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TMI Blog2022 (9) TMI 1624X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Writ Petition, it became known during the hearing of the case on 07.09.2022 that only the Indian Bank, Ludhiana, Punjab (respondent No.10) and the Bank of Baroda, Vadodara, Gujarat (respondent No.13) have made requests for issuance of LOC against the petitioner and LOCs had been issued by the respondent No.2. So the Writ Petition was dismissed against the other financial creditors. The background facts M/s. SEL Manufacturing Company Ltd. could not repay the loans taken by it from its lenders and the State Bank of India (for short 'SBI') initiated the proceedings under the Insolvency and Bankruptcy Code, 2016 ('the Code') before the National Company Law Tribunal, Chandigarh. Vide order dt. 11.04.2018, the Company was admitted into Corporate Insolvency Resolution Process (CIRP), and as part of the said process, various lenders submitted their claims against it before the Resolution Professional which were also accepted by the Resolution Professional. The said M/s. SEL Manufacturing Company Ltd. had also given corporate guarantees to various Banks for securing the credit facilities granted to M/s. SEL Textiles Ltd. These guarantees were invoked by the Banks and the said a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here was urgency pleaded by the petitioner therein to go abroad. Contentions of petitioner The petitioner in this Writ Petition is the daughter-in-law of Smt. Sneh Lata Saluja and intends to go to Singapore contending that her niece, who lives in Singapore, is expecting a child in October, 2022 and her assistance is necessary to be provided to her niece. She contends that she has not been provided copy of the LOCs and she was not informed on whose behest it was issued. She contends that her right to travel abroad is a facet of Article 21 of the Constitution of India as held in Maneka Gandhi Vs. Union of India (1978) 1 SCC 248 and Satish Chandra Verma Vs. Union of India 2019 SCC online SC 2048, is violated. The petitioner asserts that she is not involved in any criminal prosecution nor is she named as an accused in any FIR and she is merely a guarantor for the loan availed by the 2 Companies named above and is not even a principal borrower, and she cannot be prevented from travelling abroad. It is also contended that the petitioner was denied a hearing before issuing the LOCs and thus, there is also a violation of the principles of natural justice. The stand of respondents no. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.2019, and it was also communicated to the Reserve Bank of India. It is contended that the competent authority of the Indian Bank had granted permission to the SBI, which is the lead Bank for filing of an FIR with the Central Bureau of Investigation. It is contended that the SBI had given a letter on 04.06.2022 for registration of a complaint regarding fraud, cheating and other offences committed by the Directors/Promoters of M/s. SEL Manufacturing Company Ltd, but no FIR was registered till date. It is also contended that after a forensic audit of M/s. SEL Textiles Ltd. was got conducted by the Central Bank of India (which was its lead Bank), the loan account of the said company was also declared as a fraud on 31.03.2020, and the same was also communicated to the RBI, and the Central Bank of India was also permitted to file an FIR with the CBI, and a letter was written by it on 29.07.2020 for registration of a complaint regarding fraud, cheating and other offences committed by the Directors/Promoters of the said Company. It is stated that the Indian Bank had also filed an OA No.2609 of 2019 before the DRT, Chandigarh against M/s. SEL Manufacturing Company Ltd. for recovery of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to have been mentioned by it. Be that as it may, the debt owed by M/s. SEL Manufacturing Company Ltd. having been resolved by the CIRP under the Code and the debts of the lenders Bank having been admitted in the said process, it is highly doubtful if the petitioner can be proceeded against by the said Banks because in it's books of account, the debt would have to be shown as NIL. Also there is no FIR registered against the petitioner as on date alleging that the petitioner has committed any cognizable offence there is no question of the petitioner joining any investigation , though the loan account of the two Companies might have been declared a fraud by the lead Banks of the respective companies. The petitioner had infact mentioned about initiation of the recovery actions against the above named two Companies in her pleading, but in the reply filed by the Indian Bank it is incorrectly stated that she had suppressed the same. Merely on the ground that the petitioner is a guarantor for the above loans taken by the two entities, and there is a default by the said Companies, can the petitioner be prevented from travelling abroad and her fundamental right under Article 21 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be detained/arrested or prevented from leaving the country. The originating agency can only request that they be informed about the arrival/departure of the subject in such cases." Thus, LOCs were permitted to be opened essentially against persons involved in cognizable offences and who were evading arrest and not appearing in the trial Court despite NBWs or other coercive measures and there was a likelihood that they would leave the country to evade trial/arrest. It was intended as a coercive measure to make a person surrender to the investigating agency or Court of law. But where the subject of the LOC is not involved in any cognizable offence, he or she cannot be detained/arrested or prevented from leaving the country. The originating agency can only request that they be informed about the arrival/departure of the subject in such cases. The Office Memorandum stated that the LOC would be valid for a period of one year from the date of issue. There were subsequently amendments made to the Office Memorandum from time to time. Paragraph 8(j) was inserted in the office memorandum dt. 27.10.2010 through another Office Memorandum dt. 05.12.2017 which states: "Para 8(j): ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic interests of India (assuming for the sake of argument without conceding that it is affected at all) and a quantum of default which would not fall in the said category, the fundamental right to travel abroad guaranteed by Article 21 of the Constitution of India cannot be curtailed by the respondent No.1 by seeking issuance of an LOC from respondent No.2. Merely because the word 'public' is used in the exception clause in the OM, it does not elevate a mere default to an exceptional plane. It cannot be said that the departure of the petitioner from the country would adversely impact the economy of the 'country as a whole' and destabilize the 'entire economy' of the country. Since the right to travel abroad flows from Article 21 of the Constitution of India, a very high threshold has to be is mandated to deny such a right to an Indian citizen. Such a threshold is not met in the instant case. The request dt.29.11.2021 made by the Bank of Baroda (respondent no.13) and the request made on 7.12.2021 by the India bank ( respondent no.10) to respondent No.2 produced before us, show no reason as to why such LOC is being sought against petitioner. So it appears that respondent No.2 has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... originating agency can only request that they be informed about the arrival/departure of the subject in such cases. In the instant case, when the petitioner is not alleged to have committed any cognizable offence, she could not have been prevented from leaving the country by respondents by issuing LOCs and such action is clearly violative of the Office Memorandums dt.27.10.2010 and dt.22.02.2021. Accordingly the Writ Petition is allowed; the petitioner is permitted to travel abroad for two months subject to her depositing a sum of 50 Lakhs with the Registrar (General) of this Court in the form of an FDR. This condition is being imposed as the loan accounts of the 2 Companies for which she is a guarantor had been declared a 'fraud' as mentioned above. As and when she returns to India, she should produce her Passport before the Registrar (General) who shall then return the said FDR to her. Subject to the above, the LOC issued against the petitioner at the instance of respondent No.1 by respondent No.2 is set aside; respondent No.1 shall communicate this order to respondent No.2; and officials/employees of respondent Nos. 1 to 3 are restrained from preventing the petitioner from tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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