Delhi HC quashes issuance of LOC in absence of any reasons being furnished by Union Bank of India [Read Order]

The Delhi High Court quashed the issuance of Look Out Circular ( LOC ) in absence of any reasons being furnished by Union Bank of India.

The Present appeal has been filed under Clause X of the Letters Patent of the then High Court of Judicature at Lahore, which stands extended to the High Court of Delhi, challenging the judgment dated 20th December, 2023, whereby the Single Judge has quashed the Look Out Circular (‘impugned LOC’), issued against the Respondent at the request of the Appellant Bank, and accordingly, and allowed the writ petition filed by the Respondent.

The Respondent was stopped at the IGI Airport, New Delhi while he was travelling to Canada owing to the impugned LOC issued against him at the request of the Appellant Bank. Thereafter, aggrieved by the impediments posed by the impugned LOC, the Respondent had filed the said writ petition seeking quashing of the impugned LOC.

The counsel for the Appellant Bank states that it is an admitted position that the Respondent is a British National and that as per the report of the Resolution Professional ( resolution report ) dated 10th October, 2021, in the repayment plan, filed in the Respondent’s personal insolvency proceedings before the National Company Law Tribunal, New Delhi, the liability of the Respondent towards the creditors is assessed at Rs.1778 Crores and proposed repayment plan on behalf of the Respondent is a mere Rs.59.10 lakhs.

The counsel stated that the request for issuance of the impugned LOC was made against the Respondent in view of the apprehension that the Respondent will abscond from the country without repaying his dues to the Appellant Bank, which stand assessed in the recovery proceedings.

The counsel for the respondent stated that for justifying the issuance of an LOC, the reasons for opening the LOC must be set out in the proforma for LOC, together with the name and designation of the officer who signs the proforma for LOC and that in the present case, ex-facie, the said details are neither mentioned nor discernible.

It was further submitted that no reasons (whatsoever) for seeking issuance of LOC have been recorded in the proforma for LOC and that even though it is an admitted fact that the Respondent is a British National, the Respondent’s nationality is listed as ‘Indian’ in the proforma for LOC and the proforma is undated.

 A Division Bench of Acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora observed that “In the absence of any reasons being furnished by the Appellant, the issuance of the impugned LOC in the year, 2021 was unjustified and the Respondent was deprived of his liberty to travel without following the due process of law.

“The Supreme Court1 has consistently reiterated that the expression personal liberty which occurs in Article 21 of the Constitution of India includes the right to travel abroad and no person can be deprived of that right except according to procedure established by law. In the facts of this case, the impugned LOC has been issued without complying with the mandatory conditions of the OM dated 22nd February 2021 and therefore, the learned Single Judge has rightly quashed the impugned LOC” the Bench noted.

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