Telangana High Court
Sharad Kumar vs Union Of India And 4 Others on 16 July, 2024
THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY
WRIT PETITION No.26063 of 2022
ORDER:
This Writ Petition came to be filed by the petitioner, seeking to declare the action of respondent Nos.2 to 5 in interfering with the liberty of petitioner and obstructing and restraining him from travelling abroad as illegal, arbitrary and in violation of principles of natural justice and consequently prayed this Court to quash the Look Out Circular (LOC) dated 04.02.2021 issued against the petitioner and direct the respondents not to interfere with life and liberty of the petitioners including direction not to obstruct and restrain the petitioner from travelling abroad.
2. The case of the petitioner is that he is Vice President of M/s.Patel Engineering Limited Company incorporated under the provisions of Companies Act, and engaged in the business of construction of Hydropower Projects, Border Roads, Strategic Tunnels and other infrastructure. The said company was allotted a construction contract for construction of Head Race Tunnel in Sankhuwasabha District, Nepal by Satluj Jal Vidyut Nigam (SJVNL), a Public Sector Undertaking of Government of India. It is also stated that the said company has entered into various agreements and had undertaken projects. It is further case of the petitioner that in the 2 capacity of Head of Operations of the Company/Executive of the company, it is necessary for him to travel to various places in India and abroad. It is further case of the petitioner that while he was travelling, the respondent Nos.2 and 3 apprehended stating that a Look Out Circular (LOC) was issued against him as he was arrayed as Accused No.5 in Crime No.RC0782021E001 dated 06.01.2021 registered by the respondent No.3 on the complaint filed by the State bank of India i.e, respondent No.5 against the M/s.Coastal Projects Pvt. Ltd. It is further case of the petitioner that he is no way connected with the affairs or administration of the said company as he resigned from the post of Director of the said company on 07.07.2017. It is further stated that soon after coming to know about the registration of the said crime, he has filed Criminal Petition No.2549 of 2021 on the file of this Court seeking anticipatory bail and the same was allowed on certain conditions vide order dated 27.04.2021. It is further case of the petitioner that in terms of the orders passed by this Court in said Criminal Petition, he is cooperating with the investigation and therefore, there is no necessity to maintain LOC restricting his movement, which action on the part of the respondents amounts to violation of Articles 19 and 21 of Constitution of India and also the various judgments of the Hon'ble Apex Court.
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3. The respondent No.5-Bank has filed counter affidavit, inter alia stating that the petitioner was the whole time Director of M/s.Coastal Projects from 08.12.2014 to 07.01.2017 and involved in day-to-day operations and administration of the said company. The said company availed loan facilities from the consortium of banks and financial institutions and defaulted in repayment of loans to the tune of Rs.7,876.65 Crores to the lenders/financial institutions. It is further stated that the company had resorted to fraudulent accounting practices and siphoning of loan funds, contrary to terms and conditions of the loan agreement and the respondent-bank also conducted a forensic auditing of the account of the company for the period from 2013 to 2018 in terms of the guidelines issued by the Reserve Bank of India (RBI) and resolved to classify the accounts of the petitioner as fraud and consequential to the same, lodged a complaint on the file of the respondent No.3-CBI, who in turn registered a case in Crime No.RC0782021E001 dated 06.01.2021 against the petitioner (accused No.5). It is further stated that as the petitioner was full time director and as an incharge of day-to-day affairs of the company and to secure the presence of the petitioner for the purpose of investigation, at the request of the respondent- bank, LOC was issued against the petitioner. It is further contention of the respondents that the Government of India has issued a LOC vide Office Memorandum dated 27.10.2010 bearing 4 O.M.23016/31/2010-Imm and Office Memorandum dated 22.02.2021 bearing O.M.25016/10/2017-Imm (Pt.) and as an Originating Agency, the Bank has requested to issue LOC and the respondents after following the procedure have rightly issued LOC and the said action does not amount to violation of the rights guaranteed to the citizens and there are no legal infirmities warranting interference by this Court under Article 226 of the Constitution of India and prayed for dismissal of the writ petition.
