India: Look Out Circular Guidelines in India

 

Mere suspicion of a person opening bank accounts in other countries or restricting travel as a buffer to payments outstanding to the Bank cannot be the sole basis for issuing Look Out Circular. Also, the concept of automatic deletion of LOCs does not exist anymore.

Look Out Circulars (LOC) have not been defined in any statute. An LOC can be said to be coercive measure adopted by a State to restrict and regulate the physical movement of a person. The only goal of an LOC is to track and/or detain a wanted individual and send them into the custody of the apt law enforcement agency. Once an LOC is issued against an individual, it might become difficult for them to enter and exit a country.

LOCs are issued against Indian citizens or foreigners against whom any case is pending and whose presence is required in relation to any investigation.

Look Out Circular Guidelines by MHA

As mentioned above, there is no statutory regime for issuance of LOCs and the same are governed by the Office Memorandums issued by the Ministry of Home Affairs (‘MHA’).

Earlier in 1979 and 2000, the MHA had come out with Office Memorandums which governed the issuance of LOCs. Later on, these were replaced by the Office Memorandum dated 27 October 2010.

This 2010 Memorandum defines the following guidelines pertaining to issuing LOCs for Indian citizens and foreign nationals:

• The originating agency can make a request to the Bureau of Immigration to open an LOC.
• The above request can only be made by officers holding a prescribed rank and even criminal courts can pass directions for opening an LOC against a person.
• All identifying particulars of the individual against whom an LOC is to be opened must be given by the originating agency. An LOC can be issued if the name and passport details are provided as well.
• Recourse to LOC is to be taken in cognizable offences under the Indian Penal Code or other penal laws. The reason for requesting the opening of LOC against a person must be specifically mentioned.
• The individual against whom the LOC is opened cannot be detained/arrested or restricted from leaving the country if there is no mention of any cognizable offense under the Indian Penal Code (IPC) or other penal laws. At most, the originating agency may request to be informed of the LOC subject’s arrival and departure.
• LOCs are valid for a one-year period unless the originating agency makes a request for a renewal. However, this validity will not be applicable if LOC is issued at behest of Courts or Interpol. However, this position was radically changed after the issuance of Office Memorandum in the year 2021 and, hence, now an LOC once opened remains in force till a request for deletion is received. The concept of automatic deletion of LOCs does not exist anymore.

 

A 2017 amendment in the above 2010 Office Memorandum provided that in exceptional cases, an LOC could also be issued in cases not covered by the guidelines in the 2010 Office Memorandum. In such scenarios, an individual may be restricted from leaving a country at the request of a prescribed authority if the authority, based on the facts in their hands, believes that letting such an individual depart would be:

• Harmful to the security, sovereignty or integrity of India;
• Harmful to the bilateral relations with any other nation;
• Harmful for India’s economic interests, or
• The individual would indulge in terrorist activities.

 

The MHA made further amendments to the abovementioned 2010 Office Memorandum in the year 2018 thereby empowering officers in the Serious Fraud Investigation Office and also the Chairman/Managing Directors/CEOs of public sector banks to request for opening of LOCs.

The immigration authorities could detain as well as prevent any person, including a willful defaulter from leaving India against whom an LOC has been issued.

Some of the agencies that have been authorized to request for opening of LOCs are:

• Ministry of Home Affairs (MHA);
• Ministry of External Affairs (MEA);
• District Magistrate;
• Superintendent of Police;
• CBI;
• Narcotics Control Bureau;
• Directorate of Revenue Intelligence;
• Central Board of Direct Taxes (CBDT);
• Intelligence Bureau;
• National Investigation Agency (NIA);
• Customs and Income Tax Departments, etc.

 

Options Available to a Person against Whom LOC is Issued

• A person against whom an LOC is issued may approach the concerned court where trial is pending and satisfy such court that the LOC was wrongly issued.
• A person including an Indian citizen or a foreign national may also approach the High Court in its writ jurisdiction to challenge such LOC inter alia on the ground that the same infringes their fundamental right to travel and also that the LOC was issued without any valid reason.

 

Role Of Interpol in Issuance of Look Out Circulars

As per the provisions of the Office Memorandum mentioned above, LOCs can be issued by the competent authority in India on a request made for the same by INTERPOL as well.

INTERPOL (the International Crime Police Organization) is the world’s largest police organization established with the object to ensure and promote the widest possible cooperation between all criminal police authorities. It enables cross-border police assistance and helps and supports all authorities, organizations and service missions that aim to safeguard or fight against international crimes.

All member nations maintain a ‘National Control Bureau,’ which shall act as the contact point for assistance related to overseas investigations.

The National Control Bureau of the INTERPOL in India is the Central Bureau of Investigation (CBI).

There are six types of notices which may be issued by the INTERPOL:

• Red Notice,
• Yellow Notice,
• Blue Notice,
• Green Notice,
• Black Notice, and
• Orange Notice.

 

A Red Notice is issued to seek provisional arrest of a wanted person against whom a national or international court has issued a warrant of arrest.

The INTERPOL may then request the CBI (which is the National Control Bureau of INTERPOL in India) to issue an LOC for such person and the CBI may thereafter make such request to the competent authority for issuance of an LOC.

