Recent Judicial Interpretations Regarding 'Look Out' Circulars Issued By Investigation Authorities/Agencies

BACKGROUND

In 1971, the Ministry of Home Affairs ("MHA") set up the Bureau of Immigration ("BoI") as a border control agency. This was to check and monitor the entry and exit of all persons across all international check posts in India. These check points are the entry point into the country and last exit point and every person, Indian or foreign national must pass through an immigration check comprising of passport, citizenship status and visa checks. This process also serves an additional purpose, i.e. to check persons who may be wanted or may be a 'person of interest' to some law enforcement agency (police, Interpol, etc.) or who might be evading arrest or whose international movement needs to be watched, monitored, and where necessary prevented too¹.

Although BoI maintains a database with complete details, but it does not trigger or originate any look-out circular ("LOC")². It is only the custodian of the LOC, and entity responsible for maintaining the database of LOCs requested by the respective originating agency, and this arrangement is administrative in nature.

It appears that the first point of origination is in the Office Memorandum ("OM") dated September 5, 1979 followed by the amendment in December 27, 2000. Thereafter, an OM was issued on October 27, 2010. This explains that LOCs are issued to keep a watch on the arrival and departure of foreigners and Indians, and as such they lapse after a year. In addition to the MHA, the following authorities were empowered to issue LOCs:

1. Ministry of External Affairs
2. Directorate of Revenue
3. Central Bureau of Investigation
4. Interpol
5. Regional Passport Officers
6. Customs
7. Income Tax departments
8. Police authorities from various states

Sumer Singh Salkan v. Asst. Director & Ors³

The Hon'ble Delhi High Court considered a Petition seeking a recall of a LOC and Red Corner Notice issued by the Delhi Police and Interpol against the petitioner therein alleging that they were issued arbitrarily and a malafide exercise of power. After considering inter alia the foremost judgment regarding challenge to issuance of a LOC in the case of Vikram Sharma & Ors. v. Union of India & Ors.⁴, the Hon'ble Delhi High Court held that:

1. Recourse to LOC can be taken by investigating agency in cognizable offences under the Indian Penal Code, 1908 ("IPC") or other penal laws, where the accused was deliberately evading arrest or not appearing in the trial court despite Non-Bailable Warrant ("NBW") and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest.
2. The Investigating Officer shall make a written request for LOC to the officer as notified by the circular of Ministry of Home Affairs, giving details & reasons for seeking LOC. The competent officer alone shall give directions for opening LOC by passing an order in this respect.
3. The person against whom LOC is issued must join investigation by appearing Investigating Officer ("IO") or should surrender the court concerned or should satisfy the court that LOC was wrongly issued against him. He may also approach the officer who ordered issuance of LOC & explain that LOC was wrongly issued against him. LOC can be withdrawn by the authority that issued and can also be rescinded by the trial court where case is pending or having jurisdiction over concerned police station on an application by the person concerned.
4. LOC is a coercive measure to make a person surrender to the investigating agency or Court of law. The subordinate courts' jurisdiction in affirming or cancelling LOC is commensurate with the jurisdiction of cancellation of NBWs or affirming NBWs.

Despite the clear guidelines laid down in Sumer Singh's case (supra), the MHA issued the OM dated October 27, 2010 ("2010 OM"). This OM introduced a broad net under clause 8 (j) that, "in exceptional cases, LOCs can be issued without complete parameters and/or case details against CI suspects, terrorists, anti-national elements, etc. in larger national interest".

The 2010 OM was amended a few times to introduce significant amendments summarized below:

1. In 2017, clause 8 (j) was amended to include 'in exceptional cases' the restriction that departure of a person from India could be denied, if the concerned authorities received inputs that the departure of a person from India is detrimental to the sovereignty or integrity or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India.
2. In September 2018, the officers in the Serious Fraud Investigation Office (SFIO) were empowered to approve the opening of a LOC under clause 8 (j).
3. In October 2018, MHA introduced an amendment to include the Chairman (State Bank of India)/Managing Directors an Chief Executive Officers (MD & CEOs) of all other Public Sector Banks could trigger a LOC request.
4. In November 2018, Ministry of Finance informed all public sector banks about the above amendment and directed them to strictly comply with the OM against 'willful defaulters'.
5. Eventually significant amendments were introduced in 2019 and 2021 in the OM to provide wide sweeping powers including automatic renewal unless the originating agency makes a deletion request, i.e. complete reversal from the original one year lifespan provision.

