TMI Blog2021 (5) TMI 1037X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of objections vide paragraph 5 and extraction of the same would only burden this judgment and as such we desist from doing so - Thus, respondent No. 3 and 4 being empowered to issue the LOCs by virtue of OM dated 22.11.2018 and larger public interest , which also governs the economic interests of India same have been issued, which cannot be the subject matter of judicial scrutiny inasmuch as, the subjective satisfaction arrived at by respondent Nos. 3 and 4 based on objective assessment, being inconsonance with the extant OMs. The LOCs issued against the petitioner by respondent Nos. 3 and 4 and the consequential endorsement dated 08.12.2020 issued by respondent No. 1, as affirmed by the learned Single Judge does not suffer from any infirmities either in law - Writ appeal dismissed. - W.A. No. 315/2021 (GM-RES) - - - Dated:- 12-5-2021 - ARAVIND KUMAR AND PRADEEP SINGH YERUR, JJ. For the Appellant : Mukul Rohatgi, Senior Advocate for Sandeep Lahiri, Vivek Jai and Zulfiqar Menor, Advocates For the Respondent : Aditya Singh, Adv., Adithya Sondhi, Senior Counsel, Manu Kulkarni, Dharmendra Chatvi, Rahul Prasad, Poovayya Co. and D.R. Ravishankar, Advs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have initiated several proceedings against the companies and also against the petitioner in the capacity of being a guarantor of such loans. The list of cases pending against the petitioner has been produced at Annexure-E, which would indicate that there are about 33 cases pending against the petitioner and same are pending in Dubai and Abu Dhabi. It is also stated that third respondent has filed a suit for specific performance in Commercial O.S. No. 1/2020 against petitioner, wherein an application for grant of ad-interim order of temporary injunction to restrain the petitioner from alienating and/or encumbering the immovable properties described at Item Nos. 1 to 13 and 16 of plaint schedule came to be granted by the Coordinate Bench of this Court in COMAP Nos. 26/2020 c/w 27/2020 28/2020 vide order dated 17.04.2020. 5. It is also contended by the petitioner that ICICI Bank has filed a suit for permanent injunction in O.S. No. 614/2020, which is pending before the Commercial Court, Mangalore in which, there is an order of ad-interim temporary injunction dated 10.07.2020 passed against the petitioner. Petitioner has also contended that Commercial Bank of Dubai has filed a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2800 Crores and the said companies controlled by the petitioner has been subject to various regulatory and criminal actions across the globe due to which the petitioner's financial status as well as solvency are under dire distress and his ability to honour his repayment obligations to the respondent Nos. 3 and 4 are severely constrained and in jeopardy. 9. Third respondent has also contended that legal notice dated 03.05.2020 (Annexure-R16) was issued to the petitioner to comply with the obligations under the personal guarantees and the negative lein letter, but to no avail. It is stated that said respondent has filed a commercial suit OS. No. 1/2020 before the Commercial Court, Bengaluru for specific performance of negative lein letter and permanent injunction and in the said suit, temporary injunction was also sought for to restrain the petitioner from alienating or encumbering the immovable properties owned by him. It is contended that the internal audit and assessment of the accounts of the petitioner and the companies which he owned/controlled, disclosed that there were massive irregularities while operating the accounts and there was large scale cash withdrawals, misa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titioner has preferred this intra-court appeal. 13. We have heard the arguments of Sri. Mukul Rohatgi, learned Senior Counsel appearing for petitioner, Sri. Aditya Singh, learned Central Government Counsel appearing for respondent Nos. 1 and 2 and Sri. Aditya Sondhi, learned Senior Counsel appearing for respondent No. 3 and Sri. D.R. Ravishankar, learned Advocate appearing for respondent No. 4. Perused the case papers. CONTENTIONS RAISED BY SRI MUKUL ROHATGI, LEARNED SENIOR COUNSEL APPEARING FOR THE PETITIONER: 14. It is the contention of Sri. Mukul Rohatgi, learned Senior Counsel appearing for petitioner that learned Single Judge erred in arriving at a conclusion that petitioner has an alternate remedy namely, he can approach the Banks for the Look Out Notices being withdrawn by making out grounds on which same had been issued erroneously, on the ground that post decisional hearing is an empty formality and no purpose would be served by taking such recourse by the petitioner. He would submit that Banks have already filed cases against petitioner at UAE-Dubai and have obtained an order banning the travel of petitioner abroad, subsequent to the issue of LOC and as such prev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tention of this Court to various orders of temporary injunction or restrainment orders passed against petitioner from encumbering or selling the immovable properties belonging to the petitioner, which was sufficient enough to ward off the apprehension of Banks and when there are no criminal cases or civil cases pending against the petitioner in India, prohibiting the petitioner from traveling abroad is in clear violation of rights guaranteed to a citizen of this Country under the Constitution of India. 