The issuance of a Look Out Circular by a bank against a guarantor is unconstitutional if it violates fundamental rights and lacks proper authority under established guidelines.

ORDER :

C.V. Bhaskar Reddy, J.

1. This writ petition is filed by the petitioners seeking to declare the action of the Respondents in issuing Look Out Circular (LOC) against the petitioner No. 1 as illegal, arbitrary and unconstitutional and consequently, prayed this Court to set aside/quash the same and direct the Respondents not to obstruct/restrain the Petitioner No. 1 from travelling to and fro from the country vide Passport No.W2210071.

2. Heard the learned counsel for the parties and perused the record.

3. The petitioner No. 1 claims to be the Managing Director of petitioner No. 2-M/s. Progressive Constructions Limited (for short 'the company'), incorporated under the provisions of Companies Act and engaged in the business of infrastructure construction and developmental activities. It is the case of the petitioners that for the purpose of business, the said company availed various credit facilities from the consortium of Banks and the petitioner No. 1 stood as guarantor. It is further case of the petitioners that the said company suffered losses and could not repay the loans and at the request of the company, the loan was restructured. It is further case of the petitioners that petitioner No. 1 was stopped by the immigration authorities on the ground that an 'Look Out Circular' (LOC) was issued against him.

4. The grievance of the petitioners is that issuing LOC to prevent the petitioner No. 1 from travelling abroad is an arbitrary exercise of power, abuse of authority and violative of fundamental rights of the petitioner No. 1 guaranteed under Article 14, 19(1)(g) and 21 of the Constitution of India.

5. Smt.V.Dyumani, learned counsel appearing for respondent Nos. 3 to 5 relying upon paragraph 16 of the counter affidavit has stated that the LOC issued against the petitioner No. 1 was last reviewed by the competent authority of the respondent-Bank on 16.06.2023 and the respondent-Bank has to recover more than Rs. 180.00 crores together with interest thereon from the borrower and petitioners as the beneficiary of the Bank Guarantees has already given BG invocation letter to the bank. It is also submitted that the respondent-Bank is only interested to recover its dues and the bank has no intention to harass the petitioner.

6. Considered the submissions of learned counsel for the respective parties and perused the record.

7. The Ministry of Home Affairs, Foreigners Division, (Immigration Section), Government of India, has issued Office Memorandum No. 25016/10/2017-Imm(Pt.) dated 22.02.2021 framing consolidated guidelines for issuance of Look Out Circulars (LOCs) in respect of Indian Citizens and foreigners. As per the said OM dated 22.02.2021, in exceptional cases, LOCs can be issued even in such cases, as may not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (B), if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point of time. Clause 6(B) of the Office Memorandum (OM) dated 22.02.2021 confers power on the Chairman/ Managing Director/CEOs of all Public Sector banks as Originating agency to request for issuance of Look Out Circulars. The OMs issued are a framework for issuance of LOCs at the instance of an Originating agency. They are internal instructions and provide the necessary guidelines and framework. Office Memorandum (OM) issued on 27.10.2010 is corresponding to consolidated Office Memorandum (OM) issued on 22.02.2021. Clauses 8(g) and 8(h) of the OM dated 27.10.2020 correspon