to prevent the person from leaving the country. The reason is clear – there is no central, shared, or accessible database available to these agencies and banks to identify whether there is already a LOC issued against the concerned person or not.

The multiplicity of LOCs leads to an obvious issue for the defending person – which jurisdictional court to approach to get relief and travel abroad? These LOCs could be issued by various agencies located in multiple jurisdictions (say, Delhi, Mumbai, or Kolkata). The multiplicity of locations is also attributed to the pan-India jurisdiction of these agencies – it is possible that a bank default case, where the borrower is located in Mumbai, could be investigated by CBI Delhi and hence the LOC would be opened by CBI Delhi causing the jurisdiction to be in Delhi – so is the distribution of work and cases between the agencies’ offices.

To add to this, the unpredictable delay in getting a petition heard before any lower or higher court makes it nearly impossible for any person to approach multiple courts for a simple relief of permission to travel abroad for, say, a few weeks.

The above is compounded by the fact that the issuance of any LOC is not communicated or informed to the person. Thus, it is difficult to determine the fact that how many LOCs are open against any person. The only method available to such a person is to file a petition or application before the court (either for travelling abroad, or for the quashing of the LOC) and make the Bureau of Immigration a party to such petition, and at the outset asking for the court to direct the Bureau, as an ad-interim or interim relief, to provide a complete list of all LOCs open against the person. 

The complexities posed by the opaque, multiple LOCs issued against any person could be understood from the general legal procedure that such a person has to go through to enforce his legal right to travel:

V.  Article 21 and the right to travel overseas

When an LOC is issued, it infringes upon a person’s right to travel, including their right to travel overseas. Therefore, a LOC carries grave consequences, as personal liberty, freedom, and movement are fundamental aspects of every individual and are thus protected under a. 21 of the Constitution of India ('the Constitution'). In the case of Satwant Singh Sawhney v. D Ramarathnam [6], the Hon’ble Supreme Court held that the right to travel overseas is a fundamental right guaranteed under a. 21 of the Constitution.

While the authorities/State are empowered by the Constitution to impose restrictions on a person’s exercise of fundamental rights, the issuance of LOCs jeopardizes a person’s right to travel overseas, making such restriction under the issuance of LOC unfair. In the absence of any statute addressing the violation of a person’s right to travel overseas during the issuance of LOC, this procedure is unjust for those against whom such LOC is issued.

Specific mention here is that of public sector banks which are not reasonably considerate while issuing LOCs, thereby depriving genuine and bona fide individuals of their right to travel overseas. It has also come to the fore in several court cases that even when there is a dispute between the borrower and the bank regarding the debt, banks still resort to LOCs as a regular coercive recovery measure. Further, in the case of multinational businesses, where a restriction on travel further compounds the business issues and leads to greater losses, banks still persist and issue LOCs. If LOCs are arbitrarily issued, they will inevitably deprive individuals of their aforementioned fundamental rights.

VI. Misuse and abuse of power

LOCs are casually and routinely issued against Indian citizens since only basic information about a person is required for issuance. This prevailing LOC regime is leading to dire consequences. With public sector banks now authorized to issue LOCs, these banks casually approach the Bureau of Immigration to seek issuance in every case of NPA or non-repayment of loans, resulting in an abuse of power.

Regarding a person’s arrest, a well-established law under ss. 41, 438, and 439 of the Code of Criminal Procedure, 1973 (‘CrPC’) have been in place for a considerable period of time. This law provides provisions for seeking Anticipatory Bail in anticipation of arrest. However, under the LOC regime, such a remedy is not available to any person, nor are they informed of the issuance of an LOC. This has led to an unreasonable exercise of power by the State, infringing upon citizens’ fundamental right to travel overseas.

The fact that the issuance of a LOC against a person is not informed to him leads to opacity, violation of principles of natural justice and eventual abuse of power. As explained above, the only remedy available to such a person is through the court, and this too is gravely compounded in case there are unknown, multiple LOCs open against him.

VII. Banks’ LOCs

The 2010 OM does not provide any rationale for expanding its scope to borrowers of the public sector banks, as it was initially limited to individuals involved in penal crimes and those affecting national sovereignty. The absence of provisions empowering authorities like the DRI or the National Company Law Tribunal, and restricting borrowers/debtors/guarantors from travelling abroad raises concerns. Furthermore, the issuance of LOCs through originators, such as public sector banks, without proper intimation to the borrowers is problematic. There is also a lack of oversight and regulation regarding the issuance of LOCs by public sector banks, allowing the originator to delete the LOC without any established mechanism.

This clearly needs a careful rethinking. The Reserve Bank of India (‘RBI’) should at least play the role of a supervisor or monitoring authority, already being the regulator for banks, on the issuance of LOCs against persons. This would be helpful in a twofold manner – first, it would put a check on the rampancy of the issuance of LOCs, and second, in case any bank has already issued an LOC, the need for issuance of another LOC by another bank (say, being a part of the lending consortium) would be obviated. This would bring transparency, make information centrally available to the regulator, and prevent a multiplicity of LOCs.

