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2023 (2) TMI 142 - HC - Companies LawValidity of request for issuance of a Look Out Circular (in short LOC) made by the respondent No.2 - en-mass cancellation of coal block allocations - account declared as a Non-Performing Asset (NPA) by the lenders - HELD THAT:- The general objective for issuance of LOC is to control the arrival/departure of persons against whom criminal cases are pending or who are either avoiding judicial proceedings or evading arrest or not co14 operating with the investigating agencies and there are specific inputs that such person(s), would flee the country - The first comprehensive policy was framed and found its release in the office memorandum dated October 27, 2010. The authorities who could issue LOC, the ingredients necessary for issuance of LOCs, the agencies who could make a request for issuance of LOCs and the various parameters required to be fulfilled before such request could be made, was provided therein. BOB requested the Bureau of Immigration to issue LOC. It is not on record whether such LOC has been issued or not. The Bureau of Immigration, Ministry of Home Affairs (Foreigners Division) and all the other members of the consortium of banks, apart from PNB were impleaded as respondents in this proceeding. None of these respondents have come up before the Court in support of the request of BOB - There is no evidence that on account of the default committed by the Visa Power Limited, the economy of India had been shaken. The bank has not provided any contemporaneous material against the petitioner which would satisfy the exceptions clause. The bank is also silent as to whether any input had been received from any agency that the petitioner was likely to flee the country and his departure would disrupt the economy. Admittedly, in the facts of this case, no investigation is pending before any authority. It is also not a case where the bank had come to a conclusion on the basis of inputs received from an intelligence agency or any other agency that the petitioner was trying to leave India in order to evade the consequences of the legal actions that may be taken against him, both under the civil and the criminal laws. In the case of SRI SOUMEN SARKAR, SON OF SRI GOPAL CHANDRA SARKAR, VERSUS , THE STATE OF TRIPURA, THE DIRECTOR GENERAL OF POLICE, , THE SUPERINTENDENT OF POLICE, , THE UNION OF INDIA,, THE COMMISSIONER (IMMIGRATION) , 6. THE REGIONAL PASSPORT OFFICER [2021 (3) TMI 1405 - TRIPURA HIGH COURT], the High Court of Tripura on perusal of MHA's Office memorandum dated 31.08.2010, stated that the reasons for opening LOC must be given categorically. It was held that LOCs could not be issued as a matter of course, but only when reasons existed and the accused deliberately evaded arrest or did not appear in the trial court. The Delhi High Court in the case of Vikas Chaudhary V. Union of India, [2022 (1) TMI 553 - DELHI HIGH COURT] quashed the LOC inter alia stating that mere suspicion of opening bank accounts in a foreign country, when such suspicion was based on some unsigned agreements and WhatsApp chats could not be a ground to restrain someone's fundamental right to travel abroad. In the case of Brij Bhushan Kathuria vs. Union of India &Ors., [2021 (4) TMI 750 - DELHI HIGH COURT] the Delhi High Court while setting aside the LOC issued against the Petitioner held that the phrases such as 'economic interest' or 'larger public interest' could not be expanded in a manner so as to restrict an independent director who was in the past associated with the company being investigated, from travelling abroad, without any specific role being attributed to him. The personal liberty and the fundamental right of movement guaranteed by the Constitution cannot be curtailed at the behest of BOB when the conditions precedent for making such request for opening an LOC, did not exist in this case - The freedom of movement of a citizen of India is a valuable right and cannot be infringed except by imposing reasonable restrictions. The court does not find any reasonableness in the action of BOB. The lead bank, PNB failed in its attempt to restrict the movement of the petitioner. No subsequent development has taken place which would justify a further request by BOB, on the self-same set of facts. Once the action of the lead bank was set aside by this court, BOB took a chance to restrain the freedom of movement of the petitioner by placing reliance upon the liquidation proceedings, the Forensic Audit Report and the complaint lodged by PNB. Such complaint was returned by the CBI - There is no allegation that the activity of the petitioner led to upheavals in the stock market, business activities, investments, trade, growth and development etc. There is no evidence that the petitioner had tried to escape to a foreign jurisdiction to avoid legal consequences of such action. The proceedings before NCLT were initiated in 2016. Since then no evidence could be submitted to implicate the petitioner in any criminal case. The petitioner contested the liquidation proceedings. A bald assertion that the petitioner’s departure would be detrimental to the economic interest of the country and the LOC must be issued in larger public interest, cannot be due satisfaction of the existing preconditions required to be fulfilled before the originator can make such a request. The existence of such pre-conditions and the manner in which the action of the petitioner fell within the exceptions or had affected the country’s economic interest had to be demonstrated from the records. The apprehension should be well-founded, backed by reasons and also supported by evidence - The bank acted in arbitrary exercise of the power vested in it by making a request for opening LOC which was an attempt to curtail the personal liberty and fundamental right of movement of a citizen guaranteed by the Constitution of India. Petition allowed.
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