2025 (6) TMI 769 - HC - Money Laundering

Seeking suspension of Look Out Circular (LOC) issued by Respondent No. 1 at the behest of Respondent Nos. 2 and 3 against Petitioner No. 1 and for permitting Petitioner No. 1 to travel abroad - existence of sufficient cause and compliance with conditions to justify suspension of the LOCs and grant of permission to travel abroad or not - HELD THAT - The concerned Courts of Special Judge Prevention of Money Laundering Court as well as the CBI Chandigarh have already considered this matter at length and has passed Orders and since the Learned Special Judge specifically recorded that there was nothing in particular brought on record by the CBI to establish that Petitioner No. 1 had attempted to hamper the trial and misuse any concessions granted earlier there is no reason to decline the request of Petitioner No. 1 for travelling abroad. It is also appropriate to mention that the right to travel has been held by the Hon ble Supreme Court as an integral part of the fundamental right to life under Article 21 of the Constitution of India and any restriction of the same without sufficient cause would amount to a violation of his fundamental rights. The reasons for travel as stated by Petitioner No. 1 is to spend time with his child and also to attend his graduation. Undoubtedly the graduation of a child from Yale University is a matter of great pride and this Court does not find it inappropriate to permit Petitioner No. 1 to travel for the said purpose - Petitioner No. 1 is permitted to travel abroad on conditions similar to those as already imposed by the learned Special Judge vide Order dated 05.03.2025. This Court is of the opinion that an indemnity bond in the sum of Rs. 50 lacs be furnished before this Court with the said amount being forfeited in case there is any violation of conditions on the part of the Applicant/ Petitioner No. 1 - The Applicant/ Petitioner No. 1 shall also deposit a Fixed Deposit Receipt FDR in the sum of Rs. 25 lacs in his own name before this Court which he shall not be able to encash without permission of this Court and the said amount shall be forfeited in case there is any violation of conditions on the part of the Applicant/Petitioner No. 1 - List on 13.06.2025 before concerned Joint Registrar for compliance.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Court in this matter are:

(a) Whether the Look Out Circulars (LOCs) issued against the Petitioners at the behest of the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) can be suspended to permit the Petitioners to travel abroad;

(b) Whether the Petitioners have demonstrated sufficient cause and compliance with conditions to justify suspension of the LOCs and grant of permission to travel abroad;

(c) The extent to which the allegations of large-scale fraud and economic loss to consortium banks justify continued restriction on the Petitioners' right to travel abroad;

(d) The applicability of fundamental rights, specifically the right to travel abroad as an integral part of the right to life under Article 21 of the Constitution of India, and the conditions under which such rights may be restricted;

(e) The appropriateness of imposing conditions such as furnishing indemnity bonds and Fixed Deposit Receipts (FDRs) as safeguards against misuse of travel permissions;

(f) The impact of prior judicial orders, including those of the Special Judge, Prevention of Money Laundering Court, Chandigarh, and the High Court of Punjab & Haryana, on the present applications.

2. ISSUE-WISE DETAILED ANALYSIS

(a) Suspension of Look Out Circulars and Permission to Travel Abroad

Legal Framework and Precedents: The issuance and suspension of LOCs are governed by procedural rules under the Code of Civil Procedure, 1908, specifically Section 151 which allows the Court to pass orders necessary for the ends of justice. The right to travel abroad is recognized as part of the fundamental right to life under Article 21 of the Constitution of India, as affirmed by the Supreme Court. Restrictions on this right require sufficient cause and must be proportionate.

Court's Interpretation and Reasoning: The Court noted that the LOC issued by the CBI had been closed effective 01.08.2024 and the LOC issued by the ED had been suspended as of 29.04.2025. The Court relied on prior orders of the Special Judge, Prevention of Money Laundering Court, Chandigarh, which had already granted travel permissions to the Petitioners under strict conditions. The Court found no fresh material or specific evidence indicating that the Petitioners had attempted to hamper trial proceedings or misused prior travel concessions.

Key Evidence and Findings: The Court considered the prior orders permitting travel, the suspension and closure of LOCs, and the fact that the High Court of Punjab & Haryana had set aside the declaration of fraud and quashed the FIR, although the Supreme Court remitted the matter back for reconsideration regarding FIR quashing. The Court also noted that all proceedings based on the Bank's complaint were stayed.

Application of Law to Facts: Given the closure and suspension of LOCs, the absence of specific allegations of trial obstruction, and the fundamental right to travel, the Court held that the Petitioners were entitled to travel abroad subject to conditions ensuring their presence during trial and safeguarding economic interests.

Treatment of Competing Arguments: The Bank's contention that the Petitioners were masterminds of a Rs. 1626.74 crore fraud and posed a flight risk was found to be generic and unsubstantiated by particulars. The Court emphasized the need for concrete evidence rather than speculative assertions to justify restricting fundamental rights.

Conclusions: The Court allowed suspension of the LOCs and granted travel permission to the Petitioners, subject to conditions similar to those imposed by the Special Judge, including furnishing indemnity bonds and FDRs as financial guarantees.

(b) Conditions Imposed on Travel Permissions

Legal Framework and Precedents: Courts routinely impose conditions such as furnishing addresses, maintaining communication with Investigating Officers, restricting travel to specified countries, and financial sureties to balance the right to travel with the need to ensure trial integrity and prevent flight risks.

