Fundamental Right To Travel Abroad Can't Be Curtailed Merely Because Person Failed To Pay Bank Loan: Delhi HC

While ruling on a very significant legal point pertaining to the fundamental right of a citizen to travel abroad, the Delhi High Court in a most robust, rational, remarkable and recent judgment titled Shalini Khanna vs Union of India & Anr in W.P.(C) 10951/2022 and cited in Neutral Citation No.: NC:2024:DHC:960 that was pronounced as recently as on February 6, 2024 has minced just no words absolutely to make it crystal clear that the issuance of a lookout circular (LOC) cannot be resorted to in every case of bank loan defaults or credit facilities availed for business. It must be noted that the Single Judge Bench comprising of Hon’ble Mr Justice Subramonium Prasad who authored this learned judgment put it succinctly noting that, "…the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts." In this regard, it must be mentioned that the Court made the key observations while quashing an LOC that was issued by the Bureau of Immigration against Shalini Khanna at the behest of Bank of Baroda. Very rightly so!

At the very outset, this learned, laudable, landmark, logical and latest judgment sets the ball in motion by first and foremost putting forth precisely in para 1 that, "The Petitioner has approached this Court challenging a Lookout Circular issued by Respondent No.1/Bureau of Immigration at the instance of Respondent No.2/Bank of Baroda."

As we see, the Bench then states in para 2 that, "The facts of the case reveal that in June, 2013, Metaphor Exports Private Limited, a company engaged in the business of garment manufacturing through its Directors Pran Nath Khanna, Mr. Sameer Khanna (the husband of the Petitioner herein) and Ms. Anju Khanna, had approached the erstwhile Bank of Baroda for availing cash credit facilities of Rs.9 crore."

To be sure, the Bench mentions in para 3 that, "It is stated that the Petitioner executed a Deed of Guarantee for repaying the amount disbursed by Respondent No.2/Bank for the cash credit facilities to be extended by the Bank. The Deed of Guarantee, specifically states that the Guarantee shall not exceed Rs. 2.63 crores which is the fair from the value of the property at DLF, Park Place, Gurgaon. The Deed of Guarantee observes that the Petitioner has mortgaged the said property to the company as security for the cash credit for Rs. 9 crore."

Do note, the Bench notes in para 4 that, "It is stated by the Bank that cash credit facilities to the tune of Rs. 7 crore based on the stock and book debts of the company were released and out of the said Rs. 7 crore, a sum of Rs. 5.95 crore was withdrawn by the Directors of the company."

Quite strikingly, the Bench mentions in para 5 that, "It is stated that the amount has been misappropriated. The account of the company was classified as a Non-Performing Asset (NPA) on 30.06.2014 and on that date, a balance of Rs. 7.26 crore was due and payable by the company."

Quite rightly, the Bench points out in para 14 that, "Lookout Circular can be issued against a person at the instance of any of the agencies mentioned in the Office Memorandums issued by the Ministry of Home Affairs from time to time."

Further, the Bench then states in para 16 that, "In terms of the said OM, an LOC can be issued at the request of the Chairman/Managing Directors/Chief Executive of all Public Sector Banks. A request is given by a person, who is authorized under the said OM, to the Bureau of Immigration and then the Bureau of Immigration at the request of the said Officer opens the Lookout Circular."

As things stands, the Bench hastens to add in para 17 stating that, "The Office Memorandum indicates that the legal liability of the action taken by the immigration authorities in pursuance of the Lookout Circular rests with the Originating Agency, in this case, the Bank of Baroda."

It cannot be lost sight of that the Bench observes in para 18 that, "Clause L of the Office Memorandum of 2021, as quoted above, states that in exceptional cases, an LOC can be issued at the instance of the Bank if the authorities are of the view that letting the person to depart from the country will be detrimental to the economic interests of India."

Briefly stated, it cannot be left out that the Bench mentions in para 19 that, "The scope of the term ‘detrimental to the economic interest of India’ has been dealt with by the various High Courts in various judgments." In this same para we see that a lot more has been dwelt pertaining to the Apex Court ruling in Prateek Chitkara vs. Union of India and Others, 2023 SCC OnLine Del 6104. Here we are discussing only the most key paras.

58. In Vishambhar Saran v. Bureau of Immigration (W.P. No. 10241(W) of 2020, decided on December 24, 2021) [2021 SCC OnLine Cal 3074.], the Calcutta High Court held that vague allegations of a person’s travel being detrimental to the economic interest of the country or the quantum of the alleged default (Rs. 351 crores in this case), is not sufficient to issue a look-out circular thereby restricting the personal liberty of a person to travel. In the said petition, no civil or criminal proceedings were initiated against the petitioner and thus the petitioner was allowed to travel. This view was echoed in Vishambhar Saran v. Bureau of Immigration (W.P.A. No. 6670 of 2022, decided on January 31, 2023).

