Telangana High Court
Sri Balvinder Singh vs The Union Of India on 26 June, 2024
THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY
WRIT PETITION Nos.25229 of 2021 and 8695 of 2024
COMMON ORDER:
These Writ Petitions came to be filed by the petitioners, who are wife and husband, questioning the action of the respondents in not allowing them to travel abroad and in issuing the Look Out Circular (LOC) against them, as illegal, arbitrary, unconstitutional and consequently, prayed this Court to set aside the LOC and permit them to travel abroad and for other reliefs.
2. As the issue involved in both the Writ Petitions is common, W.P.No.8695 of 2024 is taken up as leading case to decide the lis in these cases.
3. The case of the petitioner is that he is the Managing Director of M/s. PCH Group of Companies, which were engaged in the business of importing Electronic Goods like Laptops, Mobiles, Furniture and Consumer durables from various countries including China, Indonesia, Malaysia, Hong Kong and Thailand, since 2010 and to carry on business activities, he travels aboard. It is further case of the petitioner that he availed credit facilities from various banks including Respondent No.6-Bank and due to agitation of bifurcation of the State, he could not successfully sell his products in the 2 market, which resulted in reduction of sales and the company has suffered financial crisis. It is further case of the petitioner that prevailing economic conditions did not allow him to run the business successfully and thereby he sustained huge loss and could not meet the financial necessities including discharge of loans to various banks and financial institutions. It is further case of the petitioner that the respondent No.6-bank has declared his account as Non- Performing Asset (NPA) in the year 2016 and lodged a complaint on the file of respondent No.7 for non-payment of loan amount of Rs.19.77 Crores by M/s. PCH Corporation Limited and the same was registered as a case in Crime No.Rc.01 (E)2019/CBI/BS&FC/BLR for the offences under Sections 120B, 420 and 468 IPC. It is further case of the petitioner that through the counter affidavit filed by the respondent No.7 in W.P.No.25229 of 2021, he came to know that at the instance of respondent No.6, a Look Out Circular (LOC) was issued against him in the year 2019 and the same was renewed from time to time. M/s.Punjab and Sind Bank also lodged complaint with the CBI, EOW, Chennai for non-payment on loan amount by M/s.PCH Corporation Limited and the same was registered as a case in crime No.RC 10/E/2014-CBI-EOW/Chennai, for the offences under Sections 120B, 420 and 468 IPC and in the said crime, he was arrested and remanded to judicial custody and thereafter, he was released on bail on 22.06.2015. It is further case of the petitioner 3 that acting on the complaint lodged by respondent No.7, his passport bearing No.Z2507790 was impounded by the Regional Passport Officer, on 15.04.2015. Aggrieved by the same, he filed Writ Petition No.36913 of 2015 on the file of this Court and pending adjudication of the said writ petition, the petitioner sought interim suspension of proceedings dated 15.04.2015 bearing No.30(21) PO 1/2015, which was confirmed by order dated 25.08.2015 bearing No.VIII/402/App- 55/2015 and to permit him to travel abroad. This Court vide order dated 16.12.2016 granted interim suspension as prayed for. It is also case of the petitioner after granting interim orders, several times he travelled abroad and returned to India in terms of the conditions imposed by the Court. It is stated that CBI, EOW Chennai, filed Charge Sheet on the file of Additional Chief Metropolitan Magistrate (Alikulam) Egmore, Chennai and the same was numbered as 5231 of 2017 and on receiving summons from the Court, he appeared and submitted sureties to the satisfaction of the Court. It is further case of the petitioner that Andhra Bank, represented by Circle General Manager, Sultan Bazar, Hyderabad, lodged a report with the CBI BS & FC, Bengaluru, for non-payment of dues and the same was registered as a case in Crime vide R.C.No.1 OF 2019 dated 11.03.2019 for the offences under Sections 120B, 406, 409, 420, 468 and 471 IPC. Pending investigation of the said case, a Look Out Circular was also issued against him by the CBI, BS & FC, 4 Bengaluru, and challenging the same, he filed Writ Petition No.7882 of 2019 and in the said W.P, this Court granted interim order on 25.04.2019 allowing the petitioner to travel abroad subject to certain conditions. It is further stated by the petitioner that in compliance with the interim directions by this Court issued in W.P.No.7882 of 2019, he travelled abroad several times. It is further case of the petitioner that the State Bank of India, Commercial Branch, Hyderabad, lodged a report with the CBI EOW, Chennai for