Court's Interpretation and Reasoning: The Court adopted conditions similar to those imposed by the Special Judge, including:

• Furnishing present and permanent addresses, mobile numbers, and email addresses to Investigating Officers, with obligation to inform any changes;
• Keeping mobile phones on at all times and reporting whereabouts when asked;
• Providing detailed itineraries for travel;
• Not extending stay abroad except in medical emergencies;
• Restricting travel to specified countries only;
• Furnishing indemnity bonds of Rs. 50 lacs;
• Depositing Fixed Deposit Receipts (FDRs) (Rs. 15 lacs as per Special Judge's order, enhanced to Rs. 25 lacs by this Court) which cannot be encashed without Court permission.

Key Evidence and Findings: The Court relied on the Special Judge's prior orders and the absence of any violation by the Petitioners of those conditions.

Application of Law to Facts: The Court found these conditions appropriate to mitigate any risk of the Petitioners absconding or interfering with the trial, while respecting their fundamental rights.

Treatment of Competing Arguments: The Bank's concerns about economic loss were addressed through these financial safeguards and monitoring conditions.

Conclusions: The Court imposed the above conditions as a precondition to granting travel permissions.

(c) Allegations of Fraud and Economic Interest of the Country

Legal Framework and Precedents: Allegations of economic offences and fraud can justify restrictions on liberty and travel, but such restrictions must be based on evidence and not mere suspicion. The presumption of innocence and the fundamental rights of the accused must be balanced against the State's interest.

Court's Interpretation and Reasoning: The Court observed that the Bank's allegations were serious but remained unsubstantiated in the context of the present applications. The prior judicial orders had set aside the declaration of fraud and quashed the FIR, and the proceedings were stayed. The Court emphasized that mere suspicion or generic assertions cannot override fundamental rights.

Key Evidence and Findings: The lack of particularized evidence from the Bank to demonstrate that the Petitioners posed a flight risk or had attempted to hamper the trial was critical.

Application of Law to Facts: The Court concluded that the economic interest argument, while important, did not justify an absolute bar on travel without due process and safeguards.

Treatment of Competing Arguments: The Court rejected the Bank's argument as vague and insufficient to deny travel permissions.

Conclusions: The Court held that the economic interest concerns could be addressed through conditions rather than outright denial of travel.

(d) Fundamental Right to Travel Abroad under Article 21

Legal Framework and Precedents: The Supreme Court has held that the right to travel abroad is an integral part of the right to life and personal liberty under Article 21. Any restrictions must be reasonable, just, and fair, and must satisfy the test of proportionality.

Court's Interpretation and Reasoning: The Court reiterated that any restriction on the Petitioners' right to travel abroad without sufficient cause would amount to a violation of fundamental rights. The Court found the Petitioners' stated reasons for travel-attending a child's graduation from Yale University and spending time with children residing abroad-to be legitimate and deserving of judicial protection.

Key Evidence and Findings: The Court accepted the Petitioners' reasons as genuine and not frivolous or evasive.

Application of Law to Facts: The Court balanced the fundamental rights of the Petitioners with the State's interest by imposing conditions rather than imposing a total travel ban.

Treatment of Competing Arguments: The Court rejected the Bank's argument that travel should be denied outright, emphasizing constitutional protections.

Conclusions: The Court upheld the fundamental right to travel abroad subject to reasonable restrictions and conditions.

(e) Impact of Prior Judicial Orders

Legal Framework and Precedents: Judicial orders from competent courts, including the Special Judge, Prevention of Money Laundering Court, and the High Court of Punjab & Haryana, are binding and relevant for the present proceedings.

Court's Interpretation and Reasoning: The Court gave due weight to the Special Judge's orders permitting travel under strict conditions and the High Court's setting aside of the fraud declaration and quashing of FIR. The Supreme Court's remand of the quashing issue did not affect the setting aside of the fraud declaration.

Key Evidence and Findings: The Court noted that the prior courts had considered the matter at length and found no reason to deny travel permissions.

Application of Law to Facts: The Court aligned its decision with the prior judicial findings and orders.

Treatment of Competing Arguments: The Bank's opposition was considered but found insufficient to override prior judicial determinations.

Conclusions: The Court followed the precedent and orders of the Special Judge and High Court in granting travel permissions.

3. SIGNIFICANT HOLDINGS

"The right to travel has been held by the Hon'ble Supreme Court as an integral part of the fundamental right to life under Article 21 of the Constitution of India, and any restriction of the same without sufficient cause, would amount to a violation of his fundamental rights."

"The reply, to say the least, is highly generic and vague without giving particulars in any manner, as to the assumptions set out therein."

"Since the Learned Special Judge specifically recorded that there was nothing in particular brought on record by the CBI to establish that Petitioner No. 1 had attempted to hamper the trial and misuse any concessions granted earlier, there is no reason to decline the request of Petitioner No. 1 for travelling abroad."

"Having regard to the afore-mentioned facts as also the fact that the concerned Courts of Special Judge, Prevention of Money Laundering Court, as well as the CBI, Chandigarh have already considered this matter at length and has passed Orders... there is no reason to decline the request of Petitioner No. 2 for travelling abroad."

Core principles established include:

• The fundamental right to travel abroad under Article 21 cannot be restricted without sufficient cause and must be balanced against State interests through reasonable conditions;
• Generic and vague allegations without particularized evidence cannot justify restriction of fundamental rights;
• Prior judicial orders permitting travel under conditions must be respected unless material changes justify otherwise;
• Financial sureties and monitoring conditions are appropriate safeguards to prevent misuse of travel permissions in economic offence cases;
• Legitimate personal reasons such as attending a child's graduation or spending time with children abroad merit judicial protection of travel rights.

Final determinations on each issue were that the LOCs would be suspended and the Petitioners permitted to travel abroad subject to stringent conditions including furnishing indemnity bonds, depositing FDRs, maintaining communication with Investigating Officers, restricting travel to specified countries, and abiding by specified itineraries and timelines.