14.7. He would submit that learned Single Judge erred in opining that petitioner ought to have been issued prior notice as it would defeat the purpose of LOC, inasmuch as, it is the specific case of the petitioner that after issuance of LOC petitioner ought to have been notified so as to enable the petitioner to exercise his available legal remedies and it is this violation of right which had been canvassed before the learned Single Judge, but was not considered. Hence, he prays for allowing the writ appeal by setting aside the order of learned Single Judge and consequently prays for allowing the writ petition. In support of his submissions he has relied upon the following judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... third respondent a sum of Rs. 2000 Crores and he has also furnished his personal guarantee for the monies borrowed by the companies which petitioner has owned, controlled and managed. He contends that proceedings for recovery of said amount has already been initiated and petitioner having come to India during February 2020 sought for a settlement of the amounts due and payable by him to the Banks and in this regard a meeting was held on 18.03.2020, in which Minutes was drawn as per Annexure-R14 (not disputed by the petitioner till date) agreeing to repay the amounts and yet, has cleverly maneuvered to avoid and evade to abide by the terms as promised. 15.1. He would also draw the attention of the Court to the agreement of Negative Lein entered by petitioner with the Bank agreeing to create mortgage deed in respect of properties mentioned in Schedule-I-A and thereafter having not kept up his promise, for which an independent suit has been filed wherein interim temporary injunction has been issued restraining the petitioner from alienating or encumbering the immovable properties owned by him. He would contend that third respondent-Bank left with no other option has issued notice c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the report dated 28.12.2020, which discloses the fraud perpetrated by the petitioner in cheating the financial institution on the basis of complaint lodged by the third respondent. 15.8. He would further submit that post decisional hearing is a remedy available to an aggrieved party and on assumptions and presumptions petitioner cannot be heard to contend the same would be an empty formality. He would also submit that in MANEKA GANDHI's case referred to by the petitioner, a finding has been recorded that restriction can be placed on the foreign travel by an Indian citizen and conduct of the petitioner disentitles him to go abroad. 15.9. Relying upon the following judgments, he prays for confirming the order of the learned Single Judge by dismissing the intra-court appeal. (i) (2010) 6 SCC 614: CHAIRMAN, ALL INDIA RAILWAY RECRUITMENT BOARD AND ANOTHER v. K.SHYAM KUMAR AND OTHERS (ii) (1978) 1 SCC 248: MRS. MANEKA GANDHI v. UNION OF INDIA AND ANOTHER (iii) 2016 SCC ONLINE SC 1886: STATE BANK OF INDIA AND OTHERS v. KINGFISHER AIRLINES LTD. AND OTHERS (iv) 2016 SCC ONLINE SC 1673: STATE BANK OF INDIA AND OTHERS v. KINGFISHER AIRLINES LTD. AND OTHERS (v) (2017) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -Bank is made to suffer financial loss, which would have a bearing on the economic interest of the Country and as such it cannot be gainsaid by the petitioner that LOC could not have been issued on account of proceedings having been initiated by respondent No. 4 in UAE. Referring to paragraph 15 of the statement of objections filed before the learned Single Judge he would contend that several persons-fugitives like the petitioner have fled from the territory of India by defrauding the Indian Financial Institutions, which has had an adverse impact on the economic interest of the Country. He would submit that order preventing petitioner from traveling out of the Country is to be preserved and as such prayer of the petitioner for revocation, if made would be considered by the fourth respondent-Bank in a holistic manner. By relying upon the following judgments he prays for dismissal of this writ appeal: (i) (1987) 2 SCC 364: STATE OF GUJARAT v. MOHANLAL JITAMALJI PORWAL AND ANOTHER (ii) (2013) 7 SCC 466: NIMMAGADDA PRASAD vs. CENTRAL BUREAU OF INVESTIGATION (iii) (2000) 9 SCC 366: SUSHEELA NAIK AND ANOTHER vs. G.K. NAIK REPLY ARGUMENTS BY SRI. MUKUL ROHATGI: 17. It is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not leave the territory of India. To contend that post decisional hearing is an empty formality and the right to fair hearing is a fundamental right and in support of his submission, he has relied upon the following judgments: (i) (2006) 12 SCC 33: SIEMENS LTD. vs. STATE OF MAHARASHTRA AND OTHERS (ii) (1987) 4 SCC 431: K.I. SHEPHARD OTHERS. vs. UNION OF INDIA OTHERS 17.4. He would contend when the respondent-Bank itself has filed the suit in Dubai and have obtained restraint order against the petitioner from leaving UAE, simultaneously they cannot prevent the petitioner from defending the said case at UAE. By referring to judgment of the Kolkata High Court in the case of MRITYUNJAY SINGH v. UNION OF INDIA AND ORS. decided on 20.04.2021 in W.P. No. 105/2020 he would contend that right to travel has been considered as a fundamental right and when there are no inputs that petitioner would run-away or flee away from the law courts of India, he cannot be prevented from traveling abroad. Hence, he prays for writ appeal being allowed. 