Look out circulars – a pressing need for a look-over
5 min read 05 Sep 2023, 05:30 PM ISTGiven the far-reaching implications of issuance of LoCs, one would ordinarily expect that these would be used only in exceptional circumstances
PremiumOver the last few months, there has been rampant use of look-out circulars (LoC) by investigating authorities and public sector banks to prevent individuals from leaving the country. LoCs are routinely and irresponsibly issued against loan defaulters, top executives accused of a crime, even witnesses and third parties (as potential accused). What is concerning is that most persons learn about existence of LoCs against them only when they are stopped at immigration checkpoints while travelling abroad. Apart from curtailing valuable fundamental right to liberty and travel, the process can cause irreparable public humiliation.
LoC and the surrounding legal framework
An LoC is a notice issued to the Indian Bureau of Immigration to curb foreign travel of the subject. The aim is to prevent persons of interest from leaving the country or to detain them. The concept has been in existence for quite some time – the first circular on this can be traced back to 1976. This is not unique to India and other countries also have their own parallels. For instance, Australia has a ‘Departure Prohibition Order’ and the United States maintains a ‘No Fly List’.
The legal framework governing LoCs is far from transparent and can be gleaned only from circulars/ office memoranda (OM) by the Ministry of Home Affairs. While courts have occasionally stepped in to lend some clarity, considerable ambiguity remains. The power to issue LoCs stems from the Passports Act, 1967 which allows the Central Government to suspend/ invalidate passports if found to be “necessary in the public interest".
Presently, the process is governed by MHA’s February 2021 OM. This provides that an LoC can be issued against any person (Indian or foreigner) accused of a cognizable offence and where they are deliberately evading arrest or refusing to appear in court. It can be issued at the behest of courts and a whopping 15 authorities including CBI, ED, SFIO and public sector banks. Once issued, the LoC remains in force indefinitely until the issuing authority cancels it or it is quashed by the Courts.
Lacunae and practical problems
Curiously, the OM does not provide for even basic safeguards or adherence to the principles of natural justice. There is no obligation to inform the individual that an LoC is opened, let alone share a copy. There is also no requirement to supply reasons for issuing of the LoC to the subject or even a post decisional hearing. As a result, it is very common for individuals to discover that an LoC is issued while at the airport to travel abroad. Recently, the High Court of Punjab and Haryana stepped in and directed that these basic requirements should be read into the OM. However, the Supreme Court stayed the decision of the High Court, and it remains to be seen how the Supreme Court deals with this issue.
Given the far-reaching implications of issuance of LoCs, one would ordinarily expect that these would be used only in exceptional circumstances. On the contrary, in recent times, there has been indiscriminate and hasty use of LoCs without procedural compliances. This has caused immense inconvenience and compelled individuals to get embroiled in the Court process. LoCs are routinely issued against witnesses who are not accused of any crime. The explanation offered is standard – that investigation is ongoing, and the person may be accused someday. Of course, there is never a response for when an investigation will be closed (it ordinarily stretches over several years). There have been cases where a person against whom no investigation is pending is stopped at the airport and is then forced to rush to the Court to identify the reasons for issuing an LoC and then go through the arduous process of having it cancelled. Even if Courts cancel the LoC, there is no reversing the reputational and monetary loss.
Another major concern is with public banks issuing LoCs. The OM gives no indication as to when banks can call for an LoC to be issued. Absent any guidelines, the banks tend to formulate their own standards which lack uniformity and are often arbitrary. The only semblance of guidance is that LoCs can be issued to protect the economic interest and larger national interest. These phrases are as vague as possible and further compound the problem. The Calcutta High Court recently described the framework as being “sufficient to sharpen the talons of a vindictive Bank to clip the wings of a vulnerable prey". There have been many instances when banks have issued an LoC simply because the quantum of loan secured by the subject is substantial and if the subject were to leave India, it would have an adverse impact on the economic interest of the country. Courts have come down heavily on such abuse by emphasizing that there is a stark difference between the economic interest of the country and that of the bank. Despite this, banks continue to request issuance of LoCs casually.
Available Recourse
An LoC can be challenged before the criminal court adjudicating the underlying criminal case. In cases where no criminal case is involved (such as where LoC is issued by bank), LoC subjects often approach the high court seeking its cancellation. Whether to move the criminal court or the high court is a crucial strategic decision that can impact the outcome and timeliness.
Conclusion
Matters that have any impact on individual liberty deserve a clear, accessible framework. Unclear rules inevitably lead to abuse and misuse. Ordinary citizens suffer and are forced through the ringer simply to be able to exercise their fundamental right to travel. LoCs are a useful tool and address a real problem – India has seen far too many high-profile criminals and defaulters evade justice by leaving the country. But that is no reason to subvert foundational elements of any rule – information symmetry, intelligible standards, and a lucid remedial process.
(Ashish Bhan, Aayush Mitruka and Lisa Mishra are lawyers working at Trilegal. Bhan is a partner, Mitruka is a senior associate and Mishra is an associate at the firm.)
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