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TMI Blog2023 (9) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... ry, there will be any detriment to public interest. 3. It is argued that the petitioners‟ personal liberty is restrained wrongfully and the petitioners are not being permitted to carry on business abroad by travelling outside the country. 4. It is contended that the petitioner no.1 tried to visit Nepal on June 9, 2022 for prospective business opportunities; however, he was stopped from boarding the plane in the last minute by the immigration authorities at the international airport at Kolkata without any reason being assigned. On repeated demands, the senior officer of the immigration office of the airport intimated the petitioners that the restraint was on the basis of information provided by the BoB and/or SFIO. 5. However, no LOC was furnished for the petitioners‟ perusal. On the petitioners‟ sending letters dated August 13, 2022 to the respondents, BoB replied on August 19 that the documents-in-question were purely confidential. 6. It is contended that the criteria for requesting issuance of LOC under ordinary circumstances are not met in the present case. With regard to the request made by the BoB for issuance of LOC, no cognizable offence under the India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Special Court frames charges upon examining the investigation report. 10. On August 22, 2023, for the first time, the SFIO produced an interim order dated February 7, 2023 passed by the National Company Law Tribunal (NCLT), Kolkata Bench which carries a prima facie ex parte finding that fraud has been established beyond doubt and passes directions against the petitioners. It is argued by learned counsel for the petitioners that, even assuming but not admitting such prima facie finding is there, an ad interim order pursuant to Section 241(2) dealing with cases of oppression, etc. and not Section 212 of the 2013 Act, cannot be construed as „pending criminal proceedings‟ apropos a cognizable offence. 11. It is argued that no exceptional circumstances like detriment to the economic interest of India or larger public interest is also met in the present case and, as such, the LOCs, being de hors the law, should be set aside. 12. Learned counsel for the SFIO seriously opposes the writ petition. Several allegations are made against the petitioners including that they are suspended Directors of one Kohinoor Power Private Limited (KPPL) which is in liquidation before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copies of their requests for issuance of LOCs against the petitioners. Since those do not disclose the identity of any source or something discreet which is detrimental to the security or interest of the country, the relevant portions of the same are discussed hereinbelow. 18. Insofar as BoB is concerned, under the head "Reason for opening of LOC", it discloses that KPPL, of which the petitioners were Directors, had availed credit facilities from the BoB. The petitioners were Directors of the borrower-Company and also guarantors. 19. Due to non-receipt of resolution plan in a CIRP initiated against the borrower, the NCLT, Kolkata ordered liquidation of the borrower on June 28, 2019. During CIRP, forensic audit was assigned to a Company which pointed out certain alleged irregularities in their forensic audit report. 20. Out of the said alleged irregularities, related party transactions worth Rs. 10.11Cr. were allegedly identified, interest free deposit of Rs.3.50Cr. was given by the borrower-Company for outright purchase of land where the project was to be set up but it was observed that the Company had taken the land on lease for annual rent of Rs. 6 Lakh and thus, allegedly, ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Central Government, is unflinching proof of the petitioners‟ guilt for some offence. Let us consider the relevant provisions of the 2013 Act, which are relied on by both parties, in the backdrop of such claims of the SFIO. 26. Section 447 of the 2013 Act provides punishment for fraud. However, the punishment for fraud is only meted out if and when a person is found guilty of fraud beyond reasonable doubt. In cases of fraud involving public interest, the term of imprisonment shall not be less than three years. 27. However, to arrive at a verdict that fraud has been committed by the petitioners beyond doubt, several paraphernalia are to precede, which are not found in the present case. 28. Much reliance has been placed on Section 217 of the 2013 Act by the SFIO. The said Section merely provides a road map for functioning of Inspectors. The procedure and powers, etc. of the Inspectors have been laid down in Section 217. For example, it shall be the duty of all officers and employees and agents of a Company which is under investigation in accordance with the provisions contained in the said Chapter, where the affairs of any body-corporate or a person are investigated u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion by the Union which, if it were to be conclusive, would not require any further investigation at all. It is not the law that the mere opinion of the Central Government will operate as a final and conclusive verdict of guilt against the concerned persons or company. Such opinion is a mere stimulus for an investigation which is being undertaken in the present case. 36. The subsequent provisions provide the modalities of such investigation. Sub-section (4) provides that the Director, SFIO shall cause the affairs of the Company to be investigated by an Investigating Officer who shall have the power of the Inspector under Section 217. We have already discussed Section 217 and the connotations thereof. 37. Sub-section (6) of Section 212 provides that notwithstanding anything contained in the Code of Criminal Procedure, an offence covered under section 447 of the 2013 Act (which we have also discussed above) shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless the Public Prosecutor has been given an opportunity to oppose the application for such release and where the Public Prosecutor opposes the applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be pierced by a mere perusal of the Section itself. Initiation of an investigation under Section 212 of the 2013 Act cannot be equated with a person being guilty of a cognizable offence or any offence for that matter. 45. In the absence of a single allegation in the records that the petitioners are not cooperating in the investigation or a single instance that the petitioners did not comply with any request or direction of the Investigating Officers, there is nothing on record to justify the arbitrary curtailment of the petitioners‟ personal liberty. 46. Clause (4)(a) of the concerned Office Memorandum dated February 22, 2021, which has been cited by the SFIO, is merely a part of an order of the Delhi High Court in a particular matter. The question formulated by the Delhi High Court was - what are the categories of cases in which the Investigating Agency can seek recourse of Look Out Circular and under what circumstances. The answer given by the said High Court to the said question in the judgment dated August 11, 2010 was that the recourse to LOC can be taken by Investigating Agency in cognizable offences under IPC or other penal laws, where the accused was deliberatel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point of time. 50. Here, none of the said grounds are fulfilled at all. Also, nothing has been disclosed in the request or in the arguments of the Originating Agencies concerned, that is, BoB and SFIO, that they had received any inputs justifying the request, which is also a mandate under Clause 6(L). The said Originating Agencies in the present case merely acted on a knee-jerk reaction, thereby seeking to use a request for issuance LOC as an alternative procedure to recovery of debts. 51. Several High Courts as well as the Supreme Court, time and again, have deprecated the practice of Originating Agencies resorting to the serious measure of issuance of LOC as a mere alternative to recovery proceeding. 52. However, such observations have apparently fallen on deaf ears every time. 53. It has to be kept in mind that the high grounds which are required to be made out for restraining the personal liberty of a person as guaranteed under Article 21 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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