Full Text
HIGH COURT OF DELHI
JUDGMENT
Through: Mr. Asheesh Jain, Sr. Advocate along with Mr. Deepak Agarwal, Mr. Dinkar Kumar and Ms. Lucky Rani, Advocates.
Through: Mr. Sushil Kumar Pandey (SPC) along with Mr. Vaibhav Soni and Mr. Hemant Kumar, Advocates for UOI.
1. The petitioner has filed the present petition praying as under –
JUDGMENT
2. The petitioner is an Indian citizen, residing in Delhi, and one of the Directors of Gulf Petrochem FZC, UAE.
3. The background of the matter is that the Sharjah Branch of respondent no. 5 (Bank of Baroda), between 2011 and 2019, extended credit facilities amounting to AED 95 million (approximately ₹195 crores) to Gulf Petrochem FZC, UAE. It is submitted that out of the said amount, AED 65 million (approximately ₹130 crores) remains outstanding.
4. It is submitted that Gulf Petrochem FZC, UAE had created a charge in favour of respondent no. 5 Bank (Sharjah Branch) over Plot No. 2J-06, the value of which itself exceeds the sanctioned loan amount. The petitioner being one of the Directors, executed a personal guarantee in favour of the said branch of the Bank to secure the credit facilities.
5. Subsequently, on 31.05.2021, the Sharjah Branch of respondent no. 5 Bank declared the loan accounts of Gulf Petrochem FZC, UAE as “fraud”. It is submitted that the same was done without granting any opportunity of hearing or representation to the company.
6. It is submitted that on 01.10.2021, the petitioner was prevented from boarding his flight to London from Delhi International Airport, when he was informed that an LOC had been issued in his name by respondent no. 5.
7. The case of the petitioner is that the respondent no. 5, in its Counter Affidavit, has admitted that (a) the LOC was opened as credit facilities extended to a foreign company had turned NPA and there was no response from the borrowers or guarantors (para 10); (b) the purpose was to “find out ways to recover amounts” (para 14); (c) recovery proceedings initiated by Sharjah Branch of respondent no.5 are pending in Dubai (para 13); (d) loan account of petitioner’s company has been declared fraud (para 23); and (e) LOC had only been issued as a last resort when monies of respondent no.5 were found to be not coming at all (para 27). It is submitted that none of these reasons satisfy the conditions stipulated under the Office Memorandums governing issuance of LOCs.
8. It is further submitted that the loan facilities in question were extended to a foreign company incorporated under UAE law
9. It also highlighted that there is no legal proceeding initiated against the petitioner in India, whether civil or criminal, by respondent no.5 and no Criminal Complaint, Criminal Case or FIR is pending against the petitioner in India or outside India. and the Bank which provided the finance/ loan facilities was also Foreign Bank registered under UAE laws. The petitioner, though an Indian citizen, merely provided a personal guarantee for the said facilities.
10. It is pointed that during the pendency of these proceedings, this Court has permitted the petitioner to travel abroad on ten occasions
11. It is further submitted that the sole basis for the LOC is the default by, subject to specific conditions, all of which have been duly complied with by the petitioner. Gulf Petrochem FZC
12. Reliance has been placed on in repayment of loans taken in the UAE. No material has been produced by the respondents to show any element of criminal culpability on the petitioner’s part. Prateek Chitkara v. Union of India, 2023 SCC OnLine Del 6104, Ajay Kumar Gupta Vs. Union of India
13. On the other hand, the preliminary submission of the respondent no. 5 is that a litigant must approach the Court with clean hands. It is submitted that the petitioner, has flouted the order/s passed by this Court and is, therefore, disentitled to any relief., W.P.(C) No. 2049/2021 and Utkarsh Goyel v. Union of India, W.P.(C) NO. 10136/2022).
14. It is pointed that during the pendency of the present petition, the petitioner filed CM Application No. 54146/2022 seeking permission to travel to the United Kingdom. Vide order dated 22.12.2022, this Court permitted the petitioner to travel from 05.01.2023 to 05.02.2023, subject to conditions. However, it is stated that as per details received from the Immigration Authority, the petitioner returned to India only on 06.02.2023 at 15:04 hours, thereby breaching the condition of timely return.
