Praful S/O Shridhar Vaidya vs Union Of India, Thr. Deputy ...
2023 Latest Caselaw 7385 Bom

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      IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                NAGPUR BENCH, NAGPUR
                          Writ Petition No.2841 of 2022


 Praful S/o Shridhar Vaidya,
 Aged about 57 years,
 Occupation - Business,
 Having office at 23, Pushpkunj Complexes,
 Central Bazar Road,
 Ramdaspeth, Nagpur-440 010.                                         ... Petitioner


 Versus


 1. Union of India,
     through Deputy Director,
     Bureau of Immigration,
     East Block VIII,
     R.K. Puram,
     New Delhi-110 066.


 2. Bank of Baroda,
     through Chief Manager,
     a Banking Company,
     having its office at Regional
     Stressed Asset Recovery Branch,
     Mytri Willows,
     2nd Floor, Opp. Empress Mall,
     Sir Bezonjee Mehta Road,
     Nagpur-440 018.                                        ... Respondents


 Shri Sunil Manohar, Senior Advocate, assisted by Shri Atul Pande,
 Counsel for Petitioner.
 Shri V.A. Bramhe, Counsel for Respondent No.1.
 Shri S.N. Fuladi, Counsel for Respondent No.2.




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         CORAM : A.S. CHANDURKAR & MRS. VRUSHALI V. JOSHI, JJ.
         Date when arguments were heard              : 6th July, 2023.
         Date when the judgment was pronounced : 25th July, 2023.


 JUDGMENT (PER A.S. CHANDURKAR, J.) :

1. Rule. Rule made returnable forthwith and heard the learned

counsel for the parties.

2. In this writ petition preferred under Article 226 of the

Constitution of India, the petitioner raises a challenge to the

intimation for issuance of a look-out circular at the instance of the

Bank of Baroda-respondent No.2, which seeks to restrain the

petitioner from travelling abroad.

3. It is the case of the petitioner who is engaged in the business of

trading of steel and allied products that he has availed credit facilities

from the Bank with regard to establishments in which he has interest.

The accounts of the said establishments have been categorized as

non-performing assets and the petitioner has been declared to be a

wilful defaulter on 1-10-2019. The Bank has initiated the proceedings

before the Debts Recovery Tribunal, Nagpur for recovery of its dues. A

recovery certificate has been issued in the said proceedings and

further proceedings in that regard are still pending. In the meanwhile,

on 13-2-2019, the Bank lodged a report against the petitioner, based

on which an offence under Sections 199, 200, 406, 417, 418, 420 and

120-B of the Indian Penal Code came to be registered. On that basis, a

request was made by the Bank on 11-8-2021 for issuance of a look-out

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circular against the petitioner. Accepting such a request, the said

circular has been issued by the Bureau of Immigration- respondent

No.1. It is in the aforesaid backdrop that the petitioner has

approached this Court challenging the said action.

4. Shri Sunil Manohar, learned Senior Advocate for the petitioner,

invited attention to the reasons furnished by the Bank for opening of

the look out circular. As per the said reasons, it was stated that the

petitioner was a guarantor to the credit facilities advanced by the

Bank. The account in question having been treated as a

non-performing asset on 15-5-2014, the balance outstanding was

Rs.11.03 crores. It was further stated that though the petitioner was

declared as a wilful defaulter, the publication of his name and

photograph had been stayed by this Court vide order

dated 18-10-2019. According to the Bank, the petitioner was

frequently travelling out of the country for meeting his relatives and

hence it was anticipated that he may not come back to India to avoid

payment of the Bank's dues. Referring to the guidelines

dated 20-2-2021 as well as the Circulars dated 13-6-2019 and

18-10-2021, it was submitted that the requirements therein had not

been satisfied so as to warrant issuance of the look-out circular. As per

this Circular dated 13-6-2019 with regard to an account where the

borrower is declared as a wilful defaulter, the balance outstanding

ought to be Rs.50 crores and above. It was submitted that on the

Bank's own showing, the outstanding amount was less than

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Rs.50 crores. As regards registration of offence against the petitioner,

it was submitted that the Investigation Officer on 7-7-2021 had made

a request in the form of 'B' Summary. The learned Judicial Magistrate,

First Class on the same day accepted the said request and proceeded

to grant 'B' Summary. Hence, it was clear that there was no criminal

proceeding pending against the petitioner. Despite the fact that the

requirements of the Circulars and the guidelines framed by the Bank

were not satisfied, the look-out circular came to be issued. In fact

there was no material whatsoever for accepting such request.

