Bombay High Court strikes down authority of public sector banks to issue look out circulars

New Delhi, Apr 23: The Bombay High Court declared that public sector banks lack the authority to issue Look Out Circulars (LOCs) against Indian citizens and foreigners under the office memoranda (OM) of the Central government reports Bar and Bench.

The verdict came in response to a series of petitions challenging the issuance of LOCs by public sector banks to restrict individuals indebted to them from traveling abroad.

A Bench comprising Justice GS Patel and Madhav Jamdar delivered the judgment, deeming the empowerment of bank managers of public sector banks to issue LOCs as arbitrary, despite the validity of the Central government’s office memoranda. Consequently, all LOCs issued at the request of public sector banks were quashed and set aside by the High Court.

However, the Court clarified that its order does not affect any existing orders issued by tribunals or criminal courts restraining individuals from traveling abroad.

On the other hand, the Court upheld the validity of office memoranda issued by the Union Ministry of Home Affairs’ Bureau of Immigration, which authorize immigration authorities to prevent individuals from traveling outside India.

These circulars or OMs, dating back to October 27, 2010, were periodically amended, including amendments in September and October 2018, which expanded the grounds for issuing LOCs.

The petitions argued that the circulars infringed upon fundamental rights under Article 21 of the Constitution and that the economic interests of public sector banks should not be equated with the economic interests of India.

The Ministry of Home Affairs defended the OMs, asserting that they serve broader national interests, including security and sovereignty, and are not a blanket infringement of fundamental rights. It emphasized the presence of checks and balances and safeguards in the issuance of LOCs.

The judgment, which was reserved over a year ago, marks a significant development in the legal landscape concerning LOCs and underscores the balance between individual rights and national interests.

Senior Advocates Dr. Birendra Saraf and Parinam Law Associates, along with Advocates Gulnar Mistry and Subit Chakrabarti, represented the petitioners, while Additional Solicitor General Anil Singh and a team of advocates appeared for the Union of India.