THE HON'BLE SRI JUSTICE MUMMINENI SUDHEER KUMAR
WRIT PETITION No.7174 OF 2021
ORDER:
Heard Sri L.Ravi Chander, learned Senior Counsel and Sri Tarun G. Reddy, learned counsel appearing for the petitioner, Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India appearing for respondent Nos.1 to 3 and 6 and Smt. M. Shalini, learned counsel appearing for respondent Nos.4 and 5.
2. This Writ Petition is filed seeking a Writ of Mandamus to declare the Look Out Circular (for short 'the LOC') vide LOC No.2020434939 issued against the petitioner restraining the petitioner from travelling outside India and also the action of respondent Nos.4 and 5 in requiring respondent Nos.1 to 3 to restrain the petitioner from travelling outside India, as illegal and arbitrary.
3. For better appreciation, it is necessary to note certain undisputed facts, which are as under:-
4. The petitioner herein in the capacity of Managing Director of M/s. B. S. Global Resources Private Limited (for short 'the said Company') approached respondent No.4-Bank for sanction of facility of trade finance. Initially the ::2::
MSK,J WP_7174_2021 same was sanctioned with limits of USD 2.00 millions on 23.08.2012 and the same was enhanced to USD 4.00 millions on 15.08.2013. The said facility was renewed from time to time and finally renewed on 05.09.2017. For the said credit facilities availed by the said Company for an amount of USD 5,000,000 a corporate guarantee was given by M/s. B.S. Limited which is the holding Company of the said Company and the petitioner herein also stood as personal guarantor for the said credit facilities extended by respondent No.4 in favour of the said Company beside executing corporate guarantor in the capacity of Chairman and Managing Director of M/s. B.S.Ltd. As the said Company failed to honor the terms and conditions of the said credit facilities, the account was declared as NPA on 09.07.2018 and respondent No.4 approached the High Court of the Republic of Singapore against the said Company, M/s. B.S. Limited and the petitioner herein for recovery of dues vide case No.HS/S830/2018 and the same was disposed of by a Judgment, dated 31.01.2019, directing the said Company to pay a sum of USD 3,218,358.13 with interest at 5.33 % per annum from the date of the Writ to the date of Judgment and costs of USD 2,300,00. The said liability was ::3::
MSK,J WP_7174_2021 also equally fastened on the petitioner herein. Seeking execution of the said Judgment, dated 26.08.2019, passed by the Singapore High Court, respondent No.5 herein made an application before the Debts Recovery Tribunal-2, Hyderabad in O.A.No.195 of 2021 for issuance of a recovery certificate by duly impleading the petitioner herein as respondent No.3, which is pending as on date. In the said O.A., respondent No.5 herein also sought for an interim order restraining the respondents therein including the petitioner herein from alienating or creating any third party interest over the properties held by them. Whether any interim orders are passed in the said O.A. or not is not brought to the notice of this Court. The petitioner herein is stated to have entered appearance in the said O.A. and is contesting the same.
5. While things stood thus, when the petitioner intended to travel abroad on 17.03.2021, respondent Nos. 2 and 3 authorities stopped the petitioner at Rajiv Gandhi International Airport, Hyderabad, from travelling abroad and cancelled his stamping on the ground that there is a LOC issued against the petitioner by respondent Nos.2 and 3 at the instance of ::4::
MSK,J WP_7174_2021 respondent No.4. Aggrieved by the said issuance of LOC, the present Writ Petition is filed.
6. Sri L.Ravi Chander, learned Senior Counsel and Sri Tarun G Reddy, learned counsel for the petitioner, contended that the proceedings for recovery of due amounts are pending at various stages and the attempt made by respondent Nos.4 and 5 and certain other Banks to declare the petitioner herein as willful defaulter and to declare the accounts of the subject loan as fraud were interdicted by this Court and consequent to allowing of Writ Petition vide Nos.17500 of 2019 and 19102 of 2019, there is no declaration of willful defaulter or as fraud account made so far against the petitioner as on date. In spite of the same, the impugned LOC was issued by respondent Nos.2 and 3 at the instance of respondent Nos.4 and 5 behind the back of the petitioner and no such information was furnished to the petitioner at any point of time and for the first time, the petitioner came to know about the said LOC only when he went to the Airport for travelling abroad on 17.03.2021. Thus, it is contended that the issuance of LOC against the petitioner without putting the petitioner on notice and without following the principles of natural justice is totally ::5::
MSK,J WP_7174_2021 illegal and arbitrary. He also relied upon decisions in the cases of Mannoj Kumar Jain and another v. Union of India and others 1, Noor Paul v. Union of India and others 2 and Dasari Sudheer v. State of Andhra Pradesh and others 3.