non- payment of dues and the same was registered as a case in Crime vide R.C.No.10 (E) OF 2017 dated 15.12.2017 for the offences under Sections 120B, 420, 468, 471, 477A of IPC r/w 13(2) r/w 13(1) (d) of Prevention of Corruption Act, and subsequently, the said report was transferred to CBI, ACB, Hyderabad for investigation. On completion of Investigation, charge sheet was filed and the same was numbered as C.C.No.5574 of 2022 on the file of XXI Additional Chief Metropolitan Magistrate, Nampally, Hyderabad. It is the case of the petitioner that he appeared before the said court and submitted sureties to the satisfaction of the court and the case is pending for trial. It is further case of the petitioner that basing on the above complaints, an ECIR was registered ECIR/HYZO/08/2015 on 13.08.2015 by Enforcement Directorate, Hyderabad alleging that both the companies i.e. PCH Lifestyle Limited and PCH Retail Limited., availed credit facilities from the consortium banks. The 5 Enforcement Directorate filed final report vide C.C.No.5231 of 2017 before the Special Judge. It is further case of the petitioner that on 15.12.2017, second FIR was registered by the CBI, EOW, Chennai against him and others for the offences under Sections 120-B read with 420, 468, 471, 477-A IPC and Section 13(2) read with Section 13(1)(d) of the PC Act for defrauding the State Bank of India, Hyderabad to a tune of Rs.133.95 crores and after a gap of two years, another FIR No.RC 01/E/2019-CBI/BS&FC/BLR dated 11.03.2019 has been filed by the CBI, BS & FB, Bengaluru for the offences under Section 120-B read with Sections 406, 409, 420, 468 and 471 IPC on a complaint made by the Andhra Bank on the allegation that he availed the loan of Rs.28.44 crores and failed to pay the amount. It is further case of the petitioner that in all the cases registered against him he was enlarged on bail and he has complied with the terms and conditions imposed by the respective Courts.
4. The respondent No.6-Bank has filed counter affidavit in W.P.No.25229 of 2021, inter alia stating that the petitioner company- M/s.PCH Corporation Ltd was incorporated as PCH Agencies Pvt. Ltd (PAPL) on 19.06.2009 for distribution of trading in Crockery, Glassware, Kitchenware and Home Decors. The said company was converted into Public Limited Company and renamed as "PCH 6 Corporation Ltd". The said company has been dealing with consortium banks and obtained various credit facilities. Initially the petitioner company was sanctioned Rs.20.00 Crores on 22.04.2010 and subsequently the credit facilities were enhanced from time to time. When the petitioner failed to discharge the loan amounts in terms of the agreements, the accounts of the company were declared as NPA on 30.03.2012 and the securities of the company were sold in e-auction for an aggregate amount of Rs.4.40 Crores and the petitioner representing the company is liable to pay an amount of Rs.33.53 crores as on 21.08.2014. It is further case of the respondent No.6 that it had filed an application on the file of the Debts Recovery Tribunal at Hyderabad on 08.05.2014 against the petitioner and guarantors for recovery of amount due and the same was decreed in favour of the bank on 11.07.2017 and Recovery proceedings are pending before the Recovery Officer DRT, at Hyderabad. At the same time, respondent No.6 also invoked the provisions under the SARFAESI Act against the secured assets of the company. It is the case of the respondent No.6 that petitioner with a malafide intention cheated the respondent-Bank along with other banks like Punjab and Sindh Bank, Corporation Bank, Andhra Bank, Canara Bank, United Bank of India, which have sanctioned credit facilities to the Company under Multiple Banking Arrangement Banking and altogether the petitioner is liable to pay an amount of 7 Rs.60.00 Crores to the consortium banks. It is further case of the respondent No.6 that the stocks and receivables reported by the petitioner-company was Rs.96.80 crores as on 31.03.2012, which was reduced to Rs.51.41 crores as on 31.03.2013. The reduction of Rs.45.39 crores in stocks and receivables is apparently not reflected in the transactions with SBI or other banks. It is further case of the respondent No.6 that either the amount reduced was diverted with an intention to defraud the Bank or the amount of stock and receivables reported were fabricated/non-existent. It is stated that Chairman/Managing Director/CEO of all public sector banks are empowered to make a request for opening of a Look Out Circular (LOC) and the respondent No.6-bank being the originator requested the CBI i.e, respondent No.7 and Enforcement Directorate to issue LOC for securing the presence of the petitioner in the cases registered against him and therefore, the petitioner is not entitled for relief sought in the writ petition.