By issuing the look-out circular, the Bank was seeking to recover its

dues and the same was not permissible. Reliance was placed on the

decision of this Court in Om Prakash Bhatt Versus State of

Maharashtra, through its Director, CBI Headquarters and others

[(2021) 2 AIR Bom R (Cri) 638] and the judgment of the Calcutta

High Court in WPA 22748 of 2022 ( Mannoj Kumar Jain and another

Versus Union of India and others) decided on 9-6-2023 to submit that

the look-out circular could not be issued in a casual manner without

there being any supporting material. Pursuant to the interim order

dated 24-6-2022, the petitioner had travelled to Cambridge, United

Kingdom from 18-7-2022 to 1-8-2022 and had thereafter returned

back. Hence merely on the apprehensions expressed by the Bank, the

petitioner could not be prevented from travelling abroad. The

intimation for issuance of the look-out circular therefore did not

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deserve to be accepted. It was thus submitted that the said action of

the respondents was liable to be set aside.

5. Shri S.N. Fuladi, learned counsel for the Bank, submitted that

the Bank was justified in seeking issuance of the look-out circular. The

balance outstanding that was to be recovered from the petitioner on

15-5-2014 was about Rs.11.03 crores. With the passage of time, that

amount had increased and it would be now more than Rs.50 crores.

The proceedings for recovery of Rs.13,52,84,815.94 had been initiated

by the Bank before the Debts Recovery Tribunal and the said

proceedings were pending. It was thus clear that the recovery of

substantial amount was required to be made from the petitioner.

Further a First Information Report came to be registered against the

petitioner on 13-2-2019. Though the learned Judicial Magistrate, First

Class had issued 'B' Summary, that order had been challenged by the

Bank by preferring a revision application. It therefore could not be

said that there was no criminal proceeding pending against the

petitioner. Various cases under the Prevention of Money Laundering

Act, 2002 were also pending against the petitioner. Relying upon the

judgment of the Delhi High Court in Ghanshyam Pandey Versus Union

of India and another [(2023) 237 Com Cas 317], it was submitted that

the issuance of the letter of credit was in accordance with law and

there was no reason to interfere in writ jurisdiction.

Shri V.A. Bramhe, learned counsel for the respondent No.1,

submitted that the look-out circular had been issued pursuant to the

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request made by the Bank. It was for the Bank to justify its request for

issuance of such look-out circular.

6. Having heard the learned counsel for the parties and having

perused the documents on record, we are of the view that the reasons

furnished by the Bank for opening of the look-out circular in its

request dated 11-8-2021 are insufficient and the same do not warrant

issuance of the look-out circular. From the affidavit filed by the Bank,

it can be seen that with regard to M/s. Bhupati Steel Trading of which

he is the proprietor, the amount due is Rs.2,39,90,122.50. As regards

the account of M/s. Sridhar Casting of which the petitioner is a

guarantor, the amount due is Rs.13,52,84,815.94 and recovery

certificate for that amount has been issued on 24-10-2018. With

regard to another account of M/s. Vidarbha Infotec Pvt. Ltd.,

insolvency proceedings are pending. It is also a fact that the petitioner

has been declared to be wilful defaulter on 1-10-2019. Coupled with

the aforesaid, according to the Bank, since the petitioner was

frequently travelling out of the country, it was anticipated that he may

not return back so as to avoid repayment to the Bank. When the

aforesaid recommendation is perused, it becomes clear that these

reasons are insufficient to seek issuance of the look-out circular. As

per the Circular dated 16-3-2019 issued by the Indian Banks

Association, various broad parameters for making such request have

been laid down. The request for issuance of the look-out circular can

be based on an apprehension that the person in question is likely to

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flee from India based on any reliable information which could include

