Delhi High Court Allows Umesh Shahra to Travel Abroad

The Delhi High Court has recently permitted businessman Umesh Shahra to travel abroad by suspending the lookout circular (LOC) issued against him. This decision follows the view taken by the Bombay High Court in the case of ‘Viraj Chetan Shah vs. Union of India & Ors.’, which restricted the power of public sector banks to request LOCs.

Arguments Presented

Advocates Ayush Jindal and Pankush Goyal, representing Umesh Shahra, argued that the three LOCs issued against him by the CBI and Bank of Baroda were no longer valid. They pointed out that the LOC issued by the CBI was based on an FIR that was quashed by the Madhya Pradesh High Court in November 2023.

Bank’s Role in Issuing LOCs

Advocate Jindal highlighted that banks used to issue LOCs arbitrarily to recover money without initiating criminal proceedings. He mentioned that the Ministry of Home Affairs issued guidelines in 2010 stating that banks could not open LOCs. However, a 2018 memorandum from the Ministry of Finance allowed public sector banks to request LOCs.

In 2021, a new Office Memorandum from the Ministry of Home Affairs allowed the heads of public sector banks to request LOCs. The Bombay High Court’s judgement quashed a clause in this memorandum, restricting banks from issuing LOCs.

Impact on Umesh Shahra

The lawyer argued that the LOC against Umesh Shahra was issued solely due to an existing debt, and the bank cannot use LOCs as a tactic to recover debt. The court agreed, noting that Shahra had already entered into a one-time settlement with the bank to pay off the debt. The LOC was seen as a major impediment to his ability to travel abroad.