5. The respondent No.7-CBI filed counter affidavit in W.P.No.8695 of 2024, inter alia stating that acting on the complaint dated 11.03.2019 lodged by Circle General Manager, Andhra Bank, Telangana Circle Office, Hyderabad, regarding the fraud to the tune of Rs.28.44 Crores, perpetrated by M/s.PCH Group of Companies, the Superintendent of Police & HoB, CBI, BSFC, Bangalore, 8 registered a case in Crime No.RC-01(E)/2019-CBI/BS&FC/BLR for the offences under Sections 120-B r/w 406, 409, 420, 468 & 471 of IPC against M/s. PCH Corporation Ltd. (A-1), M/s. PCH Life Style Ltd.(A-2), M/s.PCH Retail Ltd.(A-3) having registered offices at 6-3- 648, Padmaja Landmark, Adjacent to RTO Office, Somajiguda, Hyderabad, Mr. Sardar Balvinder Singh, Director of M/s.PCH Group of Companies (A-4), Mrs. Baljit Kaur, Director of M/s.PCH Group of Companies (A-5), Mr. Satyanarayana Murthy Mukkamala, Director of M/s.PCH Group of Companies (A-6), Mr. Hanumantha Yaramosu Rao (A.7), Mr. Bijay Kumar Mohanty, Director of M/s. PCH Life Style Ltd. (A.8) and others. Further another complaint was lodged by the State Bank of India against M/s.PCH Corporation Ltd and its representatives including the Petitioner. It is further stated in the counter affidavit that during investigation it was revealed that the Petitioner representing the accused borrower companies resorted for diversion and round tripping the funds advanced by the lender banks through various fictitious firms/companies without any genuine business just for showing the huge turnovers in books of accounts of the companies to avail the credit facilities. It is further stated that petitioner submitted false Stock and Book Debt Statements with the lender banks and availed excess Drawing Power by claiming false receivables in the name of shell firms/companies and thus the petitioner had caused wrongful loss of around Rs.28.45 9 Crores to the erstwhile Andhra bank and around Rs.19.77 Crores to the State Bank of India and accordingly, three separate charge sheets were filed on the file of XXI Additional Chief Metropolitan Magistrate, Nampally, Hyderabad on 04.01.2024 for the offences under Sections 120B r/w 420 IPC. It is further stated in the counter affidavit that as per the guidelines issued by the Ministry of Home Affairs vide its OM No.25016/2017 Imm(T) dated 22.02.2021, respondent No.7-CBI is one of the authority to request Bureau of Immigration for opening of Look Out Circular (LOC) in respect of Indian citizens and foreigners involved in cognizable offences and Superintendent of Police in CBI or an officer of equivalent level working in CBI is authorized to issue request to open a LOC where there is a likelihood of the accused leaving the country. Further, the LOC opened shall remain in force until and unless a deletion request is received by Bureau of Immigration from the originator itself i.e CBI. Accordingly, after registration of FIR on 11.03.2019 in the instant case, as requested by the Respondent/CBI, Bureau of Immigration has opened LOC bearing No.1941922 on 12.03.2019 in respect of the petitioner/accused in order to prevent him from leaving the country and to secure his presence in investigation of the case. It is further case of the respondent that at the instance of the borrower banks and also on the request of CBI, LOC was issued against the petitioner and a request for impounding the passport of 10 the petitioner was also submitted. It is also case of the respondent No.7 that the petitioner committed the offence in a preplanned manner and with a deliberate design to cause wrongful loss of public money to the tune of around Rs.48.00 Crores and corresponding wrongful gain to the accused regardless of consequence to the society at large. It is stated that the public faith in the system will erode if such economic offenders are allowed to leave country when there is an apprehension that after leaving the country he may not return to the country and ultimately prayed for dismissal of the writ petition.
6. Considered the submissions of learned counsel for the respective parties and perused the record.
7. 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 11 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. 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 1 2024 SCC Online Bom 1195 12 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 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.
xx xx xx
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 13 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.
(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.
8. 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.
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 14
9. Admittedly, in the instant cases, Look Out Circulars were issued against the petitioners basing on the request made by the Originating Agency i.e, respondent-banks 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 Shah's case (supra), the LOCs issued against the petitioners at the request of Originating Agency i.e, respondents-banks are liable to be set aside. Sofaras the request made by the CBI to secure the presence of the petitioners in pending criminal cases are concerned, ends of justice would be met if certain conditions are imposed.
10. Accordingly, both the Writ Petitions are allowed and the Look Out Circulars (LOCs) issued against the petitioners, are set aside, subject to the following conditions:
i) That the petitioners shall furnish security for an amount of Rs.25,00,000/- (Rupees Twenty Five Lakhs only) each to the satisfaction of the learned XXI Additional Chief Metropolitan Magistrate, Nampally, Hyderabad in C.C.No.5574 of 2022, within a period of eight (8) weeks from the date of receipt of a copy of this order.
ii) The consortium of banks (respondents herein) are at liberty to apply to any Court or Tribunal under applicable law for an order against an individual borrower (petitioners) or 15 guarantors or person(s) indebted for restraining such person(s) from travelling overseas.
iii) If the petitioners intend to travel abroad, they shall file an application before the trial Courts in cases pending against them seeking permission to travel abroad and it is for the trial Courts to consider the same in accordance with law.
It is made clear that if the petitioners fail to appear regularly in criminal cases pending against them, the security furnished by them shall stand forfeited and the CBI is at liberty to take necessary steps to secure the presence of petitioners in pending Criminal Cases, 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: 26.06.2024 scs