39. Merely because the Office Memorandum dated December 5, 2017 permits the issuance of a look-out circular, in exceptional circumstances, even when the individual is not involved in any cognizable offence under the Penal Code, 1860 or any other penal law, it has to be remembered that this power is meant to be used in exceptional circumstances and not as a matter of routine, it must therefore, be interpreted in a manner that indicates an offence of such a magnitude so as to significantly affect the economic interests of the country. Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company cannot, in my view, be accepted as the basis for holding that the petitioner being allowed to travel abroad would be ‘detrimental to the economic interest of India’, when it is undisputed that this suspicion has remained a suspicion for such a long period of almost three years.

82. The term "detrimental to economic interest" used in the Office Memorandum is not defined. Some cases may require the issuance of a look-out circular, if it is found that the conduct of the individuals concerned affects public interest as a whole or has an adverse impact on the economy. Squandering of public money, siphoning off amounts taken as loans from banks, defrauding depositors, indulging in hawala transactions may have a greater impact as a whole which may justify the issuance of look-out circulars. However, issuance of look-out circulars cannot be resorted to in each and every case of bank loan defaults or credit facilities availed of for business, etc. Citizens ought not to be harassed and deprived of their liberty to travel, merely due to their participation in a business, whether in a professional or a non-executive capacity. The circumstances have to reveal a higher gravity and a larger impact on the country." (emphasis supplied)."

Be it noted, the Bench then notes in para 20 that, "Though Paragraph (L) of the aforesaid Office Memorandum permits the Banks to issue a request for opening a lookout circular, in exceptional cases, even if they are not covered by the guidelines, even in such of those cases, the same can be issued only if departure of such person is detrimental to the sovereignty or security of the country, or departure of the person is threat to the bilateral relations to any country, or to the strategic or economic interest of the country, or if such person is allowed to leave, he may potentially indulge in acts of terrorism or offences against State or that such departure ought not be permitted in larger public interest at any given point of time."

Needless to say, the Bench states in para 21 that, "It is well settled that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offence under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine."

Quite significantly, the Bench propounds in para 22 that, "The term ‘detrimental to the economic interests’ must be of such a magnitude that it can significantly affect the economic interest of the country. In the present case, the total loan amount disbursed is about Rs.7 crores and even if one adds the interest to it, it cannot be said that the amount is so large that it will affect the economic interests of the country."

Most significantly and so also most remarkably, we see that the Bench then mandates in para 23 expounding forcefully that, "The issuance of lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts."

Most strikingly, the Bench then elucidates in para 24 revealing succinctly that, "Paragraph 16.52 of the chargesheet which has been filed in the present case discusses the role of the Petitioner herein. Paragraph 16.52 of the chargesheet reads as under:-

"16.52 During investigation role of Smt. Shalini Khanna w/o Sanjay Khanna (A-4), Guarantor of the credit facility given to M/s. Metaphor Export Pvt Ltd (A-6) have also been looked into. It is revealed that she had no prior knowledge of fraudulent acts or omission of accused person at the time of her giving Collateral Security and Personal Guarantee to the Bank. Hence, her name has been kept in the column no. 12 of Charge sheet.""

It is worth noting that the Bench then notes in para 25 that, "The aforesaid paragraph indicates that after investigation, the CBI was of the opinion that the Petitioner herein had no prior knowledge of the fraudulent acts or omission of the accused at the time of her giving collateral security and personal guarantee."

As a corollary, the Bench then propounds and stipulates in para 26 directing that, "In view of the foregoing, this Court is inclined to quash the Lookout Circular (LOC) issued against the Petitioner. However, in case during the course of the criminal proceedings, the Petitioner is arrayed as an accused, it is always open for Respondent No.2 to make a request to the Bureau of Immigration to open a fresh LOC against the Petitioner."

Finally, we see that the Bench then concludes aptly by holding in para 27 that, "With these observations, the petition is allowed. Pending application(s), if any, stand disposed of."

All told, we thus see so very clearly that the Delhi High Court has made it amply clear in no uncertain terms that the fundamental right to travel abroad can’t be curtailed merely because a person has failed to pay a bank loan. This most brilliant judgment without any straw of doubt definitely deserves to be emulated by all the courts all across India in all similar such cases. No denying it!