Bombay HC allows bizmen to go abroad despite LOC

Bombay HC allows bizmen to go abroad despite LOC

Circulars Issued By MHA At Instance Of BoB

Rosy.Sequeira@timesgroup.com

Mumbai:  12.12.2021

While allowing several people to travel abroad temporarily for business purposes, Bombay high court has directed that lookout circulars (LOC) issued against them at the instance of public sector banks will not come in their way.

Among those granted interim relief by a bench of Justices Gautam Patel and Madhav Jamdar on December 9 are Rihen Mehta, promoter-director of Dubaibased Global Green Bridge FZC, and son of Harshad Mehta of the Rosy Blue diamond group. The company had taken credit of AED 11 million (nearly Rs 45 crore) from Bank of Baroda’s Dubai branch and Rihen Mehta was also a personal guarantor. In 2019, he returned to India with his family. In December 2019, BoB declared the company’s account a nonperforming asset and initiated recovery proceedings. On January 13, 2020, Rihen Mehta was stopped at Mumbai airport on his way to New York.

The court heard petitions that challenged the LOC issued by the ministry of home affairs following an October 4, 2018, office memorandum (OM) where persons can be restrained from travelling if their departure is detrimental to the “economic interest of India”.

The OM allows the chairman of State Bank of India, and managing directors and CEOs of all other public sector banks to request the issue of an LOC.

The common complaint of the petitions is because an individual or corporate identity is indebted to a public sector bank, LOCs have been issued restraining their travel overseas. While some petitioners have civil or recovery proceedings pending and others criminal proceedings, the bench said none “can be said to be absconding or fugitive” evading an arrest or a warrant”. While some petitions challenged the LOC, two questioned the Centre’s power to issue such an OM, saying curtailing fundamental rights must be by statute or constitutional amendment and not by an executive order.

Additional solicitor general Anil Singh, with advocate Rui Rodrigues, said it is for each bank to justify its action in requesting an LOC. “The fact that a particular bank may have been wrong in making that request will not vitiate the office memorandum itself,” said Singh, adding there is no reason to question the power to issue such an OM.

He also said the OMs address security concerns, are not a blanket infringement of fundamental rights and have inbuilt safeguards. Since there is a complete challenge to even the first OM of October 27, 2010, the judges posted the hearing on February 4.

In individual orders, they directed the petitioners to give their exact itinerary with contact details to the court.

The HC will not grant them further travel permission unless they return to India. Immigration authorities at all points of departure will permit the petitioners to depart the country “without regard to any Look Out Circular issued at the instance of the bank”.