In what is considered a significant relief for Indian-born entrepreneur Bavaguthu Raghuram Shetty, commonly known as BR Shetty, the Indian High Court has declared the practice of allowing heads of public sector banks in India to issue lookout circulars (LOC) as invalid.
The court also temporarily suspended the LOCs issued by the heads of the Punjab National Bank and the Bank of Baroda against Shetty, according to Arabian Business.
Karnataka High Court Invalidates Authority for Banks to Issue Lookout Circulars
The High Court of Karnataka stated that the office memoranda (OMs) on lookout circulars, issued by the Bureau of Immigration of the Ministry of Home Affairs, authorizing heads of public sector banks to issue LOCs, are not legally valid. The court emphasized that there can be no delegation of this power to entities like the Chairman/Managing Director/Chief Executive of public sector banks.
Justice Krishna S. Dixit of the Karnataka High Court made these remarks while addressing Shetty’s petitions against the LOCs issued by the two banks. BR Shetty faces proceedings seeking the recovery of INR 23.24 billion owed to the banks personally and as a personal guarantor for his companies.
The court observed that the power to delegate cannot be broadly interpreted, and the OMs on LOC have not been issued in the official Gazette as required by law.
However, the High Court did not annul the OMs, as the petitioner had not specifically challenged their validity. Instead, the challenge focused on the LOCs operating against Shetty since 2000, with a request for permission to travel to Dubai.
The Karnataka High Court allowed Shetty to travel abroad unless there are other restrictions beyond these LOCs. Shetty was directed to submit an affidavit committing not to dispose of or interfere with his properties globally, disclosed or undisclosed, and to return to India as needed for legal proceedings. Additionally, Shetty was instructed not to resist if Indian banks initiate criminal proceedings under relevant laws or if extradition proceedings are undertaken abroad.