7. On the other hand, respondent Nos.2 and 6 filed counter affidavit stating that on the request made by the Managing Director and Chief Executive Officer of respondent Nos.4 and 5 through letter, dated 29.09.2020, the impugned LOC was issued against the petitioner herein in terms of the Office Memorandums governing the field.
8. Respondent Nos.4 and 5 filed counter affidavit contending that the impugned LOC was issued at the instance of the Managing Director of respondent Nos.4 and 5 and the same is in accordance with the Office Memorandum No.25016/31/2010-Imm, dated 27.10.2010, as amended through the Office Memorandum, dated 05.12.2017. It is further stated that M/s. B. S. Ltd. which is holding Company of the said Company represented by the petitioner herein availed loans to a tune of Rs.1000 Crores from consortium of Banks led by the State Bank of India and proceedings initiated for 1 WPA 22748 of 2022 2 MANU/PH/0561/2022 3 MANU/AP/0240/2015 ::6::
MSK,J WP_7174_2021 recovery of said amounts are pending before the Debts Recovery Tribunal and the High Court of Telangana at various stages, including proceedings under Section 7 of the Insolvency and Bankruptcy Code, 2016 (for short 'the Code, 2016'). Further, it is stated that cases are also pending before the Central Bureau of Investigation and Enforcement Directorate for investigation.
9. It is the contention of respondent Nos.4 and 5 that in terms of paragraph 8(j) as inserted by the Office Memorandum, dated 05.12.2017, in the Office Memorandum, dated 27.10.2010, the Managing Director of the respondent-Bank is entitled to make a request for issuance of a LOC against the petitioner herein as the economic interests of India would be detrimentally effected if the petitioner is allowed to leave the Country. In the counter affidavit filed by respondent Nos.4 and 5 several other aspects were also stated including about the amounts that are payable by the petitioner and the said Company to the consortium of Banks led by the State Bank of India and various orders passed by the Debts Recovery Tribunal for recovery of such amounts against the petitioner and the said Company etc. But, for the reasons best known, respondent Nos.4 and 5 failed to place before this Court the ::7::
MSK,J WP_7174_2021 request that was made to respondent Nos.2 and 3 for issuance of LOC against the petitioner herein.
10. This Court, after having heard the learned counsel on either side, by an order, dated 15.06.2023, directed respondent Nos.4 and 5 to produce a copy of the request made by the respondent-Bank resulting in issuance of the impugned LOC. In response to the same, Mrs. M.Shalini, learned Standing Counsel for respondent Nos.4 and 5, placed before this Court a copy of said request in a sealed cover on 16.06.2023. After having perused the said request, this Court is convinced that there is no necessity to go into all other aspects that are raised by the petitioner as well as the respondents in their respective pleadings and arguments and the validity of the impugned LOC can be decided independently. The request for issuing LOC against the petitioner and four others was made through Ref:HO/RCR/2020-21/1135, dated 29.09.2020, which reads as under:-
"Ref:HO/RCR/2020-21/1135 Date:29.09.2020 The Deputy Director, Bureau of Immigration (BoI), East Block-VIII, R.K. Puram, New Delhi-66.
Sub:-Request for issuance of Look Out Circulars (LOCs) Ministry of Home Affairs, GOI have issued OM No.25016/10/2017-imm (pt.) dated 12.10.2018 vide which it is informed that Sub Para (Xv) in Para 8(b) of "OM ::8::
MSK,J WP_7174_2021 No.25016/31/2010-imm dated 27.10.2010" has been amended to add "Chairman/Managing Directors/Chief Executives of all Public Sector Banks" in the list of officers who can make a request for opening of Look Out Circulars (LOC).
