TMI Blog2023 (9) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... k Out Circular results in restraining a person's right to travel abroad. The authority opening the Look Out Circular must satisfy itself that the departure of a person against whom Look Out Circular has been opened would be detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relationship with any country or to the economic interests of India or departure of such a person ought not be permitted in the larger public interest at any given point in time. There has to be a proper application of mind by the authorities on the facts of each case before opening of a Look Out Circular which not only impedes the right to travel but also cast an aspersion/stigma on the person in the society against whom the Look Out Circular has been opened. In the present case, there is no criminal case against the Petitioners till now and on the date of opening of the Look Out Circular, there was no suspicion or allegation against the Petitioners that the Petitioners have siphoned off funds. Proceedings are pending before various forums and a One-Time Settlement (OTS) has been arrived at between the Respondent No. 2/Bank of Baroda and the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplexities. On 31.07.2019, the loan account of the company was declared as non-performing asset (NPA) by the Respondent No 2/Bank of Baroda. It is stated that, thereafter, proceedings under the SARFAESI Act were initiated against the company and demand notice was issued to the company for repayment of its outstanding dues. The Respondent No 2/Bank of Baroda also issued demand notice invoking the personal guarantees. 5. It is stated that the company and the personal guarantors, including the Petitioners herein initiated proceedings before the Senior Civil Judge, Tis Hazari Court, Delhi by filing Civil Suit No. 2182/2021 challenging the invocation of guarantees. It is stated that on 13.12.2021, the Senior Civil Judge partly allowed the application for interim relief and restrained the Respondent No. 2/Bank and the Forensic Auditor from taking any action invoking personal guarantees till the disposal of the suit. 6. It is stated that on 01.07.2022, proceedings were initiated by Respondent No. 2/Bank against the company before the National Company Law Tribunal, New Delhi for initiation of Corporate Insolvency Resolution Process. On 23.08.2022, the Respondent No. 2/Bank issued a demand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,034.23 lakhs which is recoverable as on 31.03.2020. As per Ministry of Corporate Affairs (MCA), Registrar of Company records, it is observed that Mr. Pankaj Mishra is a director in PKA Projects Pvt Ltd., who was also a financial consultant to Borrower Company. He is also a shareholder of Borrower Company. From the above records an inference is drawn that PKA Projects Pvt Ltd is a potentially related party of Borrower Company. 7. Borrower has paid Rs. 939.85 Lakhs to Mr Pramod Kumar Verma during the year 2011 to 2013. 8. On comparison of the stock statement submitted by the company with cash credit account, it is observed that there are few parties whose receivables are shown as realized in the Stock Statement. However, there is no corresponding entry of such receipt in cash credit account. 9. Borrower has made significant payment to the tune of Rs. 3116.55 Lakhs to its potentially related parties. 10. The Borrower Company/Director and all guarantors were declared as Wilful Defaulter on 22.10.2021. 11. Branch has submitted proposal for declaring this account as Fraud and Red Flagged, the same is under process. 12. The Directors/Guarantors may escape to foreign jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the constitutional guarantee of Article 21 of the Constitution of India. 14. Learned Counsel for the Petitioner has taken this Court to a several Judgments to show that the formation of a reasonable belief that the departure of a person would be detrimental to the economic interest of the country is a pre-condition for issuing Look Out Circular and none of the factors enumerated in the counter affidavit points out that the departure of the Petitioners would be detrimental to the economic interest of the country. He contends that the opening of the Look Out Circular against the Petitioners is a mere blackmailing and arm-twisting tactics, and the Respondent No. 2/Bank only wants to keep the Petitioners, who are guarantors, as hostages in the country till the money is paid. 15. Per contra, learned Counsel appearing for the Respondent No. 2/Bank of Baroda, seeks to sustain the Look Out Circular by contending that the presence of the Petitioners is necessary in the country to ensure that money is returned. He also contends that Forensic Audit can only reveal as to whether there is siphoning off the funds or not. He contends that since there is a possibility that the Petitioners being ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Public Sector Banks could request for opening of LOCs against the persons who are fraudsters and persons who wish to take loans and wilfully default or launder money and then escape to foreign jurisdiction as these actions will not be in the economic interests of India on a larger public interest. 20. Further, another Office Memorandum dated 22.11.2018 was issued by the Ministry of Finance, Government of India regarding empowerment of heads of Public Sector Banks to issue requests for opening of Look Out Circulars which reads as under: Subject: Empowerment of heads of Public Sector Banks to issue requests for opening Look Out Circulars (LOCs) Dear Sir/Madam, Kindly find enclosed the following, for necessary action: (a) A copy of Department of Financial Services (DFS)'s OM No. 6/3/2018-BO.II dated 04.10.2018 to the Ministry of Home Affairs (MHA), vide which DFS had requested MHA to empower the heads of Public Sector Banks (PSBs) to issue requests for opening of Look Out Circulars (LOCs). (b) A copy of MHA's OM No. 25018/10/2017-Imm dated 12.10.2018, vide which MHA has now made the desired amendment to paragraph 8 (b) of their OM No. 25016/31/2010-Imm dated 27.10.2010 by addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can request for opening of Look Out Circulars in exceptional circumstances when it is felt that the permission sought for by the person to go out of the country will affect the economy of the country. 22. The Look Out Circulars cannot be opened merely on the request of the banks. There has to be some application of mind by the authority concerned opening the Look Out Circular since the opening of Look Out Circular results in restraining a person's right to travel abroad. The authority opening the Look Out Circular must satisfy itself that the departure of a person against whom Look Out Circular has been opened would be detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relationship with any country or to the economic interests of India or departure of such a person ought not be permitted in the larger public interest at any given point in time. 23. A Co-ordinate Bench of this Court in the case of Vikas Chaudhary vs. Union of India, 2022 SCC OnLine Del has observed as under: 37. However, the matter does not end here and the crucial issue which needs to be now determined is as to whether the clause detrimental to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these conditions exist in the instant case. The petitioner is not evading arrest. In fact, he has appeared before the investigating agency whenever required to do so and the investigating agency has not thought it proper to arrest him. Since the investigation is still pending and challan has not been presented, there is no question of any trial Court issuing/adopting coercive steps to ensure the presence of the petitioner. This requirement of law has been recognized by the Bombay High Court in the case of Afzal Jaffer Khan, (supra). The fact that the petitioner has travelled abroad on six occasions and has never violated the terms of the permission granted by the CBI Court, shows that the apprehension of the respondent is illusory. 14. In view of the above, it is evident that the conditions which must pre-exist before a request can be made for opening of an LOC, do not exist in the present case. Thus, the continuation of an LOC for more than 3 years against the petitioner is a violation of his fundamental right to life and personal liberty. It is, thus, liable to be withdrawn. 25. A perusal of the above cases shows that there has to be a proper application of mind by the authori ..... X X X X Extracts X X X X X X X X Extracts X X X X
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