2020 (12) TMI 145 - HC - Indian Laws

Court quashes Lookout Circular against petitioner due to procedural flaws. No impact on investigation.

The court quashed the Lookout Circular (LOC) and its extension issued against the petitioner, citing lack of valid reasoning and procedural compliance. ... Validity of Lookout Circular (LOC) issued by the respondents against the petitioner - siphoning off funds - illegal transfer of valuable foreign exchange - when the petitioner was intending to travel to Singapore, he was detained at the Indira Gandhi International Airport, Delhi and was informed that an LOC has been issued against him - case of respondents is that that the petitioner has not cooperated with the investigation and his conduct is highly evasive and non-cooperative, thereby justifying issuance of LOC and extension thereof - HELD THAT:- As held by the Supreme Court in MANEKA GANDHI VERSUS UNION OF INDIA [1978 (1) TMI 161 - SUPREME COURT] the right to travel abroad is a fundamental right guaranteed under Article 21 of the Constitution of India. In Karti P. Chidambaram [2018 (7) TMI 2000 - MADRAS HIGH COURT], the High Court of Madras held that the mandate of the Office Memorandum dated 27.10.2010 would necessarily require the request for issuance of LOC to contain reasons for such request. The condition precedent for issuance of an LOC is therefore, existence of reasons, which should be disclosed in the request for issuance of LOC. The High Court, after referring to Sections 41,41A and 41B of the Code of Criminal Procedure, 1973 further held that the legality and/or validity of LOC has to be adjudged having regard to the circumstances prevailing on the date on which the request for issuance of LOC had been made. It was further held that the LOCs cannot be issued as a matter of course, but when reasons exist, where an accused deliberately evades arrest or does not appear in the Trial Court. In the present case, there is no doubt that the allegations made against the petitioner are of a grave nature. The petitioner has submitted that the same are false and unsubstantiated, however, this Court need not detain itself on the examination of such allegations. For the purposes of the Impugned LOC, what is relevant to be noted is that the FIR was registered on 08.10.2018. Based thereon, the Enforcement Directorate registered ECIR on 02.07.2019. In undue haste, on 25.07.2019, the Impugned LOC was issued against the petitioner - The only allegation made is that the conduct of the petitioner is evasive and non-cooperative. This cannot be a ground for issuance of a LOC. Similarly, reliance of the respondents on the amendment made to the Office Memorandum is also unfounded. Though, the said amendment allows a LOC to be issued even in cases not covered by the Guidelines and in economic interest of India, no such case has been made out against the petitioner. It has not been explained how the travel of the petitioner would in any manner prejudice the economic interest of the country. Mere mention of the power in the counter affidavit cannot take the place of giving reasons for exercise of the same. The Impugned LOC and the extension thereof issued against the petitioner is set aside and quashed - Petition allowed. Issues Involved:1. Challenge to the Lookout Circular (LOC) issued against the petitioner.2. Allegations of siphoning off funds and illegal transfer of foreign exchange.3. Compliance with procedural requirements for issuing LOC.4. Petitioner's cooperation with the investigation.5. Validity and legality of the LOC based on existing guidelines and judicial precedents.Issue-wise Detailed Analysis:1. Challenge to the Lookout Circular (LOC) issued against the petitioner:The petitioner challenged the LOC issued by the respondents, claiming it was unjustified and lacked valid reasoning. The petitioner argued that the LOC was issued without following the proper guidelines and procedures, and that it violated the Office Memorandum dated 27.10.2010.2. Allegations of siphoning off funds and illegal transfer of foreign exchange:The respondents alleged that the petitioner, in collaboration with Mr. Dalip Jindal and others, siphoned off bank money amounting to Rs. 80.84 crore and parked it outside India. It was claimed that the petitioner’s companies were involved in transactions that resulted in a loss of foreign exchange to the country. The petitioner denied these allegations, asserting they were false and unsubstantiated.3. Compliance with procedural requirements for issuing LOC:The petitioner argued that the LOC was issued in violation of the guidelines established by the Office Memorandum and judicial precedents. The petitioner cited the judgment in Sumer Singh Salkan vs Assistant Director & Ors., which outlined the categories of cases and the procedure required for issuing an LOC. The petitioner contended that the LOC did not contain valid reasons for its issuance and was not justified under the circumstances.4. Petitioner's cooperation with the investigation:The petitioner claimed to have cooperated with the investigation by appearing before the authorities and providing necessary documents. The respondents, however, argued that the petitioner’s conduct was evasive and non-cooperative, justifying the issuance and extension of the LOC. The court noted that the petitioner had joined the investigation on multiple occasions and there was no evidence to suggest that the petitioner was a flight risk or likely to abscond.5. Validity and legality of the LOC based on existing guidelines and judicial precedents:The court referred to the judgments in Sumer Singh Salkan and Karti P. Chidambaram, which emphasized the need for valid reasons and adherence to procedural guidelines for issuing an LOC. The court observed that the LOC was issued in undue haste without sufficient grounds to justify it. The court held that the mere allegation of non-cooperation could not be a valid reason for issuing an LOC. The court also noted that the amendment to the Office Memorandum allowing LOCs in the economic interest of India was not applicable in this case, as no specific prejudice to the economic interest of the country was demonstrated.Conclusion:The court quashed the LOC and its extension issued against the petitioner, stating that it lacked valid reasoning and procedural compliance. The court clarified that the order would not impact the ongoing investigation and made no observations on the merits of the allegations or the petitioner’s defense. The petition was allowed with no order as to costs.