In milieu of the instructions, we are hereby requesting for issuance of Look Out Circular (LOCs) against the following persons:-
S.No. Name of Person
1. Mr. Arun Amolakram Kapur
2. Mr. Indrajit Sabharwal
3. Mr. Rajesh Agarwal
4. Mr. Arunachalam Nandaa
Kumar
5. Mr. Manish Goel
The necessary details and information regarding the above is enclosed in the prescribed format with a request to do the needful in the matter.
Please inform us the issuance and effective LOC number of the above request.
With regards, (P.Manoj) General Manager, Recovery and Law.
Encl:- Five original filled format in above mentioned names."
11. The above said letter was signed by the General Manager, Recovery and Law of the respondent-Bank. This cannot be treated as a valid request for issuance of LOC in terms of the Office Memorandum, dated 05.12.2017, as it is only the Chairman/Managing Directors/Chief Executive Officers of all Public Sector Banks can make a request for opening of LOC. In the Form that was enclosed with the said letter, dated 29.09.2020, the details of the petitioner were furnished and in paragraph (iv), the reason for opening of LOC was stated as ::9::
MSK,J WP_7174_2021 "guarantor of a NPA account'' and the same was signed by the Managing Director and Chief Executive Officer of respondent No.4. Except stating that the petitioner herein is a guarantor of a NPA account, there is no other reason furnished by respondent Nos.4 and 5 for making a request for issuance of LOC against the petitioner. No doubt the said Form was signed by the Managing Director and Chief Executive Officer of respondent No.5-Bank who is competent officer in terms of Paragraph 8(b) of Office Memorandum, dated 27.10.2010. Therefore, this Court is not inclined to treat the request made through letter, dated 29.09.2020, as incompetent, though the same was signed by the General Manager only. There is no dispute that the petitioner herein is a guarantor of a NPA account. But, the same by itself does not entitle respondent Nos.4 and 5 to make a request for issuance of LOC against the petitioner. In the absence of recording of satisfactory conclusion by the respondent-Bank that the petitioner leaving India would be detrimental to the economic interests of India, the question of making such a request to respondent Nos.2 and 3 does not arise. Merely, being a guarantor of a NPA account is not one of the guideline laid down under the Office Memorandum, dated ::10::
MSK,J WP_7174_2021 27.10.2010, as amended from time to time. Paragraph 8(j) of the said Office Memorandum reads as under:-
"In exceptional cases LOCs can be issued even in such cases, as would not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (b) of the above-referred OM, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and / or economic 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 in time."
In order to bring any action of the petitioner within the ambit and scope of paragraph 8(j), the respondents need to undertake a serious exercise and on application of mind have to arrive at a conscious conclusion that the act of petitioner leaving the Country would adversely affect the economic interests of India. In the instant case no such exercise was undertaken and the concept of economic interests of India itself is not spelt out in the request made for issuance of the LOC.
12. No doubt, in the counter affidavit filed by respondent Nos.4 and 5 an attempt is made to say that the petitioner leaving the Country would be detrimental to the economic interests of India as huge amounts are due and payable by the petitioner to the respondent-Bank as well as to the consortium of Banks led by the State Bank of India. Unless and until the ::11::
MSK,J WP_7174_2021 reason for making a request for issuance of LOC against the petitioner falls within the guidelines, as provided under paragraph 8 of the Office Memorandum, dated 27.10.2010, as amended from time to time, and in the absence of a conclusive satisfaction being recorded by the officer or authority authorised under paragraph 8(b) of the said Office Memorandum by recording sufficient reasons, any action on the part of respondent Nos.2 and 3 in issuing LOC without application of mind on mere request made by respondent Nos.4 and 5 is totally arbitrary and illegal.
13. The contents of the request, dated 29.09.2020, made by respondent Nos.4 and 5, as noted above, were also confirmed by respondent Nos.2 and 6 in the counter affidavit and it is only basing upon the said request, the impugned LOC was issued by respondent Nos.2 and 3. The relevant paragraph from the counter of respondent Nos.2 and 6 reads as under:-
"In reply to the para 2 of the petition, it is respectfully submitted that the LOC has been raised in the name of Rajesh Agarwal, S/o Satyanarayan Agarawal on the requisition of Managing Director and chief Executive Officer, UCO Bank, Head Office, Kolkata vide letter No.HO/RCR/2020-21/22354 dated 29.09.2020. The requisition seeking for opening of LOC against the petitioner was received in a prescribed proforma on grounds "Guarantor of an NPA account" with the action "Prevent subject from leaving India and inform originator."