Also, consolidation of LOCs needs to be done in cases where the banks have moved complaints to any investigating agency (e.g., CBI) regarding any fraud committed by the borrower against whom the bank had issued a LOC, and the matter is now being investigated by such agency. In such cases, almost always such an agency also opens an LOC against such borrower. The bank LOCs should stand subsumed within such LOCs and should not need to be continued.

VIII. Case law analysis

The legal landscape surrounding LOCs has been elucidated through a series of judicial interpretations. In the cases of Maneka Gandhi v. UOI [7] and A.K. Gopalan v. State of Madras [8], the Hon’ble Supreme Court of India held that no person can be deprived of their life or personal liberty, as it is a fundamental right, except in accordance with the procedure of law. Hence, the existence of law is an essential requirement, particularly when the LOC regime is entirely governed by the letters, OMs, and circulars which are issued by the MHA. These documents cannot be equated with the law as defined under a. 13(3)(a) of the Constitution.

In the landmark judgement of Sumer Singh Salkan (supra) by the Hon’ble High Court of Delhi, the Court had laid down procedures for the authorities to follow while issuing LOCs. However, the legal position of LOCs remains in question as their occurrence has increased in recent years.

In Vikram Sharma v. UOI (supra), the Hon’ble Delhi High Court observed and clarified that not all statutory bodies, such as the National Commission for Women, possess the authority to request the issuance of LOCs. The court emphasized that neither the CrPC nor the Passports Act, 1967 nor the MHA circular grants statutory bodies like the National Commission for Women the power to request the opening of LOCs.

An LOC was issued without any ongoing criminal investigation in the matter of Chandran Ratnasami v. K.C. Palanisamy [9] where the Hon’ble Supreme Court of India expressed serious concerns regarding the abuse of process in issuing LOCs. Despite the absence of any ongoing criminal investigation or proceedings against the petitioner, an LOC was issued against the petitioner. The Superintendent of Police, acting as the ‘concerned authority’ in this case, directed a reinvestigation to keep the LOC active.

In the case of C Jeyashekar v. Deputy Commissioner of Police [10], the Hon’ble Madras High Court observed that there is no reason to keep a LOC open if a chargesheet is being filed in the ongoing case, only to ensure the presence of the accused.

The case of S. Martin v. Central Crime Branch [11], highlights the fundamental right of the citizens of India to travel abroad. The Hon’ble Madras High Court emphasized that the right is a fundamental right of Indian citizens and reaffirmed that Indian citizens have a fundamental right to travel abroad, as protected by the Passports Act, 1967. The court’s ruling further highlights that LOCs are coercive measures employed during ongoing criminal investigations, and they must not be open-ended. The investigating authorities are required to conclude their investigations and file a charge sheet within a reasonable time frame. In this context, the Hon’ble Madras High Court emphasized that keeping an LOC active indefinitely is not justified.

In the case of Priya Parameshwaran Pillai v. UOI [12], the Hon’ble Delhi High Court has addressed the unjustified issuance of LOCs, which resulted in a violation of the petitioner's fundamental rights. This case highlighted the significant abuse of the LOC issuance process where the petitioner was not informed about the issuance of an LOC in her name, despite no ongoing investigation or criminal trial warranting such action. The Hon’ble Delhi High Court recognized that the petitioner’s fundamental rights under as. 21, 19(1)(a), and 19(1)(g) of the Constitution, guaranteeing the protection of life and liberty, freedom of speech and expression, and the right to practice any profession or trade, were violated. Consequently, the court ordered the withdrawal of the LOC.

In Mushtaq Ahmed v. Deputy Commissioner of Police [13], the Hon’ble Madras High Court observed that as per the 2010 OM, the LOCs should automatically lapse after the completion of a year. If the Investigating Officer further wishes to extend the LOC or keep it active, then he must renew the existing LOC or issue a fresh one. The LOCs cannot be perpetually maintained or extended indefinitely.

The Hon’ble Madras High Court, in the case of Karti P. Chidambaram v. Bureau of Immigration [14], observed that LOC, being an executive decision, has adverse consequences and further infringes upon and impairs the right to personal liberty and freedom of movement of a person. Therefore, the Hon’ble Court held that the Writ Court can interfere with an LOC, but the question of whether to exercise its discretionary jurisdiction to intervene remains open.

The Hon’ble Supreme Court in the matter of Roshini Kapoor v. UOI [15], criticized the ED for failing to suspend the LOC issued against the petitioner even though the petitioner was granted interim bail by the Hon’ble Supreme Court with no specific conditions other than the conditions imposed by the trial courts. This demonstrates an abuse of power by the investigating agencies where these agencies, as they attempted to disregard the interim bail order.

In the matter of Mannoj Kumar Jain v. UOI [16], the Hon’ble Calcutta High Court observed that the ground used against the petitioners was in the economic interests of India, and there is no evidence that if the petitioners left the country for a specific period of time, it will affect the said economic interest. The petitioners have not been declared fraudsters or money-launderers or even economic offenders. Once an LOC is issued, it results in harmful consequences on the person's right to liberty and the interference sought by the CBI has no rational basis. On this observation, the Hon’ble High Court quashed the LOC issued by the bank against the petitioners.