While a Red Corner Notice (issued by INTERPOL) would ensure that the accused person is provisionally arrested in India, the LOC (issued by CBI at behest of INTERPOL) would ensure that such an accused person is not permitted to leave India or that their movement is regulated at all immigration check points in India).

Case Laws

Prior to the issuance of the abovementioned Office Memorandum dated 27 October 2010, the Delhi High Court in the case of Sumer Singh Salkan & Ors vs. Asst. Director & Ors. held that:

• Recourse to LOC can be taken by investigation agency in cognizable cases under IPC or other penal laws, where the accused was deliberately evading arrest or not appearing in trial court despite issuance of non bailable warrants and other coercive measures and there was likelihood of the accused leaving the country to evade arrest/trial.
• The Investigating officer shall make a written request for LOC giving details and reasons for seeking the LOC.
• With respect to the question of what remedy was available to the person against whom LOC is issued, the High Court answered that the person against whom LOC is issued must join the investigation by appearing before the investigating officer or should surrender before the concerned court or should satisfy the Court that LOC was wrongly issued against them. LOC can then be withdrawn by the authority which issued it and can also be rescinded by the trial court where the case is pending.

 

The Telangana High Court in the matter of Haridass Ramesh vs. Union of India agreed with the observations of the Karnataka High Court which had held that non-intimation of the issuance of LOC against a person by the originating agency does not violate any rights. This in effect means that there is no requirement of issuing a show cause notice to a person against whom an LOC is sought to be opened.

On the issue of the Banks taking recourse to issuance of LOC, the Calcutta High Court in the matter of Mannoj Kumar Jain & Ors vs. Union of India & Ors. observed that the recent trend shows that the Banks are issuing LOCs as a recovery mechanism for outstanding monetary dues. The Court further observed that a Bank’s apprehension that a borrower would leave the country forever in absence of an LOC cannot be applied across the board for all borrowers without any exception.

The criteria for assessing the creditworthiness of a borrower and their bona fides for repayment must be determined on a case-to-case basis. The Court further observed that LOCs, which have the effect of restricting a person’s free movement and the right to travel, should only be issued in exceptional circumstances and not at random and slightest provocation, particularly at the instance of a Bank who seeks restriction on travel as a buffer to payments outstanding to the Bank.

On the scope of judicial review to interfere with the decision of competent authority issuing the LOC, the Delhi High Court in the matter of Vikas Chaudhary vs. Union of India held that as long as it was found that the decision of the authorities to issue an LOC is a reasonable one, the Court would be circumspect in interfering with the authority’s decision. However, there could never be a blanket bar on the High Court’s power of judicial review to examine the authority’s decision.

The Court also noted that since the 2017 amendment in the Office Memorandum provided that LOC could be issued in exceptional circumstances even when the person is not involved in any cognizable offence under IPC or other penal laws, such power is meant to be used only in exceptional circumstances and not as a matter of routine. Mere suspicion of a person opening bank accounts in other countries cannot be the sole basis for holding that such person may, if allowed to travel abroad, be detrimental to the economic interests of India.

The Madras High Court in the matter of Karti P. Chidambaram vs. Bureau of Immigration, MHA & Ors. held that the legality and/or validity of LOC has to be adjudged with regard to the circumstances prevailing on the date on which the request for issuance of LOC has been made.

On the issue whether a copy of the LOC is to be provided to the person against whom an LOC is opened, the Telangana High Court in the matter of Kondaveeti Papamma vs. Union of India & Ors. directed the CBI to serve a copy of the LOC and reasons for issuing the same to the Petitioner therein so that an opportunity to be heard could be given to the Petitioner therein.

Considering a similar question, the Punjab & Haryana High Court in the matter of Noor Paul vs. Union of India had inter alia observed that non-supply of a copy of the LOC and the reasons for issuance of LOC at the time when the subject is stopped at the airport was not just, fair and reasonable and was violative of Article 21 of the Constitution. Accordingly, the Court directed the Ministry of Home Affairs, Bureau of Immigration and Foreigners Regional Registration Offices (FRRO) to serve a copy of the LOC and the reasons for issuing it as soon as possible after it is issued and shall also provide a post decisional opportunity to such person.

However, upon the said judgment being challenged before the Supreme Court in Bank of India vs. Noor Paul, the Supreme Court has stayed the portion of the judgment which directed the Ministry of Home Affairs, Bureau of Immigration and FRRO to serve a copy of the LOC and the reasons for issuing it as soon as possible after it is issued and to also provide a post decisional opportunity to such person. The said appeal before the SC is still pending.

Conclusion

Issuance of an LOC against a person may greatly interfere with their right to free movement outside of India. The Courts have not been shy to set aside such LOCs which were issued without any reasonable basis or were completely unwarranted in the facts of such cases. It is to be remembered that though at the time of issuance of an LOC, the person is not given an opportunity to be heard, however their rights would be protected by the Courts, in appropriate cases. Furthermore, a stringent procedure has been laid down for issuance of such LOCs and the Courts have held that LOCs cannot be issued against persons in a routine manner.

 

For further information, please contact:

Gautam Khurana, Managing Partner

India Law Offices, New Delhi

e: g.khurana@indialawoffices.com

t: +91 11 24622216

 

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