Showik Indrajit Chakraborty v. Addl. Superintendent of Police & anr⁵

Earlier this year, Hon'ble Bombay High Court decided a bunch of petitions seeking quashing and setting aside/withdrawal of LOCs issued by the Central Bureau of Investigation ("CBI"). This arose out of an investigation taken over by the CBI regarding a suicidal death and other investigations connected to that incident. After examining the LOCs, the Hon'ble Bombay High Court clarified that LOCs cannot be issued as a matter of course, but only when there is/are reason(s) to issue the same, i.e., when a person deliberately evades arrest or does not appear in the trail court or for any other reason. Among other reasons for passing an order to quash and set aside the LOC, the Hon'ble Court considered and relied on the following:

1. A LOC is a coercive measure to make a person surrender and as such interferes with a person's right of personal liberty and free movement and curtails the fundamental right of an individual to travel, guaranteed under Article 21 of the Constitution.
2. That the persons against whom LOCs were issued had participated in the investigation and cooperated in the same. It had been more than 2.5 years since they were last summoned by the CBI.
3. They had roots in the society and the right to travel is a fundamental right and cannot be curtailed except according to due procedure established by law.
4. LOCs is expected to be periodically reviewed as to whether grounds exist to continue the same.

Siddhartha Sudhir Moravekar v. SFIO & ors.⁶

In this case the petitioner was not an accused in the case registered by the Economic Offences Wing ("EOW") and in the chargesheet filed by the EOW, but he was the son of an accused against whom a First Information Report ("FIR") and chargesheet were filed. Pertinently, there was an investigation by the Securities and Exchange Board of India ("SEBI"), but the petitioner was not arraigned in this investigation too. In this case, the Hon'ble Bombay High Court directed the petitioner to submit an affidavit providing an undertaking to cooperate with the trial court and to remain present when summoned by the court and the agency (SFIO) and observed that merely stating that a person is a flight risk is not sufficient. Accordingly, the LOC was quashed and set aside by the Hon'ble Bombay High Court:

Saket Agarwal v. The Director, SFIO⁷

The factual matrix is somewhat similar to Siddhartha Sudhir Moraverkar's case (supra), but in this case the SFIO made a statement that it had taken a decision to withdraw the LOC and did not provide any reasons for the same. Based on this statement the court disposed the Petition. One of the rare cases where SFIO withdrew the LOC.

NON-INTERFERENCE BY COURTS CONCERNING LOCs

Contrary to the above, in some cases courts have declined to interfere with the LOCs issued by investigation authorities. In Chaitya Shah v. Union of India & ors.⁸, the Hon'ble Bombay High Court (Goa Bench) observed that:

1. The LOC was properly issued and extended through proper procedure. Further, that the petitioner's presence was necessary for effective investigation into the affairs of the company. This was perhaps due to the fact that the petitioner's main business as well as his wife and daughters were based in Hong Kong and he was a non-resident Indian. The court leaned on the OM issued on February 22, 2021 wherein it was specifically directed that:
   "(H) Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed Proforma regarding 'reason for opening LOC' must invariably be provided without which the subject of an LOC will not be arrested/detained.
   (I) In cases where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The Originating Agency can only request that they be informed about the arrival/departure of the subject in such cases.
   (J) The LOC opened shall remain in force until and unless a deletion request is received by BoI from the Originator itself. No LOC shall be deleted automatically. Originating Agency must keep reviewing the LOCs opened at its behest on quarterly and annual basis and submit the proposals to delete the LOC, if any, immediately after such a review. The BOI should contact the LOC Originators through normal channels as well as through the online portal. In all cases where the person against whom LOC has been opened is no longer wanted by the Originating Agency or by Competent Court, the LOC deletion request must be conveyed to BoI immediately so that liberty of the individual is not jeopardized.
   (K) xxxxxxxx
   (L) 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) above, 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 in time."
2. Although the petitioner offered to deposit his parents' passports (who were residing in India) but this did not weigh in his favour. The court held that the recourse to LOC in this case was not unfounded because the petitioner has a definite connection with the investigation, including the fact that he purchased shares of Gitanjali Gems Limited, i.e. the company under investigation by SFIO.
3. Pertinently, the court observed that merely attending the office of the SFIO would not mean that the petitioner has fully co-operated with the investigation but he has to explain the allegations and fully co-operate with the investigation.
4. Regarding the renewal of the LOC, the court observed that as per Clause (J) above, no LOC shall be deleted automatically and it shall remain in force unless and until a deletion request is received from the originator itself. Having said that, in this case, a request was made for renewal and it was subsequently renewed as per the guidelines.