15. The case of the respondent no. 5 is that the petitioner’s conduct demonstrates deliberate disregard of the undertaking furnished before this Court.
16. It further emphasised that the loan account of Gulf Petrochem FZC was declared ‘Fraud’.
17. It is submitted that the LOC has been issued strictly in accordance with the Office Memorandum dated 12.10.2018. It is submitted that the LOC was issued after the credit facilities turned NPA and there was no positive response from either the borrower or the guarantor. In such cases, where borrower companies are closely held and controlled by their guarantors, liability is joint and several.
18. It is submitted that since the date of default, the petitioner has neither repaid any part of the outstanding dues nor demonstrated seriousness in settling the liability. The loan account continues to accrue interest. The conduct of the petitioner amounts to wilful default and misappropriation of bank funds. The case of the respondent is that as the lender is a nationalised bank, such loss directly impacts the national economy and constitutes a matter of economic interest of India.
19. It is submitted that the possibility of recovery would be bleak if the petitioner is allowed unrestricted foreign travel. The LOC serves not only to secure the petitioner’s presence but also to ensure that recovery proceedings are not frustrated.
20. It is further submitted that funds advanced by lenders are being diverted and utilized for purposes other than those for which they were sanctioned. In several instances, borrowers or guarantors abscond to foreign jurisdictions lacking adequate recovery mechanisms. It is submitted that it is in view of such circumstances that the Office Memorandum dated 12.10.2018 was issued. The same is reproduced as under –
21. It is submitted that in the present case, there exist no bona fide financial or commercial reason/s justifying the petitioner’s desire to travel overseas. The request for permission to travel abroad is therefore indicative of an attempt to evade the jurisdiction of this Court.
22. It is submitted that the petitioner’s contention that the LOC curtails his right to trade or live with dignity and equates it with a non-bailable warrant (NBW) is misconceived. The amounts involved are substantial, and continued deprivation of funds to the respondent no.5 is actionable under Sections 403, 405, 406, and other relevant provisions of the Indian Penal Code, as well as under Section 447 of the Companies Act, 2013.
23. It is submitted that the issuance of LOC was a last-resort.
24. Upon consideration of the submissions advanced on behalf of the parties, this Court finds merit in the submissions canvassed by learned REASONING AND FINDINGS senior counsel for the petitioner.
25. The issue raised in the present petition, pertaining to office memorandum dated 12.10.2018, whereby sub-para (xv)1 was added to para 8(b) of the Ministry’s Office Memorandum No. 25016/31/2010-Imm dated 27th October 2010 (corresponding to Clause 6(B)(xv) of the consolidated Office Memorandum of 2021), which empowers the Chairmen, Managing Directors, and Chief Executive Officers of all Public Sector Banks to request the issuance of a Look-Out Circular, stands squarely covered by the judgment of the Division Bench of the Bombay High Court in Viraj Chetan Shah v. Union of India through the Ministry of Home Affairs & Anr. “195. Consequently:, 2024 SCC OnLine Bom 1195. The relevant portion of the said judgment is reproduced as under – (a) Clause 8(b)(xv) of the 2010 amended OM (equivalent to Clause 6(B)(xv) of the 2021 consolidated OM) which includes the Chairmen, Managing Directors and Chief Executive Officers of all public sector banks as authorities who may request the issuance of a Look Out Circular is quashed. (b) All the LOCs are quashed and set aside.
(c) The Bureau of Immigration will ignore and not act upon any LOCs issued by any public sector banks. All databases will be updated accordingly. We do not expect the public sector banks to do this, and therefore direct the Bureau of Immigration or MHA to do the needful.
(d) All authorities at all ports of embarkation will be informed and apprised accordingly.”
