The Bombay High Court has struck down the power of public sector banks to issue lookout circulars

New Delhi, April 23: The Bombay High Court stated that public sector banks do not have the power to issue Look Out Circulars (LOCs) against Indian citizens and foreigners under the Office Memoranda (OM) of the Central Government’s Bar and Bench reports.

The judgment came in response to a series of petitions challenging the issuance of LOCs by public sector banks to restrict persons indebted to them from traveling abroad.

A bench comprising Justices GS Patel and Madhav Jamdar delivered the judgment and held that the power of bank managers of public sector banks to issue LOCs was arbitrary despite the validity of the central government’s office memoranda. Consequently, all LOCs issued on the petition of public sector banks were quashed and set aside by the Supreme Court.

However, the Court clarified that its order does not affect existing orders of tribunals or criminal courts prohibiting persons from traveling abroad.

On the other hand, the Court upheld the validity of office memoranda issued by the Bureau of Immigration of the Union Ministry of Home Affairs, which authorizes immigration authorities to prevent persons from traveling outside India.

These circulars or OMs, dated October 27, 2010, have been amended periodically, including amendments in September and October 2018, which expanded the grounds for issuing LOCs.

The petitions alleged that the circulars violated fundamental rights under Article 21 of the Constitution and that the economic interests of public sector banks should not be equated with the economic interests of India.

The Home Office defended the OMs, saying they serve broader national interests, including security and sovereignty, and do not constitute a general violation of fundamental rights. It emphasized the presence of checks and balances and safeguards in the issuance of LOCs.

The judgment, which was reserved over a year ago, marks an important development in the legal landscape regarding LOCs and underlines the balance between individual rights and national interests.

Senior lawyers Dr. Birendra Saraf and Parinam Law Associates, along with lawyers Gulnar Mistry and Subit Chakrabarti, represented the petitioners, while Additional Solicitor General Anil Singh and a team of lawyers appeared for the Union of India.