The Hon’ble Karnataka High Court, in the case of Farooq Ali Khan v. Bureau of Immigration [17], observed with the reference of Sumer Singh Salkan (supra), Karti Chidambaram (supra) that taking recourse of LOC against the petitioner on his alleged role in default of the repayment of the loan by the company, should not violate the petitioner’s fundamental rights. The Court hence allowed the petitioner to travel to Italy and Germany subject to his return to the country within 12 weeks from the start date of his journey.

Recently, in Sanjay Dangi v. UOI [18], the Hon’ble Bombay High Court stayed an LOC issued against the petitioner until 10.07.2023 and allowed the petitioner liberty to travel on 23.06.2023 or after. This High Court came down heavily on the petitioner and displayed displeasure since the petitioner filed the application to seek leave of the Court by applying in very less time and pressurising the Court to decide in haste, disrupting the functioning of the Court. Therefore, in view of this, the Hon’ble Bombay High Court of Bombay stayed the LOC at a cost of Rs. 50,000/- payable to St. Jude India Childcare Centre on or before 26.06.2023.

X. Conclusion

LOC is a drastic and arbitrary measure which limits an individual’s ability to travel or to carry on trade. Certain issues that arise after a request to open an LOC, as accepted by the investigating agencies, include arrest or detention at immigration borders, monetary loss due to a no-show when travel tickets are booked, and the jeopardizing and affecting of a person’s fundamental rights if an LOC is issued without following the prescribed guidelines. The investigating agencies have been issuing LOCs against the citizens, even when they are not directly involved in the investigation. This trend has further led to instances where the authorities disregard Hon’ble Supreme Court orders, as observed in Roshini Kapoor (supra) where the LOC was active despite relief granted by the apex court, clearly showing the unethical use of powers by the authorities.

Despite the existence of numerous guidelines and instructions, instances of unjustifiable LOC issuances based on the whims of respective authorities have surfaced. The complete executive control over LOCs, vested in the MHA, has led to an escalating pattern of power abuse. The lack of legislative provisions underpinning LOCs has further empowered investigating agencies to exercise discretion in their issuance or opening.

The LOCs are not supported by legislative provisions, allowing investigating agencies to issue or open LOCs at their discretion. To prevent the infringement of citizens’ fundamental rights, a concrete legal procedure and mechanism should be established, outlining the process of issuance, re-issuance, and revocation of LOCs. The absence of legislative backing has resulted in incomplete adjudication of the issuance process, leaving its implementation solely at the discretion of executive authorities and has also complicated the determination of appropriate measures to address such abuses of power.

Clearly, much reform and express legislation is the need of the hour on this sensitive subject matter. By instituting a comprehensive legal framework and augmenting oversight, authorities can strike a balance between ensuring national security and upholding citizens’ rights. The future of LOCs should prioritize fairness, transparency, and strict adherence to the rule of law, fostering a just and responsible application of this potent tool.

Endnotes:

[1] Office Memorandum no. 25022/13/78-FI dated 05.09.1979.

[2] Vikram Sharma v. UOI, 2010 SCC OnLine Del 2475.

[3] Sumer Singh Salkan v. Asst. Director & Ors., (2010) SCC OnLine Del 2699

[4] Office Memorandum no. 25016/31/2010-Imm dated 27.10.2010.

[5] Office Memorandum no. 25016/10/2017-Imm dated 19.09.2018.

[6] Satwant Singh Sawhney v. D Ramarathnam, AIR 1967 SC 1836.

[7] Maneka Gandhi v. Union of India, (1978) 1 SCC 248.

[8] A.K. Gopalan v. State of Madras, AIR 1950 SC 27.

[9] Chandran Ratnasami v. K.C. Palanisamy and Ors., (2013) 6 SCC 740.

[10] C Jeyashekar v. Deputy Commissioner of Police, W.P. 25755 of 2013, order dated 11.10.2013, Madras High Court.

[11] S. Martin v. Central Crime Branch, 2014 SCC OnLine Mad 426.

[12] Priya Parameshwaran Pillai v. UOI and Ors., 2015 SCC OnLine Del 7987.

[13] Mushtaq Ahmed v. Deputy Commissioner of Police and Ors., 2017 SCC OnLine Mad 31249.

[14] Karti P. Chidambaram v. Bureau of Immigration & Ors., 2018 SCC OnLine Mad 2229.

[15] Roshini Kapoor v. Union of India and Ors., 2022 SCC OnLine Bom 3808.

[16] Mannoj Kumar Jain v. Union of India, 2023 SCC OnLine Cal 1442.

[17] Farooq Ali Khan v. Bureau of Immigration and Ors, MANU/KA/1451/2023.

[18] Sanjay Dangi v. Union of India, 2023 SCC OnLine Bom 1260.  


Authored by Aishwarya Pawar, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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