26. The aforesaid judgment was subsequently relied upon by a Coordinate Bench of this Court in Vinay Mittal & Anr v. Bank Of Baroda & Ors., 2025:DHC:2720. The relevant portion of the judgment is reproduced as
(xv) Chairman / Managing Directors/Chief Executive of all Public Sector Banks under -
27. Furthermore, it is considered appropriate to refer to Clauses 8(g), 8(h), and 8(j) of the Office Memorandum dated 27th October 2010, as well as the amendment thereto dated 5th December 2017. Clauses 8(g), 8(h), and 8(j) of the Office Memorandum dated 27th “g) 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. October 2010 are reproduced as under h) In cases where there is no cognizable offence under IPC or 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. xxx xxx xxx j) In exceptional cases, LOCs can be issued without complete parameters and/or case details against CI suspects, terrorists, antinational elements etc. in larger national interest.”
28. The amendment dated 5th “Office memorandum December 2017, is reproduced as under - Sub: Amendments in circular dated October 27, 2010 for issuance of look-out circular in respect of Indian citizens and foreigners— regarding. In continuation to this Ministry Office Memorandum NO. 25016/31/2010-Imm dated October 27, 2010 and as approved by the competent authority, the following amendment is hereby issued: Amendment Read as: In exceptional cases, look-out circulars 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 Office Memorandum, 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 interest 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 to be permitted in the larger public interest at any given point in time. Instead of: In exceptional cases, look-out circulars can be issued without complete parameters and/or case details against counterintelligence suspects, terrorists, anti-national elements, etc., in the larger national interest.”
29. Thereafter, to consolidate the entire regime, the Ministry of Home Affairs issued a comprehensive Office Memorandum on 22 February 2021, which currently governs the field. Relevant clauses of the 2021 Memorandum are reproduced as under –
with various stakeholders and in suppression 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:- (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.
(I) In cases where there is no cognizable offence under IPC or 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.
(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 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”
30. The aforementioned Office Memorandums have been examined and interpreted in several judicial pronouncements.
31. In Prashant Bothra & Anr. v. Bureau of Immigration & Ors., 2023 SCC OnLine Cal 2643, it was held as under:
were Directors and guarantors, the same cannot tantamount to a cognizable offence against the petitioners.
47. The said citation by the SFIO is not relevant in the present case. In the present case, no “trial” has started and/or any arrest has been made or sought to be made. There is no issuance of NBW at all in the present case or even warrant, for that matter. Clause 4(a) of the Office Memorandum, quoting the Delhi High Court, clearly envisages that there has to be a cognizable offence where the accused was deliberately evading arrest or not appearing in a Trial Court despite NBW and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest. None of the said criteria are met in the present case. On the contrary, Clause 6 of the Office Memorandum dated February 22, 2021 provides that the existing guidelines with regard to issuance of LOC were being superseded and it was decided as provided thereafter. The said consolidated guidelines, thus, are spelt out in Clause 6.”
32. In Sumer Singh Salkan vs. Asst. Director, 2010 SCC OnLine Delhi 2699 the Court has observed as under – “The questions raised in the reference are as under:
D. LOC is a coercive measure to make a person surrender to the investigating agency or Court of law. The subordinate courts' jurisdiction in affirming or cancelling LOC is commensurate with the jurisdiction of cancellation of NBWs or affirming NBWs.”
33. In Brij Bhushan Kathuria v. Union of India and Others, 2021 SCC OnLine Del 2587, this Court has made the following observation – “14…….An LOC has the effect of seriously jeopardising the right to travel of an individual. The settled legal position, as per the judgment in Sumer Singh Salkan (supra) is that unless and until there is an FIR which is lodged or a criminal case which is pending, an LOC cannot be issued.
18. It is clear from a perusal of clauses (g), (h) and (j) that unless and until the conditions in these clauses are satisfied, prima-facie an LOC cannot be opened.
19. There is no criminal case pending against the Petitioner. His role is also yet to be ascertained by the investigating authorities. Phrases such as ‘economic interest’ or ‘larger public interest’ cannot be expanded in a manner so as to include an Independent Director who was in the past associated with the company being investigated, without any specific role being attributed to him, as in the present case……”
34. Vide order dated 10.09.2024 passed in Ajay Kumar Gupta Vs. Union of India, W.P (C) No. 2049/ 2021, a Coordinate Bench of this Court has observed as under -
35. Thus, the conditions mentioned in Clauses (H), (I) and (L) of the Office Memorandum on 22 February 2021 are required to be satisfied.
