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Issues: (i) whether the High Court had territorial jurisdiction to entertain the writ petition; (ii) whether Indian entities of the banks could seek issuance of Look Out Circulars in respect of dues of their UAE-incorporated sister entities; (iii) whether the National Central Bureau and the Serious Fraud Investigation Office were entitled to seek issuance or extension of Look Out Circulars against the petitioners.
Issue (i): whether the High Court had territorial jurisdiction to entertain the writ petition.
Analysis: Part of the cause of action was found to arise within Haryana because the petitioners were residents there and properties standing in their names had been mortgaged in connection with the lending transactions. The Court also noted the asserted intention to proceed in India against the petitioners and their properties on the basis of the foreign decree. In view of the settled principle that even a fraction of cause of action within jurisdiction is sufficient under Article 226, the technical objection was rejected.
Conclusion: The High Court had territorial jurisdiction, and this issue was decided in favour of the petitioners.
Issue (ii): whether Indian entities of the banks could seek issuance of Look Out Circulars in respect of dues of their UAE-incorporated sister entities.
Analysis: The Office Memoranda governing Look Out Circulars were held to operate within their legal limits and could not be stretched to cover dues owed to foreign incorporated entities merely because they were sister concerns of Indian banks. The Court emphasised the separate legal personality of the UAE entities, the absence of any cognizable offence in India, and the absence of any statutory basis showing that such foreign dues fell within the contemplated public sector bank mechanism. The Court also found no exceptional case affecting the economic interests of India so as to justify restriction on travel abroad.
Conclusion: The Indian entities of the banks were not entitled to seek issuance of Look Out Circulars for dues owed to their UAE sister entities, and this issue was decided in favour of the petitioners.
Issue (iii): whether the National Central Bureau and the Serious Fraud Investigation Office were entitled to seek issuance or extension of Look Out Circulars against the petitioners.
Analysis: As to the National Central Bureau, the underlying foreign cheque-dishonour liability had been decriminalized in the UAE by the applicable decree and circular, and the Court held that a non-cognizable matter could not justify preventing departure from India under the relevant guidelines. As to the Serious Fraud Investigation Office, the investigation under Section 212(1)(c) of the Companies Act, 2013 did not disclose any adverse report, FIR, or other material bringing the case within the Look Out Circular framework, and no enabling office memorandum authorising such a request on the stated basis was shown.
Conclusion: Neither the National Central Bureau nor the Serious Fraud Investigation Office was entitled to seek issuance or extension of Look Out Circulars against the petitioners, and this issue was decided in favour of the petitioners.
Final Conclusion: The Look Out Circulars were quashed and the petitioners were protected from being restrained from travelling abroad, with consequential directions to the concerned authorities.
Ratio Decidendi: A Look Out Circular can be sustained only when the request falls strictly within the governing office memoranda and the underlying case justifies such coercive restraint; it cannot be used for foreign sister-entity dues or for matters lacking a cognizable offence or statutory basis.
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