New Delhi [India], The Delhi High Court has recently allowed a businessman, Umesh Shahra, to travel abroad by suspending the look-out circular (LOC) issued against him, following the view taken by the Bombay High Court in the judgment of 'Viraj Chetan Shah vs. Union of India & Ors.', in which the power of the Chairman, Managing Directors and Chief Executive Officer of all public sector banks to seek opening of letters of credit against a person was nullified.
Advocates Ayush Jindal and Pankush Goyal, appearing for the petitioner, argued before the Court that of the three letters of credit issued against the petitioner at the behest of the CBI and Bank of Baroda, none survive and therefore the same should be annulled in the present. , thus allowing the applicant to travel abroad.
Adv. Ayush Jindal argued that the LOC at the instance of the CBI was opened in an FIR/RC against the applicant in 2021, however, the said FIR is quashed by an order of the Madhya Pradesh High Court in November 2023 and there is no cognizable offense. . against the applicant; the LOC based thereon does not survive and can therefore be voided.
Advocate Jindal further informed the Court that before the judgment of the Bombay High Court, banks used to arbitrarily issue LOC against a person with the sole intention of recovering money without initiating any criminal proceedings.
Adv. Ayush Jindal further stated that the Ministry of Home Affairs issued an Office Memorandum in 2010 laying down the guidelines for issuance of Vigilance Circulars (LOCs); However, according to said Memorandum, letters of credit could not be opened at the request of the banks. It was not until 2018 that the Ministry of Finance issued a memorandum empowering directors of public sector banks to issue applications for opening surveillance circulars. Under this office memorandum, the Chairman (State Bank of India), Managing Directors and Chief Executive Officers (MD and CEO) of all public sector banks could apply for opening of letters of credit against individuals.
Adv. Jindal went ahead and informed the Court that in 2021, the Ministry of Home Affairs issued an Office Memorandum, which now covers the field, for the issuance of surveillance circulars.
In terms of the said OM, a letter of credit can be issued at the request of the chairman, managing directors or the chief executive officer of all public sector banks. A person authorized under the said OM submits an application to the Immigration Bureau and then the Immigration Bureau, on the request of such officer, opens the LOC.
The counsel further argued that the judgment of the Division Bench of the Bombay High Court, in which the Court, as per its judgment in Viraj Chetan Shah Vs. Union of India & Ors., struck down a particular clause of the Office Memorandum of 2010, equivalent to clause 6 of the Office Memorandum of 2021, by which the Chairman, Managing Directors/Chief Executive Officer of all public sector banks They could request the opening of a COL.
The lawyer also submitted that the letter of credit has been issued against the plaintiff solely due to an existing debt and that the bank cannot open a letter of credit as a pressure tactic to recover the debt from a person who has otherwise reached a unique agreement (OTS) with the bank to settle said debt. A surveillance circular is a major impediment for a person who wants to travel abroad.
Advocates Ayush Jindal and Pankush Goyal, appearing for the petitioner, argued before the Court that of the three letters of credit issued against the petitioner at the behest of the CBI and Bank of Baroda, none survive and therefore the same should be annulled in the present. , thus allowing the applicant to travel abroad.
Adv. Ayush Jindal argued that the LOC at the instance of the CBI was opened in an FIR/RC against the applicant in 2021, however, the said FIR is quashed by an order of the Madhya Pradesh High Court in November 2023 and there is no cognizable offense. . against the applicant; the LOC based thereon does not survive and can therefore be voided.
Advocate Jindal further informed the Court that before the judgment of the Bombay High Court, banks used to arbitrarily issue LOC against a person with the sole intention of recovering money without initiating any criminal proceedings.
Adv. Ayush Jindal further stated that the Ministry of Home Affairs issued an Office Memorandum in 2010 laying down the guidelines for issuance of Vigilance Circulars (LOCs); However, according to said Memorandum, letters of credit could not be opened at the request of the banks. It was not until 2018 that the Ministry of Finance issued a memorandum empowering directors of public sector banks to issue applications for opening surveillance circulars. Under this office memorandum, the Chairman (State Bank of India), Managing Directors and Chief Executive Officers (MD and CEO) of all public sector banks could apply for opening of letters of credit against individuals.
Adv. Jindal went ahead and informed the Court that in 2021, the Ministry of Home Affairs issued an Office Memorandum, which now covers the field, for the issuance of surveillance circulars.
In terms of the said OM, a letter of credit can be issued at the request of the chairman, managing directors or the chief executive officer of all public sector banks. A person authorized under the said OM submits an application to the Immigration Bureau and then the Immigration Bureau, on the request of such officer, opens the LOC.
The counsel further argued that the judgment of the Division Bench of the Bombay High Court, in which the Court, as per its judgment in Viraj Chetan Shah Vs. Union of India & Ors., struck down a particular clause of the Office Memorandum of 2010, equivalent to clause 6 of the Office Memorandum of 2021, by which the Chairman, Managing Directors/Chief Executive Officer of all public sector banks They could request the opening of a COL.
The lawyer also submitted that the letter of credit has been issued against the plaintiff solely due to an existing debt and that the bank cannot open a letter of credit as a pressure tactic to recover the debt from a person who has otherwise reached a unique agreement (OTS) with the bank to settle said debt. A surveillance circular is a major impediment for a person who wants to travel abroad.