17.5. Having heard the learned Advocates appearing for the parties and on perusal of the order passed by the learned Single Judge as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s guaranteed under Articles 14, 19 and 21 of the Constitution of India, looks attractive at first blush, is not so on deeper examination for reasons more than one. Firstly, the petitioner has not challenged the constitutional validity of the Official Memorandum (OMs) dated 27.10.2010, 05.12.2017, 19.07.2018, 19.09.2018, 04.10.2018, 12.10.2018 (Annexures-AA to AE and Annexures-R1 and R2) whereunder it enables the authorities to impose restriction on a Indian citizen from leaving the territory of India. As such neither the Single Judge was required to examine the said issue nor we are inclined to delve upon this aspect. 22. It is the specific act emerging from the said OMs, which the petitioner seeks to assail in the writ petition and when examined in this background, it would emerge from the authoritative pronouncement of the Apex Court in the case of MANEKA GANDHI's wherein the Hon'ble Apex Court (per Hon'ble Mr. Justices Bhagawati, Untwalia and Fazal Ali) have observed that procedure established by law under Article 21 must meet the requirement of Article 14 and it has been further held the right to travel abroad cannot be regarded as forming part of Articles 19(1)( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... different constituents, so different indeed that one cannot be comprehended in the other. 55. Brother Bhagwati has, on this aspect considered at length certain American decisions like Kent(1),_Apthekar (2) and Zemel (3) and illuminating though his analysis is, I am inclined to think that the presence of the due process clause in the 5th and 14th Amendments of the American Constitution makes significant difference to the approach of American Judges to the definition and evaluation of constitutional guarantees. The content which has been meaningfully and imaginatively poured into due process of law may, in my view, constitute an important point of distinction between the American Constitution and ours which studiously avoided the use of that expression. In the Centennial Volume. The Fourteenth Amendment edited by Bernard Schwartz, is contained in an article on 'Landmarks of Legal Liberty' by Justice William J. Brennan in which the learned Judge quoting from Yeat's play has this to say : In the service of the age old dream for recognition of the equal and inalienable rights of man, the 14th Amendment though 100 years old, can never be old. Like the poor old wome ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and thereby act of the respondents are hit by Article 14 of the Constitution. 24. In the instant case, we notice that the extant OMs provide for an opportunity to the petitioner namely, the petitioner being entitled to appear before the third and fourth respondent-Banks and explain the circumstances which perforced the Banks for issuing LOC was not prevailing and both the Banks are required to examine, consider and then pass an order on the said plea. Though Sri. Mukul Rohatgi has made an attempt to contend that post decisional hearing is an empty formality we are not inclined to accept the same, inasmuch as, Hon'ble Apex Court in MANEKA GANDHI's case has held that though prior opportunity at the time of impounding the passport is not required, the subsequent opportunity as to why such impounding is not required to be continued, should be considered as inherent in fair hearing. It has been further held to the following effect: 14. Now, as already pointed out, the doctrine of natural justice consists principally of two rules, namely, nemo debt esse judex propria cause : no one shall be a judge in his own cause, and audi alteram partem : no decision shall be given agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opportunity of hearing arises only by implication from the duty to act fairly, or to use the words of Lord Morris of Borth-y-Gest, from 'fair play in action, it may equally be excluded where, having regard to the nature of the action to be taken, its object and purpose and the scheme of the relevant statutory provision, fairness in action does not demand its implication and even warrants its exclusion. There are certain well recognised exceptions to the audi alteram partem rule established by judicial decisions and they are summarised by S.A. de Smith in Judicial Review of Administrative Action, 2nd ed., at page 168 to 179. If we analyse these exceptions a little closely, _it will be apparent that they do not in