The Bombay High Court on Tuesday held that public sector banks do not have the power to recommend or request the central government for issuance of Look Out Circulars (LOCs) against default borrowers who are Indian citizens or foreigners under the office memoranda (OM) of the central government. It said that while OMs of the central government were not ultra vires, the Constitution or 'per se arbitrary', the subsequent empowerment of bank managers of public sector banks to issue LOCs was arbitrary. "We do not expect public sector banks to do this (issue LOCs)," the bench said. A division bench of Justices Gautam S Patel and Justice Madhav J Jamdar passed a judgment in a batch of petitions and quashed and set aside the LOCs issued to restrain people indebted to public sector banks from travelling abroad. The HC said that the Bureau of Immigration will not act on the said LOCs. The bench on Tuesday passed the judgment a year and half after it had on July 18, 2022, concluded the hearing and reserved its verdict in the matter. The LOCs were issued by the Bureau of Immigration of the Ministry of Home Affairs (MHA) that allow the authorities at any port of departure to prevent a person from travelling outside India. The LOCs were issued based on a series of OMs or circulars of the ministry since October 27, 2010. The court, however, clarified that its present verdict would not affect any existing restraint orders issued by Debt Recovery Tribunal (DRT) or Criminal Court and the same will operate to continue. The bench also held that the fundamental right to travel abroad cannot be curtailed by executive action absent any government statute or controlling statutory provision. The circulars were amended from time to time and in September, 2018, a new ground was introduced to issue LOC in the 'economic interest of India,' that restrained a person from travelling abroad if his or her departure was detrimental to economic interest of the country. Next month, another clause was introduced empowering the chairman of the State Bank of India and the managing director and the chief executive officers of all other public sector banks to request immigration authorities to issue LOCs. The petitioners, through senior advocate Birendra Saraf (who is now Advocate General of Maharashtra), had argued that the circulars infringed upon their fundamental rights, including the right to life with dignity under Article 21 of the Constitution. They argued that the 'economic interest of India' cannot be equated to the 'financial interests' of any public sector bank. However, senior advocate Anil Singh who was the then Additional Solicitor General, representing MHA, responded that every bank was expected to justify its request for LOC. He argued that while a particular LOC can be set aside, the 'wider concept' of an OM or the circular empowering the bank to recommend the action cannot be invalidated. It said that deprivation of life or personal liberty can be done only through procedure established by law and the impugned circulars contain such checks and balances and the OMs issued for national purpose 'do not cause blanket infringement of fundamental rights.'
