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TMI Blog2021 (4) TMI 878X X X X Extracts X X X X X X X X Extracts X X X X ..... in the day-to-day activities of the company and there was no material sufficient to establish, even prima facie, the charges against him. 3. The petitioner denies being a guarantor as per Form C5A dated February 7, 2013, when a fresh letter regarding grant of individual limits within the overall limit was issued by the guarantors for KGLL, which did not include the petitioner's name as a guarantor. It is the further case of the petitioner that the Bank has an award against the borrower-Company passed by the Debts Recovery Tribunal under the SARFAESI Act. 4. The order of the CBI Court was upheld by the Sessions Court on July 7, 2017 in Criminal Revision Case No. 186 of 2016. CRR No. 1831 of 2017 was filed by the CBI against such order in this Court, in connection with which an application for condonation of delay remains pending. 5. In addition, a proceeding under the Prevention of Money Laundering Act (PMLA), 2002 was also initiated against the petitioner by the Enforcement Directorate (ED), bearing OC No. 1139 of 2019. The Adjudicating Authority under the said Act ordered attachment of the movable and immovable assets of the accused-Company and the other accused persons, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of the DRT Award against the borrower-Company and the Attachment Order passed regarding the petitioner's movable and immovable property by the Adjudicating Authority under the PMLA, passed at the behest of the ED, the debt- in-question is sufficiently secured. 15. On the basis of a fresh request by the Bank, as submitted by the respondents, the LOC under challenge was renewed on January 8, 2021, during pendency of the writ petition. However, since the veracity of the original LOC is challenged and no new ground has been cited, apart from the petitioner's alleged Directorship of the borrower- Company even in the renewal, the above arguments hold true in respect of such renewed LOC as well. 16. It is also submitted by learned counsel for the petitioner that the respondents cannot supply reasons post facto in their affidavit-in- opposition by alleging that the petitioner is also a guarantor in respect of the borrower-Company. 17. Learned counsel for the writ petitioner cites an unreported judgment rendered by the Delhi High Court on December 2, 2020 in WP (C) 5382 of 2020 (Deept Sarup Aggarwal Vs. Union of India & Anr.) for the proposition that unless reasons are discl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he country, public money may be lost, the economic interest of the country being squarely affected. 24. Upon considering the materials-on-record and hearing learned counsel for the contending parties, it is clear that the only reason disclosed in the request of the Bank as well as in the LOC itself was that the petitioner was a Director of the borrower-Company. Such allegation was made in the present tense in both the request and the LOC. However, such allegation is, by itself, insufficient to fall within any of the grounds for issuance of LOC, as contemplated in the relevant Office Memoranda. 25. The petitioner has clearly shown that the petitioner had resigned long back, even before the discovery of alleged fraud in 2014 by the Bank. 26. As regards the other ground that the petitioner's liability was co-extensive with the borrower-Company in the capacity of a guarantor, it is well-settled that a new ground cannot be supplanted by pleadings if not furnished in the original LOC or the request therefor. Introduction of such an allegation post facto cannot justify the issuance of the LOC and subsequent renewal at the relevant juncture. 27. That apart, in paragraph 20 of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the borrower-Company, without any material to substantiate such allegation, cannot retrospectively validate the reasons given in the request for issuance of LOC and/or the LOC or subsequent extension thereof. 33. The facts of Nimish Kalyanbhai Vasa (supra) somewhat match with the present case insofar as the borrower-Company has suffered an Award of the DRT and the petitioner has travelled overseas on several occasions, each time returning within the stipulated period. 34. The proposition laid down in UCO Bank (supra) holds good in the present case as well, since there is nothing on record to show that the economic interests of India would be adversely affected in the event the petitioner travels abroad. No such ground was disclosed in the LOC or preceding request for its issuance. 35. Neither the LOC nor its subsequent extension, in any event, could go beyond the reasons furnished by the respondent no.3-Bank in its request for issuance of LOC. Such request being based merely on the allegation that the petitioner "is" (present tense) a Director of the Company is utterly insufficient to issue a Look-Out Circular. Moreover, there is no justification in withholding the petitioner u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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