36. In the present case it is noted that there are no complaint/criminal proceedings pending against the petitioner in India.
37. Although Clause (L) of the 2021 Memorandum carves out an exception permitting issuance of an LOC, inter alia, on grounds relating to the “economic interests of India” and “larger public interest”, it has been held that such an exception cannot be invoked loosely.
38. It has been held by this Court in Prateek Chitkara v. Union of India,
defaults or credit facilities availed of for business, etc. Citizens ought not to be harassed and deprived of their liberty to travel, merely due to their participation in a business, whether in a professional or a nonexecutive capacity. The circumstances have to reveal a higher gravity and a larger impact on the country.
106. This court is of the opinion that this is not a case that would be detrimental to the economic interest of the country as there is no allegation that the petitioner has siphoned off any public funds.
107. In addition, the overwhelming fact that no criminal proceedings have been initiated against the petitioner, despite the demand having already been raised against him is an important consideration.”
39. It is also relevant to note the following observations of the Court in Hulas Rahul Gupta v. Bureau of Immigration and Others, 2023 SCC OnLine Del 8349–
40. The said issue has also been examined by this Court in Puja Chadha v. Directorate of Enforcement, 2025:DHC:8787 and Mr. Sandeep Dhanuka v. Directorate of Revenue Intelligence & Anr.
41. It is also noted that in Sh. Utkarsh Goyel v. Union of India & Ors., 2024:DHC:1878, a Coordinate Bench of this Court dealt with an identical matter. It was observed therein as under:-, 2025:DHC:9654 wherein this Court quashed the Look-Out Circulars issued against the petitioners therein on the ground that no cognizable offence was pending against them. It was further held that the exceptions of “economic interests of India” and “larger public interest” cannot be invoked in a vague or sweeping manner. “2.The facts as stated in the counter affidavit filed by the Respondent No.3/Bank of Baroda at whose instance the LOC has been opened are that M/s Royal Industries FZ LLC availed of loan from UAE Branch of Respondent No.3. It is stated that the Petitioners are Promoters and Directors of M/s Royal Industries FZ LLC. It is stated that the Petitioners also stood guarantee for the loan availed by the said M/s Royal Industries. It is stated that the borrower did not pay the loan amount and the account of the borrower was classified as an NPA on 30.06.2016.
14. In the facts of the present case, there are no civil or criminal proceedings against the Petitioners in India. The Respondent/Bank has already initiated proceedings for recovery of money against the Petitioner outside the country. There is nothing on record to indicate that the Bank has resorted to execute the decree against the Petitioners inside the country.
15. In the absence of any amount payable within India, the threshold of default which would render an impact on the country’s economic interest or the larger public interest is not spelt out in the said Office Memorandum. Simple defaults of loan payable outside the country cannot get elevated to an exceptional circumstance where the Petitioner’s departure from the country would cause an adverse impact to the nation’s economy. The validity and legality of LOC’s therefore, heavily depends on the prevailing circumstances governing the date on which such an LOC request is being made. Based on the materials placed on record in the instant case, this Court is of the opinion that no exceptional case of adverse effects on India’s economic interest exists. The fact that Respondent No.3 which is the Originator is in India alone cannot be a reason to open a Lookout Circular since the loan has been disbursed outside the country.”
42. In view of the foregoing, the impugned Look-Out Circular (LOC) is hereby quashed, subject to the petitioner furnishing an undertaking by way of an affidavit affirming that he shall:
(i) continue to cooperate in any investigation and appear before the investigating authority/ies, as and when required or directed, and render full cooperation in any ongoing proceeding/s and investigation/s; and
(ii) provide all material/documents requested from him by the investigating agencies, and as may be available within his power or possession.
43. Copy of the said affidavit of undertaking shall be served upon learned counsel for the respondents. It is made clear that any breach thereof by the petitioner, shall be treated as egregious and wilful disregard of orders passed by this Court.
44. The petition is disposed of in the above terms. Pending application also stands disposed of.
SACHIN DATTA, J NOVEMBER 14, 2025