4. The respondent No.3-CBI filed counter affidavit inter alia stating that the respondent No.5 has lodged compliant against the petitioner and the same was registered as a case in Crime No.RC0782021E001 dated 06.01.2021 for the offences under sections 420, 468, 471 r/w 120B IPC and 13(2) r/w 13(1)(d) of PC Act, 1988 against the petitioner and other directors of the company. It is further stated that LOC was opened against the petitioner by respondent No.5 as well as respondent No.3 and the petitioner caused to proceed aboard without obtaining necessary permission from the Court of Principal Special Judge for CBI cases, Hyderabad and in violation of the terms and conditions imposed by this Court in Criminal Petition No.2549/2021. It is further stated that issuance of LOC and travel restrictions imposed against the petitioner are for proper investigation to bring the culprits into the fold of law and the 5 presence of petitioner is very much required for smooth investigation and it is very difficult to secure the presence of the petitioner in the event, LOC issued against him is quashed and ultimately prayed for dismissal of the writ petition.
5. Considered the submissions of learned counsel for the respective parties and perused the record.
6. The Ministry of Home Affairs, Foreigners Division, (Immigration Section), Government of India, has issued Office Memorandum No.25016/10/2017-Imm(Pt.) dated 22.02.2021 framing consolidated guidelines for issuance of Look Out Circulars (LOCs) in respect of Indian Citizens and foreigners. As per the said OM dated 22.02.2021, in exceptional cases, LOCs can be issued even in such cases, as may 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), 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 of time. 6 Clause 6(B) of the Office Memorandum (OM) dated 22.02.2021 confers power on the Chairman/Managing Director/CEOs of all Public Sector banks as Originating agency to request for issuance of Look Out Circulars. The OMs issued are a framework for issuance of LOCs at the instance of an Originating agency. They are internal instructions and provide the necessary guidelines and framework. Office Memorandum (OM) issued on 27.10.2010 is corresponding to consolidated Office Memorandum(OM) issued on 22.02.2021. Clauses 8(g) and 8(h) of the OM dated 27.10.2020 corresponds with Clauses 6(H) and 6(I) of OM dated 22.02.2021. The inclusion of Chairman/Managing Directors/CEOs of all public sector banks in Clause 6(B)(xv) of the OM dated 22.02.2021 was assailed in Viraj Chetan Shah vs. Union of India Through the Ministry of Home Affairs and another 1, wherein the Hon'ble High Court of Bombay after referring catena of judgments of Hon'ble Apex Court as well as High Courts, quashed Clause 8(b)(xv) of the OM dated 27.10.2010 bearing O.M.23016/31/2010-Imm equivalent to Clause 6(B)(xv) of the O.M. dated 22.02.2021 bearing O.M.25016/10/2017-Imm (Pt.). In the said decision, it was observed as follows:
54. For quick reference, we reproduce the three clauses in question immediately:
6. The existing guidelines with regard to issuance of Look Out Circulars (LOC) in respect of Indian citizens and foreigners have been reviewed by this Ministry. After due deliberations in consultation with various 1 2024 SCC Online Bom 1195 7 stakeholders and in suppression of all the existing guidelines issued vide this Ministry's letters/O.M. referred to in para 1 above, it has been decided with the approval of the competent authority that the following consolidated guidelines shall be followed henceforth by all concerned for the purpose of issuance of Look Out Circulars (LOC) in respect of Indian citizens and foreigners:--
(B) The request for opening of LOC must invariably be issued with the approval of an Originating agency that shall be an officer not below the rank of--
.........
xv. Chairman/Managing Directors/Chief Executive of all Public Sector Banks.
(J) The LOC opened shall remain in force until and unless a deletion request is received by BoI from the Originator itself. No LOC shall be deleted automatically. Originating Agency must keep reviewing the LOCs opened at its behest on quarterly and annual basis and submit the proposals to delete the LOC if any, immediately after such a review. The BOI should contact the LOC Originators through normal channels as well as through the online portal. In all cases where the person against whom LOC has been opened is no longer wanted by the Originating Agency or by Competent Court, the LOC deletion request must be conveyed to BoI immediately so that liberty of the individual is not jeopardized. (L) In exceptional cases, LOCs can be issued even in such cases, as may 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) above, 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.