a criminal case registered with the police, the amount due and payable

by such person or fraud being reported in any of the transactions with

the Bank, the person or entity is declared as a wilful defaulter and the

combined loan outstanding is Rs.50 crores and above. When the

recommendation made by the Bank is perused, it can be seen that the

outstanding amount referred to therein is not indicated to be

Rs.50 crores and above. The affidavit of the Bank as filed also does

not indicate aforesaid amount due to exceed Rs.50 crores. There is

only an anticipation expressed that the petitioner may not return back

to India to avoid repayment. The recommendation does not refer to

any reliable information received by the Bank which is the

requirement stipulated in the Circular dated 16-3-2019. These are the

only statements made in the said recommendation.

7. The Circular dated 16-3-2019 requires a request for issuance of

the look-out circular to be made carefully and judiciously. Such

request is required to be based on the objective parameters supported

by evidence. The recommendation placed on record does not indicate

satisfaction of these primary aspects. The First Information Report

bearing No.128 of 2019 was registered on 13-2-2019 but on 7-7-2021,

the learned Judicial Magistrate, First Class was pleased to accept

'B' Summary therein. Though the said order has been challenged by

the Bank, the fact remains that as of today, the order accepting

'B' Summary continues to operate. It is pertinent to note that the

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aforesaid 'B' Summary was accepted on 7-7-2021 while the request for

issuance of the look-out circular was made by the Bank on 11-8-2021.

Thus on the date when such recommendation was made, the

'B' Summary was already issued in the matter. Besides the aforesaid,

there is no other material that was placed before the Bureau of

Immigration to warrant issuance of the look-out circular.

8. The Circulars dated 5-12-2017 and 12-10-2018 permit issuance

of the look-out circular if such travel of the person is shown to be

detrimental to the economic interest of India. The Division Bench of

this Court in Om Prakash Bhatt (supra) as well as the Calcutta High

Court in Mannoj Kumar Jain and another (supra) have considered

these Circulars and have cautioned against the unregulated abuse of

power by the Banks in the absence of any such material for issuance of

the look-out circular. These decisions support the case of the

petitioner. As held, in Ghanshyam Pandey (supra), the question

whether issuance of a look-out circular is justified or not has to be

determined on the facts and circumstances of each case.

9. We may note that by the interim order dated 24-6-2022, the

petitioner was permitted to travel abroad for a specified period.

Undisputedly, the petitioner has complied with the said interim order

and has returned back. It is not the grievance of the respondents that

the said interim order has been breached by the petitioner in any

manner whatsoever. We may also observe that even without making a

request for issuance of the look-out circular, the Bank can always

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request the judicial forum where any proceeding for recovery is

pending against the petitioner to impose appropriate conditions on the

petitioner to ensure that he returns back after such travel outside

India. The Court/Tribunal can always consider imposing appropriate

conditions if found necessary in the facts of the case while granting

such permission.

10. Hence for the aforesaid reasons, we find that the grounds

furnished by the Bank for recommending issuance of the look-out

circular against the petitioner vide its communication dated 11-8-2021

are not the reasons indicated in the Circulars dated 27-10-2010,

5-12-2017, 12-10-2018, 13-6-2019 and 18-10-2021 on the basis of

which a look-out circular can be issued. The said recommendation

was thus not liable to be accepted. Thus the look-out circular issued

by the respondent No.1 at the behest of the respondent No.2 on the

basis of the communication dated 11-8-2021 is rendered inoperative.

It is clarified that this judgment would not preclude the Bank from

seeking issuance of a look-out circular by complying with the

requirement of prevailing Circulars in accordance with law.

11. Rule is made absolute in the aforesaid terms with no order as to

costs.

(MRS. VRUSHALI V. JOSHI, J.) (A.S. CHANDURKAR, J.)

LANJEWAR