Bombay HC to decide validity of government circular on guidelines for issuing letters of credit


The Bombay High Court will rule on the validity of at least eight Circulars / Memoranda of Office (OM) issued by the central government regarding guidelines for the issuance of Look Out Circulars (LOC) to Indian citizens and strangers.

A division bench of Justices Gautam Patel and Madhav Jamdar clubbed a bunch of petitions challenging the issuance of letters of credit issued by Indian government, Immigration Bureau, Home Office.

Lines of credit allow immigration authorities at any port of departure to prevent a person from traveling outside of India.

Letters of credit are issued in accordance with a series of circulars or operational notices, the first of these circulars being published on October 27, 2010. Periodically, these circulars / operational notifications are amended.

Such an amended circular which has been contested was issued in September 2018 under which “the economic interests of India” may be grounds for issuing a letter of credit. It would prevent a person from traveling if the departure of that person could be detrimental to the economic interests of the country.

Another amendment was made in October 2018, whereby the Chairman of State Bank of India / Managing Director and Managing Directors of all other public sector banks can also request immigration authorities to issue letters credit.

Senior lawyer Birendra Saraf and lawyer Karl Tamboly, counsel for some of the petitioners, argued that the letters of credit were issued to prevent people from traveling abroad because a natural or legal person was in debt. from a public sector bank.

The lawyers argued that the words “economic interest of India” cannot be equated with the “financial interests” of a bank. The financial concerns of any bank, whether public sector or otherwise, are not equitable to “India’s economic interests”.

Refuting the arguments, Additional Solicitor General Anil Singh appearing for the central government, said each bank had to justify its actions when applying for a line of credit.

He further argued that at most some of the letters of credit could be canceled, but the validity of the circulars or operational notices cannot be questioned simply on the basis of a bad request from a particular bank in a special case. In addition, MOs have a broader concept and respond to concerns about the country’s security, sovereignty, terrorism and other national interests, Singh argued.

The HC had kept the requests for hearing on February 4, 2022.

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Posted on: Saturday December 11, 2021 20:37 IST

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