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

The Delhi High Court has observed 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.

“… 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,” Justice Subramonium Prasad held.

The court made the observations while quashing an LOC issued by Bureau of Immigration against one Shalini Khanna at the instance of Bank of Baroda.

The case against Khanna was that she had executed a Deed of Guarantee for repaying the amount disbursed by the bank for cash credit facilities availed by directors of a company, including her husband.

It was stated that cash credit facilities of Rs. 7 crores were released and out of the said amount, Rs. 5.95 crores was withdrawn by the Directors. The bank alleged that the money was misappropriated.

The bank initiated proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions before the Debts Recovery Tribunal (DRT) which held that the bank was entitled to recover a sum of Rs. 2,95,74,316 along with pendente lite interest and future interest from Khanna, in terms of the guarantee.

A complaint was registered by the Central Bureau of Investigation (CBI) against Khanna and the Directors of the company under Section 420 and 120B IPC read with Section 13 (1)(d) and Section 13(2) of the Prevention of Corruption Act.

Allowing the plea, Justice Prasad observed that though Union Government's Official Memorandum permits Banks to issue a request for opening a LOC, the same can be issued only if departure of such person is detrimental to the sovereignty or security of the country, or is threat to the bilateral relations to any country, or to the strategic or economic interest of the country.

“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,” the court said.

As the court quashed the LOC against Khanna, it added that if, during the course of criminal proceedings, she is arrayed as an accused, it will always open for the bank to make a request to the Bureau of Immigration to open a fresh LOC against her.

Counsel for Petitioner: Mr. Hrishikesh Baruah, Mr. Kumar Kshitij and Mr. Anurag Mishra, Advocates

Counsel for Respondents: Mr. Ajay Digpaul, CGSC with Mr. Kamal Digpaul and Ms. Ishita Pathak, Advocates for UoI; Mr. Ashish Verma and Mr. Kartikey Bhargava, Advocates for R-2

Title: SHALINI KHANNA v. UNION OF INDIA & ANR.

Citation: 2024 LiveLaw (Del) 153

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