An outline of Look out Circular against the maverick investor
Recently, the former Bharatpe MD Ashneer Grover and his wife Madhuri, the former Head of Controls at Bharatpe were granted permission to travel to the United States1 during the pendency of criminal case regarding misappropriation of funds of Resilient Innovations Private Limited's (RIPL)2, the company that controls Bharatpe. Earlier, the couple had approached the Hon'ble Delhi High Court to suspend the operation of the Look-out Circular (LoC) active against them since November 2023. It is interesting to note that their petition to quash the FIR is also pending with the Delhi High Court.
Ever since the criminal complaint filed against the couple by Bharatpe, alleging financial irregularities and criminal activities such as criminal breach of trust, fraud, cheating, embezzlement; the couple's movement had been restricted due to the risk of them fleeing the country.
Let us understand briefly, the nature, meaning and purpose of a Look-out Circular.
Nature and Meaning of a Look-out Circular
A Look-out Circular (LOC) is a legal instrument used by law enforcement agencies to prevent individuals from leaving a country, and it is particularly relevant in the context of preventing the absconding of accused persons, especially those involved in financial crimes.
The primary purpose of an LOC is to prevent the accused person from leaving the country and evading the legal process. By alerting immigration authorities and border control, law enforcement agencies can effectively stop the accused from absconding.
When an LOC is issued against an individual, it is circulated to all entry and exit points of the country, such as airports and seaports. This ensures that immigration officials are promptly informed, allowing them to take necessary actions to detain the individual if they attempt to leave the country.
The issuance of LOCs involves coordination among various law enforcement and immigration agencies. This collaboration enhances the effectiveness of preventing the accused from fleeing, as multiple agencies are alerted and can work together to apprehend the individual.
Look-out Circulars are commonly used in cases related to financial crimes, such as fraud, money laundering, and economic offenses. In such cases, where the accused may have substantial resources and international connections, the risk of absconding is higher, making the use of LOCs crucial.
It's important to note that the issuance of Look-out Circulars should be done judiciously, ensuring that the legal process is followed, and the rights of the individuals are respected. It is a preventive measure aimed at ensuring that accused persons face the legal consequences of their actions and do not evade justice by leaving the jurisdiction.
In Indian law, the issuance of Look-out Circulars (LOCs) is not explicitly governed by a specific penal section. Instead, it falls under the administrative and executive powers of the Ministry of Home Affairs and the Bureau of Immigration. The guidelines for issuing LOCs are laid out by the Ministry of Home Affairs, and they are primarily used to prevent individuals from leaving the country to evade legal proceedings.
The legal basis for Look-out Circulars can be found in the broad powers granted to the government to regulate immigration and prevent individuals from absconding during investigations or legal proceedings. These powers are generally derived from various statutes and regulations related to immigration and border control. The primary laws and regulations relevant to the issuance of Look-out Circulars include:
- The Passports Act, 1967: This legislation provides the legal framework for the issuance and revocation of passports in India. The Passports Act3 empowers the authorities to impound or revoke a passport in the interest of sovereignty, integrity, and security of India, among other reasons.
- The Foreigners Act, 1946: This law empowers the government to regulate the entry, stay, and departure of foreigners in India. The law allows authorities to issue orders for the expulsion of foreigners from India4.
- The Code of Criminal Procedure (CrPC), 1973: Although the CrPC does not explicitly mention Look-out Circulars, the police may use their powers5 to arrest individuals for preventing them from absconding during the course of an investigation.
It's important to note that the issuance of Look-out Circulars is an administrative measure, and there is no direct involvement of the judiciary in this process. However, the decision to issue an LOC is subject to legal scrutiny, and individuals affected by it may challenge the issuance through legal avenues to ensure that their rights are not violated.
Judicial Trend
The landmark judgment of Maneka Gandhi vs Union of India6 has dealt in great detail the latitudes of Article 21 of the Constitution vis a vis travel abroad and aspects that make life meaningful, complete and worth living.
The Hon'ble Supreme Court exclaimed:
"Could it have been intended by the constitution-makers that a citizen should hive this freedom in India but not outside? Freedom of speech and expression carries with it the right to gather information as also, to speak and express oneself at home and abroad and to, exchange thoughts and ideas with others not only in India but also outside. On what principle of construction and for what reason can this freedom be confined geographically within the limits of India?"
However, since no fundamental right is absolute and the fetters of reasonable restrictions duly apply on the same.
The interlinkage of traveling abroad and its protection as a fundamental right was further discussed in the case of Satish Chandra Verma vs Union of India7 "The right to travel abroad is an important basic human right for it nourishes independent and self-determining creative character of the individual, not only by extending his freedoms of action but also by extending the scope of his experience."
The Hon'ble Bombay High Court while reaffirming that Right to Travel is a fundamental right read into Article 21 of the Constitution has held in the case of Rajinder Kaur Jaspal Singh Layal and Ors. vs. Union of India and Ors8 that a pending property dispute cannot be a ground to restrict petitioners' travel abroad.
Elaborating another case regarding Look-out Circulars (LOCs), the right to travel abroad is regarded as an inseverable and indivisible part of the fundamental right to dignity and personal liberty. The Hon'ble Delhi High Court in the case of Shalini Khanna vs Union of India9 has held that Look-out Circulars cannot be issued in case of default of loan payment. The recent rise in reported cases of white collar crime have brought to fore the issues related to Look-out Circulars (LOCs) and the laws surrounding it.
In a myriad of judgments the Look-out Circulars (LOCs) have been quashed and set aside by the Hon'ble Courts based upon the facts of each case specifically and there is a lack of exhaustive judicial or legislative guidelines regarding the issuance and setting aside of Look-out Circulars (LOCs) though the jurisprudence regarding quashing and putting on hold warrants and summons is very clearly settled.
The High Court does not sit as a trial court and entertain evidence in deciding the petitions but its role is limited to oversee that there is no blatant miscarriage of justice.
Following the same lead, despite the claims of the petitioners that the LOC is illegal and unnecessary since the petitioners have always cooperated in the investigation and their right to travel abroad cannot be taken away as it is part of their fundamental Right to Life under Article 21 of the Indian Constitution; the Hon'ble Delhi High Court had observed that, "It is too hot in the day for this court to intervene now. Come after sometime. The investigation is at a nascent stage and they will take some time to investigate."
The case will come to logical conclusion in due course and the presence or absence of any substantial evidence for or against Mr. Ashneer Grover and Mrs. Madhuri Grover shall decide their case relating to the misappropriation of funds of Resilient Innovations Private Limited's (RIPL), until then, the Hon'ble Court has allowed the plea of the couple to travel abroad, albiet, with reasonable restrictions.
Footnotes
2. O.M.P.(I) (COMM.) 388/2023
3. Section 10(3) of the Passports Act, 1967
4. Section 3(2)(c) of the Foreigners Act, 1946
5. Section 41(1) (h) of CrPC, 1973
6. AIR 1978 SC 597
7. 2019 SCC Online SC 2048
8. Writ Petition No. 4917 OF 2022
9. 2024 SCC Online Del 837
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