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195. Consequently:
(a) Clause 8(b)(xv) of the 2010 amended OM (equivalent to Clause 6(B)(xv) of the 2021 consolidated OM) which includes the Chairmen, Managing Directors and Chief Executive Officers of all public sector banks as authorities who may request the issuance of a Look Out Circular is quashed.
(b) All the LOCs are quashed and set aside.
(c) The Bureau of Immigration will ignore and not act upon any LOCs issued by any public sector banks. All databases will be updated accordingly.
We do not expect the public sector banks to do this, and therefore direct the Bureau of Immigration or MHA to do the needful. 8
(d) All authorities at all ports of embarkation will be informed and apprised accordingly.
196. Further:
(a) This order will not and does not affect any existing restraint order issued by a competent authority, court, tribunal or investigative or enforcement agency, or in enforcement of any order of a court. Where, for instance, the DRT or a criminal court has issued a restraint order (even if this is at the instance of public sector bank), that order will continue to operate. The invalidation of the present LOCs cannot and will not affect such orders.
(b) The banks are also always at liberty to apply to any court or tribunal under applicable law for an order against an individual borrower, guarantor or person indebted restraining such person from travelling overseas.
(c) In addition, the banks may invoke powers under the Fugitive Economic Offenders Act, 2018, where applicable, notwithstanding this judgment in regard to any LOC.
(d) This judgment cannot and will not prevent the Union of India from framing an appropriate law and establishing a procedure consistent with Article 21 of the Constitution of India.
7. On the similar issue, in a recent decision in Rajesh Kumar Mehta vs. Union of India and others 2, the Hon'ble High Court of Delhi followed the aforesaid decision in Viraj Chetan Shah's case (supra), and quashed the Look Out Circular issued against the petitioner therein.
8. Admittedly, in the instant case, Look Out Circular was issued against the petitioner basing on the request made by the Originating Agency i.e, respondent No.5-bank and also on the complaint being registered by the CBI. In view of quashing of Clause 8(b)(xv) of the OM dated 27.10.2010 equivalent to Clause 6(B)(xv) of the O.M. dated 22.02.2021 by the Hon'ble High Court of Bombay in Viraj Chetan 2 Order dated 28.05.2024 passed in W.P (C) No.11707/2012 by the Hon'ble High Court of Delhi at New Delhi 9 Shah's case (supra),the LOCs issued against the petitioner at the request of Originating Agency i.e, respondent No.5-bank is liable to be set aside. Sofaras the request made by the respondent No.3-CBI to secure the presence of the petitioner in pending criminal case is concerned, ends of justice would be met if certain conditions are imposed.
9. Accordingly, this Writ Petition is allowed and the Look Out Circulars (LOCs) issued against the petitioner, is set aside, subject to following conditions in addition to the conditions imposed in Criminal Petition No.2549/2021:
i) That the petitioner shall furnish security for an amount of Rs.25,00,000/- (Rupees Twenty Five Lakhs only)to the satisfaction of the learned Special Judge for CBI Cases, at Nampally, Hyderabad, in Crime No.RC0782021E001 dated 06.01.2021 within a period of eight (8) weeks from the date of receipt of a copy of this order.
ii) The consortium bank/respondent No.5 is at liberty to apply to any Court or Tribunal in appropriate law for an order against the petitioner (guarantors/executives of the accused company) indebted for restraining such person(s) from travelling overseas.
iii) If the petitioner intends to travel abroad, he shall file an application before the trial Court in Crime No.RC0782021E001 dated 06.01.2021 on the file of Principal Special Judge for CBI Cases, at Nampally, Hyderabad, 10 seeking permission to travel abroad and it is for the Special Court to consider the said application, in accordance with law.
It is made clear that if the petitioner fails to appear regularly in criminal case pending against him or violates any of the conditions in this writ petition, the security furnished by him shall stand forfeited and the respondent No.3-CBI is at liberty to take necessary steps to secure the presence of petitioner in pending Criminal Case, in accordance with law As a sequel, miscellaneous petitions pending if any, shall stand closed. No order as to costs.
___________________________ C.V. BHASKAR REDDY, J Date: 16.07.2024 scs