14. The impugned LOC and the basis for issuing such LOC have to stand or fall on the reasons furnished in the said ::12::
MSK,J WP_7174_2021 proceedings. In the light of the law laid down by the Hon'ble Apex Court in the case of Mohinder Singh Gill v. Chief Election Commissioner 4, the impugned LOC cannot be sustained on the grounds and reasoning mentioned in the counter affidavit filed by the respondents. Even assuming that the reasons given by respondent Nos.4 and 5 in the counter affidavit are true, it is highly doubtful whether the same would fit into the ground of being detrimental to the economic interests of India. Thus, there is no application of mind by the Managing Director of the respondent-Bank before making a request for issuance of LOC, and also on the part of respondent Nos.2 and 3, who issued LOC.
15. It is not the case of the respondent-Bank that the issuance of impugned LOC was requested/issued because of pendency of Central Bureau of Investigation and Enforcement Directorate cases nor there was any request from consortium of Banks, led by the State Bank of India. Before imposing restriction on a freedom of a citizen more so on the right to travel proper application of mind is required and mere availability of power cannot be a ground to exercise such power especially when such an action would affect the fundamental 4 1978 (1) SCC 405 ::13::
MSK,J WP_7174_2021 rights of a citizen. It shall not be construed as if this Court is acknowledging the actions of the petitioner in any manner.
16. The other grounds raised by the petitioner about non-compliance of the principles of natural justice before issuing the LOC etc., and the reliance placed by learned counsel on either side on various decisions need not be considered in the light of the conclusion arrived at by this Court on the validity of the impugned LOC issued against the petitioner.
17. It is also necessary to notice that a coordinate Bench of this Court by order, dated 16.11.2022 and 25.01.2023 in this Writ Petition permitted the petitioner herein to travel abroad and petitioner had travelled accordingly and returned to Country, and it is also not in dispute that the wife of the petitioner is suffering from cancer, requiring the petitioner to travel abroad.
18. Before parting with the case, this Court is constrained to make certain observations in the manner in which the respondent-Bank is prosecuting the matters for recovering the amounts due to it. Consequent to the Judgment of the High Court of the Singapore, dated 31.01.2019, and after a lapse of ::14::
MSK,J WP_7174_2021 two years the respondent-Bank filed O.A.No.195 of 2021, seeking execution of the said judgment. But, for the reasons best known, the said O.A. is still stated to be pending and no interim order also appears to have been obtained. But, the respondent-Bank by simply making a request for issuance of LOC against the petitioner herein appears to have kept quiet for more than four years since the date of Judgment of the High Court of the Singapore. This Court is not able to understand what it is that achieved by the respondent-Bank by merely getting the impugned LOC issued against the petitioner without taking any steps for execution of the orders passed in its favour.
19. In the light of the above, this Court is left with no other option except to come to the conclusion that the ground on which the impugned LOC was issued does not fit into any of the guidelines mentioned in the Office Memorandum, dated 27.10.2010, as amended by Office Memorandum, dated 05.12.2017, as such, the impugned LOC issued by respondent Nos.2 and 3 is bound to be declared as the one issued without application of mind, illegal, arbitrary and the same is liable to be set aside and accordingly the same is set aside.
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MSK,J WP_7174_2021
20. However, it is further directed that, in case if the petitioner intends to travel abroad, he shall keep respondent No.5-Bank informed about his travel details and shall strictly adhere to such schedule, and report to respondent No.5-bank on arrival to Country, every time.
21. Accordingly, the Writ Petition is allowed, to the extent indicated above.
As a sequel, miscellaneous petitions, pending if any in this Writ Petition, shall stand closed. No costs.
___________________________________ MUMMINENI SUDHEER KUMAR, J Date: 06.10.2023 NDS ::16::
MSK,J WP_7174_2021 THE HON'BLE SRI JUSTICE MUMMINENI SUDHEER KUMAR WRIT PETITION No.7174 OF 2021 Date: 06.10.2023 NDS