In The Crosshairs: What is a lookout circular? Who can issue it? Can it be challenged?

An LOC is usually issued against persons who have a criminal record or are under investigation

On February 22, reports emerged that the Enforcement Directorate (ED) had sought a lookout notice against ed tech company Byju's founder Byju Raveendran. According to the reports, the ED had asked the Bureau of Immigration to issue a lookout circular (LOC) to stop Raveendran from leaving India.

According to the ED, the company and its founder have contravened the provisions of the Foreign Exchange Management Act (FEMA) by failing to submit documents of imports and proceeds of exports.

In November 2023, BharatPe Co-Founder Ashneer Grover was stopped from leaving the country after an LOC was issued against him on the request of the Economic Offences Wing (EOW). The LOC was issued amid allegations that Grover’s family siphoned funds from the fintech unicorn on the pretext of offering recruitment services.

These instances lead us to the question: what is an LOC? Who has the power to issue it? And can it be challenged in court. Below is what experts Moneycontrol spoke to have to say.

What is an LOC?

An LOC is usually issued against persons who have a criminal record or are under investigation to prevent them from escaping prosecution by leaving the country where the alleged offence was committed.

“An LOC is a notice issued by the Ministry of Home Affairs (MHA) to all the relevant points of entry / exit of India,” said Sanjeev Kumar Sharma, Senior Partner at Saraf and Partners.

According to Sharma, LOCs are issued to identify and track specific individuals at such points of entry or exit, and to thereafter send them into the custody of the appropriate law enforcement agency. He further noted that when an LOC is in force, the person named in it would be detained at the airport / other port, and may not be permitted to travel out of India.

Amit Jajoo, Partner at Induslaw said, “Although there is no statute which governs the issuance of an LOC, circulars and guidelines issued by the MHA govern the issuance of LOCs.” These guidelines are revised from time to time to keep them up to date. Jajoo added that the last of such guidelines was issued by the MHA in 2021.

LOCs are generally valid for a year, if the request is not renewed by the originating agency, said Sidharth S Kumar, Counsel, BTG Advaya.

Who can issue an LOC?

“LOCs are issued only by the Bureau of Immigration, Ministry of Home Affairs, however, certain agencies are authorised to request the issuance of LOCs,” said Durgesh Khanapurkar, Partner at law firm Desai & Diwanji.

Agencies that can request for an LOC include the ED, the Central Bureau of Investigation (CBI), the Directorate of Revenue Intelligence (DRI), the Customs and Income Tax Department, and the EOW (added), among others.

“Until 2010, LOCs could be issued primarily in cases where cognisable offences were alleged to have been committed or had been committed under the Indian Penal Code (IPC) or other penal laws,” said Simranjeet Singh, Partner at Athena Legal. However, the MHA amended the guidelines to bring other offences under the purview of LOCs.

Can LOCs be challenged in courts?

According to lawyer Arjun Natrajan, LOCs can be challenged in a High Court by filing a writ petition, alleging the violation of the fundamental rights of a person without a valid ground. “An LOC, being an executive action, is open to scrutiny by High Courts in exercise of their writ jurisdiction,” said Natrajan.

In its recent decision quashing an LOC against actor Rhea Chakrabarty, the Bombay High Court noted that LOCs cannot be issued in a routine manner, they can only be issued when a person deliberately evades arrest or does not appear in the trial court, or does not cooperate with the investigation. ”An LOC is a coercive measure to make a person surrender, and as such interferes with the person's right of personal liberty and free movement, and curtails the fundamental right of an individual to travel.”

Vidhan Vyas, Founder, Vyas Legal, noted that courts have in the past quashed LOCs issued against journalist Rana Ayubb and Lok Sabha MP Karti Chidambaram