LOC request quashed due to insufficient evidence & procedural lapses, upholding personal liberty & rights

The court quashed the Look Out Circular (LOC) request by Bank of Baroda (BOB) against the petitioner, a former director of Visa Power Limited, citing insufficient evidence and failure to meet procedural requirements outlined in the guidelines. The court emphasized the importance of personal liberty and fundamental rights, ruling that BOB's request was arbitrary and unjustified. The decision highlighted the need for stringent adherence to LOC guidelines to prevent unwarranted restrictions on individuals' movements.

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Issues Involved:
1. Validity of the Look Out Circular (LOC) request by Bank of Baroda (BOB) against the petitioner.
2. Compliance with procedural requirements and guidelines for issuing LOCs.
3. Examination of the grounds cited by BOB for the LOC request.
4. Impact of prior judicial decisions on similar LOC requests.
5. Fundamental rights and personal liberty of the petitioner in the context of LOC issuance.

Detailed Analysis:

1. Validity of the Look Out Circular (LOC) request by Bank of Baroda (BOB) against the petitioner:
The petitioner, a former director of Visa Power Limited, challenged the LOC request initiated by BOB. The LOC was requested due to the company's liquidation and outstanding dues. The petitioner argued that the request was unjustified, as the company was already under liquidation, and the creditors could approach the liquidator for recovery. The court examined whether the LOC request met the criteria outlined in the relevant guidelines and found that BOB's request did not satisfy the necessary conditions.

2. Compliance with procedural requirements and guidelines for issuing LOCs:
The court reviewed the guidelines for issuing LOCs, particularly the office memorandum dated October 27, 2010, and subsequent amendments. The guidelines required specific conditions to be met, such as the involvement in cognizable offenses or evasion of legal proceedings. The court found that BOB's request did not provide sufficient evidence or meet the exceptional circumstances required for issuing an LOC. The reasons cited by BOB, such as the company's NPA status and forensic audit report, were not adequate to justify the LOC.

3. Examination of the grounds cited by BOB for the LOC request:
BOB cited several grounds for the LOC, including the company's NPA status, liquidation, forensic audit findings, and the apprehension that the petitioner might flee the country. The court found that these reasons were not supported by sufficient evidence. The forensic audit report, which alleged undervalued transactions and fund diversion, was not accepted by the NCLT and NCLAT. Furthermore, the CBI had returned the complaint filed by PNB due to a lack of details indicating a cognizable offense. The court concluded that BOB's reasons did not meet the criteria for issuing an LOC.

4. Impact of prior judicial decisions on similar LOC requests:
The court considered a prior judgment in WPA 10241(W) of 2020, where an LOC issued at the request of PNB was quashed. The court noted that the current request by BOB was based on similar grounds and facts. The prior judgment emphasized that mere default or NPA status was not sufficient to justify an LOC. The court found that BOB's request did not present any new or exceptional circumstances that would warrant a different outcome.

5. Fundamental rights and personal liberty of the petitioner in the context of LOC issuance:
The court highlighted the importance of personal liberty and the right to freedom of movement, as guaranteed by the Constitution. It emphasized that these rights could not be curtailed without reasonable grounds and evidence. The court found that BOB's request for an LOC was an arbitrary exercise of power and an attempt to restrict the petitioner's fundamental rights without sufficient justification. The court concluded that the LOC request did not meet the necessary legal and procedural requirements and quashed the request.

Conclusion:
The court allowed the writ petition, setting aside and quashing the LOC request by BOB dated November 29, 2021, and any subsequent steps taken based on that request. The court emphasized that the bank could request immigration authorities to inform them of the petitioner's entry and exit from the country but could not restrict his movement without meeting the stringent conditions for issuing an LOC. The decision underscored the need for careful and judicious application of LOC guidelines, ensuring that fundamental rights are not infringed without valid reasons.

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