Delhi High Court Quashed LoCs, Relief for Supertech Director
The Delhi High Court quashed LoCs (lookout circulars ) issued against Mohit Arora, director of Supertech Realtors, by the Bureau of Immigration. These LoCs were requested by Bank of Baroda and Union Bank of India. The court clarified that it has not commented on LoCs issued at the request of other investigative agencies.
Justice Subramonium Prasad emphasized that although an FIR has been registered against Arora, this alone does not justify the continuation of the lookout circulars issued by the banks. He stated, “It is well settled that mere inability to pay money without there being a criminal case cannot be a reason to take away the fundamental right guaranteed under Article 21 of the Constitution of India.” The right to travel abroad is guaranteed under Article 21 of the Constitution of India. This right cannot be taken away in an arbitrary or illegal manner.
Supertech Ltd and its subsidiary, Supertech Realtors, had secured credit facilities from various financial institutions, including Bank of Baroda and Union Bank of India, for multiple development projects. In 2012, Supertech Realtors entered into a facility agreement with Union Bank of India for a term loan of ₹735 crore, with ₹300 crore allocated for the Supernova project in Noida, Uttar Pradesh. Mohit Arora provided a personal guarantee for this loan.
In March 2014, Union Bank of India also sanctioned ₹150 crore for the Eco Village-II, Phase-I project in Greater Noida (West), with Arora again acting as guarantor. As Supertech and its subsidiaries began defaulting on their repayments, their accounts were classified as Non-Performing Assets (NPAs) by the banks, which initiated recovery proceedings. Consequently, five lookout circulars were issued against Arora by the Bureau of Immigration.
The High Court ruled that while office memorandums allow the issuance of lookout circulars in exceptional circumstances, this power should not be exercised routinely. The court highlighted that the issuance of such circulars should be reserved for truly exceptional situations and not for cases where individuals are not involved in any criminal offenses under the Indian Penal Code (IPC) or other criminal statutes.
This Delhi High Court quashed LoCs underscores the judiciary’s stance on protecting fundamental rights against arbitrary actions by financial institutions. It also sets a precedent that financial inability alone, without criminal implications, should not lead to restrictions on personal freedoms such as the right to travel.
The decision of Delhi High Court quashed LoCs against Mohit Arora reinforces the principle that fundamental rights cannot be curtailed without substantial justification. This ruling is a significant reminder to financial institutions and other authorities to exercise their powers judiciously and in accordance with the law.
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