IMPORTANT POINT
Look Out Circulars must be justified by substantial evidence and cannot infringe on fundamental rights without clear, objective criteria.

ORDER :

1. Heard Mr. Pasham Mohith, learned counsel appearing on behalf of the Petitioner, Mr. Gadi Praveen Kumar, learned Deputy Solicitor General of India appearing on behalf of Respondent Nos.1, 3 to 5, and Ms.V.Dyumani, learned Standing Counsel appearing on behalf of respondent No. 2.

2. Petitioner approached the Court seeking prayer as under:

“....to issue a Writ, Order or Direction more particularly one in the nature of Writ of Mandamus declaring the actions of the Respondents in issuing and keeping a Look Out Circular (LoC) pending against the Petitioner as illegal, arbitrary and unconstitutional and set aside/ quash the same and consequently direct the Respondents not to obstruct/restrain the Petitioner from travelling to and fro from the country vide Passport No N4236897 and pass.....”

PERUSED THE RECORD:

3. The counter affidavit has been filed by the Respondent-Bank and the relevant paragraph Nos. 8, 11, 12, 13, 14 and 15, are extracted hereunder:

“8. It is submitted that the Government of India, Ministry of finance, Department of Financial Services issued proceedings no. 25016/31/2010, dated 27.10.2010 the guidelines for issue of Lookout Notice in respect of Indian Citizens and Foreigners. Subsequently vide office memorandum dated 04.10.2018 the Government of India empowered the Bank Officers to issue the Lookout Notice. A copy of the office memorandum is filed herewith. The clause no. 1 (d) & 2 of the Office Memorandum is reproduced is under.

(d) It is therefore, clear that the guidelines enable LOCs against persons who are fraudsters/persons who wish to take loans, wilfully default/launder money and then escape to foreign jurisdictions, since such actions would not be in the economic interests of India, or in the larger public interest.

(2) Therefore, as suggested by CBI, MHA is requested to kindly amend the OM dated 27.10.2020 and include in the list of authorities under Paragraph 8 (b) another category, as follows:

“(XLV) Chairman (State Bank of India)/Managing Directors and Chief Executive Officers (MD& CEOS) of all other Public Sector Banks”

11. It is submitted that though the crystalized liability of the borrower was settled under OTS, the bank guarantees issued by the Respondent on behalf of M/s. Progressive - Higleig Joint Venture in favour of M/s Tanzania National Roads Agency for “The Upgrading of Namtumbo - Tunduru Road to Bitumen standard LOT A: Contract No. TRD/HQ/1039/2010/11 Namtumbo - Kilimasera Section (60.70 Km)” and “The Upgrading of Namtumbo Tunduru Road to Bitumen Standard; LOT B: Contract No TRD/HQ/1040/2010/11 Kilimasera Mtemanga Section (68.20 Km)” to the tune of USD 2,18,21,972.00 (approx. Rs.180.43Crore) These BGs have expired during Sep'2013 & June'2014. The Borrower was awarded 3 Road Projects in Tanzania and subsequently all 3 projects terminated on 27.12.2012 citing the reasons for Slow Progress/Borrower failed to perform the works as per Contract. It is submitted that the beneficiary, vide their letters dt.14.01.2013 had submitted invocation letters. But the Borrower has approached Courts and obtained stay order on invocation of BGs by Banks and court also directed the Respondent Bank not to invoke the BGs till the matter is disposed off. Hence, the Respondent has not invoked the BGs. Beneficiary vide letter dt. 03.10.2022, again submitted the invocation letters stating that vide order dated 13.09.2022 court has vacated the stay order.

12. It is submitted that the Borrower vide their letter dt. 12.10.2022 informed that the cases before Hon'ble High Court of Telangana Hyderabad are still pending for final adjudication and final arbitration award copies, not received and requested not to honour the payment. The Borrower has informed that they filed another application before the Hon'ble High Court of Telangana seeking stay on the invocation of the BGs. The Hon'ble High Court vide order date 08.11.2022 in International Commercial Arbitration passed a status quo Order which is continuing till date.