The Delhi High Court has clarified that judicial bodies are not equipped to evaluate whether the material used to issue a Look Out Circular (LOC) was sufficient. This decision was made by a Division Bench comprising Justices C Hari Shankar and Om Prakash Shukla, who emphasized that the courts do not have the jurisdiction to second-guess the subjective satisfaction of the authority that issues the LOC.
Judicial Review and Subjective Satisfaction
The Bench acknowledged that while judicial review of LOC issuance is not entirely precluded, the role of the court is not to act as an appellate body concerning the subjective satisfaction of the issuing authority. The Bench stated, “The Court cannot sit in appeal over the subjective satisfaction of the authority issuing the LOC or assess, for itself, whether the material on the basis of which the decision has been taken is sufficient to justify the decision.”
However, the court also noted that if the material is purely speculative or lacks substantiality, judicial intervention may be warranted to protect the fundamental rights of citizens. The Bench insisted that determining the sufficiency of the material should remain the duty of the authority in charge of issuing the LOC, stating, “The Court cannot don the cloak of a super-executive authority.”
Case Background: Vikas Chaudhary
This ruling was made while overturning a single-judge order that had quashed an LOC against Vikas Chaudhary, a garment exporter. The LOC, initiated by the Income Tax Department, was based on allegations of undisclosed foreign assets, including an alleged acquisition of shares in a Dubai-based company, Centurion International Limited.
The single-judge had previously noted that the case against Chaudhary was built on an unsigned draft agreement and inconclusive WhatsApp messages. The judge criticized the continuation of the LOC for nearly three years without any action under relevant laws such as the Income Tax Act, the Black Money Act, or the Prevention of Money Laundering Act (PMLA), particularly as Chaudhary needed to travel abroad for his livelihood.
More Read
Division Bench’s Stand
The Division Bench disagreed with the single judge’s findings, asserting that the court’s review should not extend to the sufficiency of the material used to issue an LOC. They referred to the amended paragraph 8(j) of the 2010 Office Memorandum, which allows LOCs against individuals whose departure from India could be “detrimental to the economic interests of India,” reinforcing that the subjective satisfaction is that of the issuing authority.
The Bench concluded, “Unless and until, therefore, the Court is satisfied that there was no material on the basis of which the authority issuing the LOC could have arrived at the satisfaction… the Court would, to our mind, not be justified in interfering with the decision to issue the LOC merely because, in its estimation, the material available was not sufficient.”
The Income Tax Department was represented by Senior Standing Counsel Indruj Singh Rai alongside Advocates Sanjeev Menon, Rahul Singh, Priya Sarkar, and Gaurav Kumar. Advocates Shadman Ahmed Siddiqui, Kartik Pandey, Vaibhav Prasad Singh, Anushka Srivastava, Akshara Pareek, and Daniyal appeared for Vikas Chaudhary. The Union government was represented by Central Government Standing Counsel (CGSC) Farman Ali with Advocates Usha Jamnal and Tanya.
