High Court allows travel abroad, quashes Look Out Circulars

The High Court ruled in favor of the petitioners, setting aside the Look Out Circulars (LOCs) issued against them by Indian entities and investigative agencies. The Court affirmed the petitioners' right to travel abroad, emphasizing adherence to legal provisions and fundamental rights. It held that Indian entities could not request LOCs for dues owed to foreign sister entities without proper grounds, and investigative agencies were not entitled to seek LOCs based on investigations without sufficient cause. The Court set aside all LOCs against the petitioners and allowed them relief, disposing of pending applications.

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Issues Involved:
1. Territorial Jurisdiction
2. Issuance of Look Out Circulars (LOCs) by Indian entities for dues owed to foreign sister entities
3. Entitlement of National Central Bureau (Interpol) and Serious Fraud Investigation Office (SFIO) to seek LOCs
4. Petitioners' entitlement to relief

Detailed Analysis:

Point (a): Territorial Jurisdiction

The Court examined whether it had jurisdiction to entertain the writ petition. The objection to territorial jurisdiction was raised by the Bank of Baroda and the State Bank of India but not argued. The Court, referencing the Supreme Court's decision in Kusum Ingots and Alloys Ltd. v. Union of India (2004), concluded that even a small fraction of the cause of action within its jurisdiction suffices. The petitioners' properties in Haryana and their residence in Faridabad provided sufficient grounds. The Court also cited the Supreme Court's stance in Popatrao Vyankatrao Patil v. State of Maharashtra (2020) that the government should not use technicalities to defeat legitimate claims. Thus, the Court held that it had jurisdiction.

Point (b): Issuance of LOCs by Indian Entities for Dues Owed to Foreign Sister Entities

The Court evaluated whether Indian entities of Bank of Baroda and SBI could request LOCs for dues owed to their UAE-based sister entities. The issuance of LOCs was governed by Office Memorandums (OMs) from the Ministry of Home Affairs, which did not explicitly cover foreign-incorporated entities. The Court noted:
- The debt in India with respect to Indian Public Sector Banks was settled.
- The Dubai branches of Bank of Baroda and SBI are distinct entities from their Indian counterparts.
- Indian laws, including OMs, do not have extraterritorial application unless explicitly stated.

The Court emphasized that the right to travel abroad, as recognized in Maneka Gandhi v. Union of India (1978), cannot be arbitrarily restricted. The Court found no exceptional case or adverse effect on India's economic interests due to the petitioners' actions. It held that the requests for LOCs were mechanically issued without proper consideration, thus violating the petitioners' fundamental rights. Consequently, the Court ruled that Indian entities could not request LOCs for dues owed to their foreign sister entities.

Point (c): Entitlement of National Central Bureau (Interpol) and SFIO to Seek LOCs

LOCs Issued by National Central Bureau (Interpol):
The Court reviewed LOCs issued at the request of the National Central Bureau (NCB) for cheque dishonor cases in the UAE. The petitioners presented evidence that issuing cheques in bad faith was decriminalized in the UAE as of January 2, 2022. The Court accepted this argument, noting that the convictions in absentia could not serve as a basis for LOCs. The Court emphasized that under Indian law, dishonor of cheques is a non-cognizable offense, and thus, LOCs could not be issued for such cases. The LOCs issued by the NCB were deemed unsustainable.

LOCs Issued by SFIO:
The SFIO was investigating M/s ACCIL, India, under Section 212(1)(c) of the Companies Act, 2013. The Court noted that the debt of ACCIL was resolved through a Corporate Insolvency Resolution Process approved by the NCLT, and no adverse report or FIR was filed against the petitioners. The Court found no provision empowering SFIO to seek LOCs based on such investigations. Therefore, the Court held that neither the NCB nor SFIO were entitled to request LOCs against the petitioners.

Point (d): Petitioners' Entitlement to Relief

Based on the above reasoning, the Court set aside all LOCs issued against the petitioners at the instance of respondents No.3 to 8. The Court restrained officials from preventing the petitioners from traveling abroad and allowed the writ petition, disposing of pending applications.

Conclusion:
The High Court ruled in favor of the petitioners, setting aside the LOCs issued against them and affirming their right to travel abroad. The Court emphasized adherence to legal provisions and fundamental rights, rejecting the arbitrary issuance of LOCs by Indian entities for foreign dues and by investigative agencies without proper grounds.

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