The Delhi High Court ruled that the State cannot indefinitely restrain the OCI holder foreign national of Indian origin (petitioner) liberty to travel to his country of citizenship, despite the long-concluded proceedings. Finding that the initial Look Out Circular (LOC) was opened between 2015 and 2018, and after nearly seven years, another LOC has been issued in relation to the very same transactions that occurred between 2010 and 2015, the Court raised serious doubt as to its necessity and proportionality, owing to such an unexplained gap and the belated action.
Negating the contention of the DRI (respondent) that the petitioner had violated the LOC issued in 2015 and had evaded the summons issued at that time, the Court pointed out that there is nothing on record to suggest that the petitioner was informed or made aware of the fact that any LOC had been issued against him. Moreover, the first LOC dated November 06, 2015, was issued in relation to the petitioner’s Indian passport, which had already been renounced on April 09, 2013, upon his relinquishment of Indian citizenship.
A Single Judge Bench of Justice Sachin Datta observed that although Clause (L) of the February 22, 2021, Office Memorandum carves out an exception permitting issuance of an LOC, inter alia, on grounds relating to the “economic interests of India” and “larger public interest”, it has been held that such an exception cannot be invoked loosely.
The Bench noted that no cognizable offence was pending against the petitioner, and the proceedings arising out of the 2016 SCN have been conclusively dropped. Further, the order in favour of the petitioner has been upheld twice by the CESTAT.
The Bench also noted that the petitioner has travelled to India twenty-two times in the past four years, as his immediate family permanently reside in India, and there is no reasonable apprehension that the petitioner would abscond or evade the jurisdiction of Indian authorities.
Further, the Bench found that the petitioner has volunteered to give an undertaking on affidavit, affirming that he shall continue to cooperate in the investigation and appear before the investigating authority, as and when required or directed, and render full cooperation in any ongoing proceeding/s and investigation/s; and also provide all material/documents requested from him by the investigating agencies, and as may be available within his power or possession.
Accordingly, subject to the petitioner filing the undertaking on affidavit, the Bench quashed the LOC. However, it was clarified that since the LOC has been quashed on the strength of the undertaking, any breach thereof by the petitioner shall be treated as egregious and wilful disregard of orders passed by this Court, entailing action under the Contempt of Courts Act, 1971, besides other consequences under law.
Briefly, the petitioner, a foreign national of Indian origin holding an OCI Card, residing in Hong Kong as the sole shareholder and director of Century Exports Limited (CEL), a company registered in Hong Kong, and involved in the business of international trading of goods, had supplied various consignments of coal to two Indian companies between 2011 and 2015, both of whom are engaged in power generation in India. All consignments supplied by CEL were duly received and utilised by the concerned companies in India.
In the meantime, suspecting over-valuation and inferior quality of coal supplied by CEL, the respondent registered a case against CEL and the power-generating companies, viz. Reliance Infrastructure Limited (RIL) and Rosa Power Supply Company Limited (Rosa Power) and issued a Show Cause Notice (SCN) to them, proposing to redetermine the value of coal and impose penalties under Sections 112 and 114AA of the Customs Act, 1962. The SCN already culminated in a favourable adjudication, and the Principal Commissioner of Customs exonerated the petitioner of any wrongdoing. This exoneration was also confirmed by the CESTAT.
However, in May 2025, upon arrival at Indira Gandhi International Airport, New Delhi, from Hong Kong along with his family, the petitioner was detained by immigration authorities based on a Look-Out Circular issued against him at the request of the respondent. This came to be challenged by the petitioner seeking quashing of the LOC since no proceedings or investigation were pending against him.
Case Relied On:
Puja Chadha vs. Directorate of Enforcement [2025: DHC: 8787]
Appearances:
Senior Advocate Sidharth Luthra, along with Advocates Sidhant Kumar, Devika Mohan, Manyaa Chandok, and Om Batra, for the Petitioner/ Taxpayer
Advocates Anurag Ojha, Dipak Raj, Shashank Kumar, Garima Kumar, Kuldeep Mishra, Deep Raj, Ripudaman Bhardwaj, Kushagra Kumar, and Amit Kumar Rana, for the Respondents/ Revenue