In the connected investigation of Gitanjali Gems Ltd., the Bombay High Court in Ramesh Hiimatlal Shah v. Union of India & ors.⁹ relied on the judgment of Chaitya Shah (supra). Although in Ramesh Himatlal Shah's case, he along with his family are Indian residents, but the court did not defer from the principles laid down in Chaitya Shah (supra). Pertinently, there was an order issued by the Securities and Exchange Board of India (SEBI) that the petitioner did not supply true and complete information and the investigating agency needs to unearth various links, if he was permitted to travel abroad, the possibility of evading and hampering the investigation could not be ruled out.

AUTHOR'S COMMENTS

Although it appears that the recent trend of courts is to consider the facts and proceed to quash/set aside the LOCs issued by investigating authorities, but there are some instances wherein the court refuses to interfere with the issuance/renewal of the LOC. The authorities cite reasons such as an on-going investigation, flight risk, non-cooperation in the on-going investigation etc. to renew the LOC which the courts deal with while passing an order. From Chaitya Shah (supra) and Ramesh Himatlal Shah (supra) it is apparent that there is no distinction drawn when the petitioner is a non-resident and/or his family is residing overseas and his business is primarily carried on overseas. As such, this appears to be a clear restraint on personal liberty and remains to be ultimately decided by the Apex Court.

Having said that, the judgments of Chaitya Shah (supra) and Ramesh Himatlal Shah (supra) were prior in time to the recent judgments of Showik Indrajit Chakraborty (supra) and Siddhartha Sudhir Moravekar (supra), therefore, it appears that the focus is shifting towards setting aside unnecessary LOCs and they are being considered from the lens of personal liberty.

An anomaly to the above cases is Saket Agarwal (supra) wherein the investigating agency withdrew the LOC and did not provide any reasons for the same. But it appears that this is a clear fulfilment of the requirement of the originator seeking deletion/removal of the LOC. The authors disclose that they appeared for the petitioner in Saket Agarwal (supra).

This article has been written by Yuvraj Choksy (Principal Associate).

Footnotes

1. Viraj Chetan Shah v. Union of India & Ors. (Order dated April 23, 2024 in Writ Petition No. 719 of 2020).

2. Viraj Chetan Shah v. Union of India & Ors. (Order dated April 23, 2024 in Writ Petition No. 719 of 2020).

3. ILR (2010) VI Delhi 706.

4. Vikram Sharma & Ors. v. Union of India & Ors. ((2010) 171 DLT 671).

5. Showik Indrajit Chakraborty v. Addl. Superintendent of Police & anr (2024 SCC OnLine Bom 615).

6. Siddhartha Sudhir Moravekar v. SFIO & ors (2024 SCC OnLine Bom 2323).

7. Saket Agarwal v. The Director, SFIO (Order dated May 6, 2024 in Criminal Writ Petition No. 265 of 2021).

8. Chaitya Shah v. Union of India & ors. (2021 SCC OnLine Bom 3967)

9. Ramesh Hiimatlal Shah v. Union of India & ors. (Order dated July 5, 2022 in Writ Petition No. 3009 of 2021).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.