any way militate against the principle which requires fair play in administrative action. The word 'exception' is really a misnomer because in these exclusionary cases the audi alteram partem rule is held inapplicable not by way of an exception to fair play in action , but because nothing unfair can be inferred by not affording an opportunity to present or meet a case. The audi alteram partem rule is intended to inject justice into the law and it cannot be appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medial hearing. The audi alteram partem rule is sufficiently flexible to permit modifications and variations to suit the exigencies of myriad kinds of situations which max, arise. This circumstantial flexibility of the audi alteram partem rule was emphasised by Lord Reid in Wiseman v. Sorneman (supra) when he said that he would be sorry to see this fundamental general principle degenerate into a series of hard and fast rules and Lord Hailsham, L.C., also observed in Pearl-Berg V. Party that the courts have taken in increasingly sophisticated view of what is required in individual cases . It would not, therefore, be right to conclude that the audi alteram partem rule is excluded merely because the power to impound a passport might be frustrated, if prior notice and hearing were to be given to the person concerned before impounding his passport the Passport Authority may proceed to impound the passport without giving any prior opportunity to the person concerned to be heard, but as soon as the order impounding the passport is made, and opportunity of hearing, remedial in aim, should be given to him so that he may present his case and controvert that of the Passport Authority and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n other words, such post decisional hearing is impermissible cannot be accepted. However, it is needless to state that notwithstanding the conclusion arrived at by respondent Nos. 3 and 4 for issuance of LOC against the petitioner, prayer of the petitioner for revoking the same shall be considered independently and without being influenced by any conclusion already arrived by them and without being influenced by any observations made either by the learned Single Judge or by this Court. 26. In the instant case the cause for issuance of LOC against the petitioner has been indicated by the third respondent in its statement of objections vide paragraph 5 and extraction of the same would only burden this judgment and as such we desist from doing so. In fact, respondent Nos. 1 and 2 in their affidavit dated 11/16.12.2020 filed in W.P. No. 13862/2020 have contended that documents pertaining to issuance of LOC are classified as secret and confidential. However, a sealed cover has been furnished for this Court in two (2) sets for perusal of LOCs issued against the petitioner. Same has also been perused by us. 27. The reasons which are assigned by the third respondent in the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, without taking consent of the Bank, Dr. Shetty withdrew himself from the board of the Holding Company as well as diluted his stake holding, in an attempt to absolve himself from the liabilities of the Company. Mr. Shetty had also executed undertaking to create mortgage over his personal immovable properties to secure the loan exposure with Bank, but alter he refused to cooperate. Mr. Shetty had also submitted board resolution on 25.05.2020 to execute guarantees and securities by Neopharma Tennessee LLC and Neopharma INC; however on the very next day he informed that Neopharma Inc will not be able to give guarantee for the credit facilities provided to Neopharma LLC. The above actions of Mr. Shetty shows that his intention is to jeopardise bank's interests. The banking regulator of UAE, Central Bank of UAE has issued instructions to all banks in UAE to freeze the personal accounts of Mr. Shetty and other individuals. Further the Central Bank of UAE has also frozen the operations in advance account of M/s. UAE Exchange Centre LLC wherein Mr. Shetty is guarantor. Further, at the instance of Abu Dhabi Commercial Bank, UK High Court has appointed advisory firm M/s. Al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if such departure is detrimental 'to the economic interest of India' and 'that such departure ought not to be permitted in the larger public interest at any given point of time'. 29. Thus, respondent No. 3 and 4 being empowered to issue the LOCs by virtue of OM dated 22.11.2018 and larger public interest , which also governs the economic interests of India same have been issued, which cannot be the subject matter of judicial scrutiny inasmuch as, the subjective satisfaction arrived at by respondent Nos. 3 and 4 based on objective assessment, being inconsonance with the extant OMs. The Courts not having technical competence, cannot sit in the arm chair of the respondent Nos. 3 and 4 to evaluate or ascertain whether such finding could have been arrived at. Even otherwise, the reasons which have been assigned to by the respondents in their statement of objections, defending the issuance of LOCs against the petitioner, cannot be said as either irrational or no person of ordinary prudence would have arrived at a conclusion for issuance of LOCs against the petitioner. We say so, for the reason that, petitioner had met the officials of the third respondent on 18.03. