National

HC rejects NRI businessman’s plea against lookout circulars

Krishna Prasad Bengaluru | Updated on February 16, 2021

Shetty was dennied to fly based on two LOCs issued by two public sector banks to whom his companies owe ₹2,800 crore

In a setback to BR Shetty, NRI entrepreneur and promoter of UAE-based NMC Healthcare, the Karnataka High Court has rejected his plea against the Bureau of Immigration restraining him from leaving India based on the Lookout Circulars (LOCs) issued by two public sector banks. His companies owe around ₹2,800 crore to the banks.

The immigration authorities on November 14, 2020, denied him permission to fly to Abu Dhabi from Bengaluru airport based on two LOCs issued by the Bank of Baroda and the Punjab National Bank in May and July respectively, in relation to recovery of loans granted to companies promoted by him.

Justice PS Dinesh Kumar dismissed the petitions filed by Shetty while holding that action of the banks and immigration authorities cannot be interfered with as the petitioner. “Unless, Shetty exhausts the remedy of approaching BOB and PNB and explains to them as to how the LOCs have been wrongly issued, and the banks pass any further orders, his prayer to permit to travel to Abu Dhabi cannot be considered,” the Court said.

The Court said that the petition is liable to be dismissed on the threshold because of the admission by the petitioner that he was the guarantor as “a guarantor is equally liable to repay the debt”. Moreover, the petitioner himself was the promoter of these companies, the court noted.

The companies promoted by Shetty owe ₹2,000 crore to BOB and ₹800 crore to PNB.

Poser to banks

Justice Kumar, in his order, has pointed that during the hearing of the petition the Court had posed a query to the banks that on what security they permitted such large exposure. The banks had said that “the companies were listed on the London Stock Exchange and the share value had shown that the said companies had high net worth.

The Court observed, “If Public Sector Banks are permitting such a large exposure without adequate securities, it is a matter of great concern and it shall have serious adverse impact on the economy of this country. It is time, the law makers and RBI re-visit the lending guidelines and take necessary remedial measures to ensure that public money is well secured before disbursement.”

Published on February 16, 2021

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