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded fair hearing would mean and include reasonable opportunity being extended before order being passed and post decisional hearing has been frowned upon by the Apex Court and in support of his submission he has relied upon the judgments of the Apex Court in the case of reported in the case of SIEMENS LTD. vs. STATE OF MAHARASHTRA reported in (2006) 12 SCC 33 and in the case of K.I. SHEPHARD AND OTHERS vs. UNION OF INDIA AND OTHERS reported (1987) 4 SCC 431. He would contend that respondent Nos. 3 and 4 have already decided that petitioner is a defaulter and petitioner should not be allowed to leave the Country and heavy reliance has been placed on the judgment of the High Court of Calcutta rendered in WP No. 105/2020 in the matter of MRITYUNJAY SINGH v. UNION OF INDIA AND ORS. The said judgment would not come to the rescue of the petitioner herein inasmuch as in the facts obtained in the said case it was noticed that petitioner therein was a sailor, being the Captain of Merchant Navy, had to necessarily travel on high seas for the major part of the year. In the facts obtained in the said case the Hon'ble learned Single Judge of Calcutta High Court had noticed that the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GUJARAT v. MOHANLAL JITAMALJI PORWAL reported in (1987) 2 SCC 364 has observed: 26) Unfortunately, in the last few years, the country has been seeing an alarming rise in white-collar crimes, which has affected the fiber of the country's economic structure. Incontrovertibly, economic offences have serious repercussions on the development of the country as a whole. In State of Gujarat vs. Mohanlal Jitamalji Porwal and Anr. (1987) 2 SCC 364 this Court, while considering a request of the prosecution for adducing additional evidence, inter alia, observed as under:- 5..... The entire Community is aggrieved if the economic offenders who ruin the economy of the State are not brought to book. A murder may be committed in the heat of moment upon passions being aroused. An economic offence is committed with cool calculation and deliberate design with an eye on personal profit regardless of the consequence to the Community. A disregard for the interest of the Community can be manifested only at the cost of forfeiting the trust and faith of the Community in the system to administer justice in an even handed manner without fear of criticism from the quarters which view white collar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imes and economic situation whereafter yet another expert committee was constituted then alone the impugned law was enacted. Liquidity of finances and flow of money is essential for any healthy and growth oriented economy. But certainly, what must be kept in mind is that the law should not be in derogation of the rights which are guaranteed to the people under the Constitution. The procedure should also be fair, reasonable and valid, though it may vary looking to the different situations needed to be tackled and object sought to be achieved. 35. In the matter of INDIAN BANK vs. BLUE JAGGERS ESTATES LTD. AND ORS. reported in (2010) 8 SCC 129 has held that public sector banks are trustees of public funds and it cannot compromise public interest for benefiting private individuals. It has been also held: 25. The Court cannot lose sight of the fact that the bank is a trustee of public funds. It cannot compromise the public interest for benefitting private individuals. Those who take loan and avail financial facilities from the bank are duty bound to repay the amount strictly in accordance with the terms of the contract. Any lapse in such matters has to be viewed seriously and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal guarantor to various loans borrowed from respondent Nos. 3 and 4. The total indebtedness of the petitioner to respondent Nos. 3 and 4 is approximately to the tune of Rs. 2800 Crores. In fact, petitioner has also executed personal guarantees for various loan accounts obtained from respondent Nos. 3 and 4. In the month of December 2019 Muddy Waters Research LLC, an investment research firm has published a report making stark allegations of related party transactions, manipulation of balance sheet, implanted asset purchases, etc. in NMC Healthcare LLC, Oman of which company, petitioner is the promoter and it is this report which opened the financial irregularity of the companies owned and controlled by the petitioner and this resulted in sale of shares of companies promoted by the petitioner in discount and it also resulted in a in-house investigation by NMC Healthcare LLC disclosing the debt at USD 2.7 billion said to have been kept and hidden and not disclosed in the balance sheet. In fact, this has resulted in several criminal cases being filed against the group companies of the petitioner and various reports indicate that the indebtedness of the group of companies of the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
