Mritunjay Singh vs Union Of India And Others
2021 Latest Caselaw 394 Cal/2

                      In The High Court at Calcutta
                     Constitutional Writ Jurisdiction
                              Original Side

The Hon'ble Justice Sabyasachi Bhattacharyya

                            WPO No. 105 of 2020
                              Mritunjay Singh
                                     Vs.
                          Union of India and others

For the petitioner                    :    Mr.   Ranajit Chatterjee,
                                           Mr.   Dipak Ranjan Mukherjee,
                                           Mr.   N. Banerjee,
                                           Mr.   Arijit Dey
For the respondent No.2               :    Mr.   Avinash Kankani

For the respondent Bank-SBI           :    Mr. Soumya Roy,
                                           Mr. Santosh Mahato

Hearing concluded on                  :    13.04.2021

Judgment on                           :    20.04.2021

The Court:

1. The present challenge is against a Look-Out Circular (LOC) issued

against the petitioner. The petitioner is a Captain of the Merchant

Navy and stays on the high seas for the most part of the year, since

2008.

2. The petitioner was a Director of Kaushik Global Logistic Limited

(KGLL) between March 19, 2009 and July 11, 2012. The said

company defaulted in repayment of a term loan availed from the State

Bank of India (SBI), Alipore Branch, Kolkata. A criminal case was

initiated by the Central Bureau of Investigation (CBI), in which the

petitioner was one of the accused. The CBI Court, vide order dated

July 22, 2016, discharged the writ petitioner on the finding that the

petitioner was not involved in the day-to-day activities of the company

and there was no material sufficient to establish, even prima facie, the

charges against him.

3. The petitioner denies being a guarantor as per Form C5A dated

February 7, 2013, when a fresh letter regarding grant of individual

limits within the overall limit was issued by the guarantors for KGLL,

which did not include the petitioner's name as a guarantor. It is the

further case of the petitioner that the Bank has an award against the

borrower-Company passed by the Debts Recovery Tribunal under the

SARFAESI Act.

4. The order of the CBI Court was upheld by the Sessions Court on July

7, 2017 in Criminal Revision Case No. 186 of 2016. CRR No. 1831 of

2017 was filed by the CBI against such order in this Court, in

connection with which an application for condonation of delay

remains pending.

5. In addition, a proceeding under the Prevention of Money Laundering

Act (PMLA), 2002 was also initiated against the petitioner by the

Enforcement Directorate (ED), bearing OC No. 1139 of 2019. The

Adjudicating Authority under the said Act ordered attachment of the

movable and immovable assets of the accused-Company and the other

accused persons, including the writ petitioner, on September 30,

2019. An appeal against the said order, preferred before the Appellate

Tribunal, was admitted on January 22, 2020.

6. A previous writ petition filed by the petitioner against the ED

culminated in a Division Bench order of April 22, 2019, granting the

petitioner liberty to open a fresh bank account for credit of his salary

for the maintenance of his family and himself.

7. Subsequently, the Immigration Authorities opened the impugned LOC

on the basis of a request of the SBI dated January 17, 2020. The writ

petitioner was detained at the Kolkata Airport on February 11, 2020,

when the petitioner was going to take a flight to Bangkok for boarding

a merchant vessel as Captain.

8. The reason for opening LOC, as discussed in the LOC itself as well as

the request of the Bank is that the writ petitioner is a Director of

KGLL, which had been identified to have committed fraud, by the

Bank, on March 7, 2014. The petitioner argues that neither the LOC

nor the request for it was furnished to the writ petitioner.

9. Learned counsel for the petitioner argues that the right to travel

abroad is a fundamental right and, in the present case, the livelihood

of the petitioner, who is a sailor, depends on overseas travel.

10. It is also contended that Section 10A of the Passports Act, 1967 is the

only statute empowering the Central Government to suspend a

passport or restrict overseas travel of a citizen and provides for a prior

opportunity of hearing to the affected person. In the present case, no

opportunity of hearing was given to the petitioner before issuance of

the LOC.

11. It is further submitted that the ground for request to issue LOC was

invalid on the date of the request, that is, January 17, 2020, since the

writ petitioner had resigned as Director of KGLL as long back as on

July 11, 2012.

12. It is submitted that no other reason for such request and the

consequential issuance of LOC were disclosed either by the Bank or

the Immigration Authorities.

13. The 2017 Amendment of the concerned Office Memorandum (OM)

pertaining to LOCs cites exceptional circumstances detrimental to the

economic interests of India as one of the grounds for issuance of LOC.

Nothing has been brought on record by the respondents to

demonstrate that the said criteria applied to the writ petitioner at all.

14. That apart, in view of the subsistence of the DRT Award against the

borrower-Company and the Attachment Order passed regarding the

petitioner's movable and immovable property by the Adjudicating

Authority under the PMLA, passed at the behest of the ED, the debt-

in-question is sufficiently secured.

15. On the basis of a fresh request by the Bank, as submitted by the

respondents, the LOC under challenge was renewed on January 8,

2021, during pendency of the writ petition. However, since the

veracity of the original LOC is challenged and no new ground has been

cited, apart from the petitioner's alleged Directorship of the borrower-

Company even in the renewal, the above arguments hold true in

respect of such renewed LOC as well.

16. It is also submitted by learned counsel for the petitioner that the

respondents cannot supply reasons post facto in their affidavit-in-

opposition by alleging that the petitioner is also a guarantor in respect

of the borrower-Company.

17. Learned counsel for the writ petitioner cites an unreported judgment

rendered by the Delhi High Court on December 2, 2020 in WP (C)

5382 of 2020 (Deept Sarup Aggarwal Vs. Union of India & Anr.) for the

proposition that unless reasons are disclosed in the LOC or for

subsequent extension thereof which come within the purview of the

relevant Office Memoranda, no LOC can be issued. In the said case,

as in the present, it is argued, mere mention of the power to issue

LOC did not justify how the travel of the petitioner would in any

manner prejudice the economic interests of the country.

18. Learned counsel for the writ petitioner next places reliance on an

unreported judgment of the Gujarat High Court rendered in Special

Civil Application No. 15328 of 2019 (Nimish Kalyanbhai Vasa Vs. Union

of India) and argues that in view of the petitioner therein having

suffered a decree as guarantor to the principal borrower-Company and

the petitioner had on several occasions travelled out of India, the

Court proceeded on the presumption that no Look-Out Circular

existed as on the relevant date.

19. Learned counsel next relies on UCO Bank Vs. Dr. Siten Saha Roy and

others, rendered by a Single Judge of this Court in RVW 23 of 2020, in

connection with WP No. 23412(W) of 2012, wherein it was held, inter

alia, that the "economic interests of India" could not be ascertained

merely on the quantum of loan and is on a much higher footing,

directly and adversely impacting the share market or the economy of

the country as a whole, which would be jeopardized in the event the

accused is permitted to travel abroad, to such an extent that it

destabilizes the entire economy of the country. The said ground

cannot be confined to individual loans on the basis of commercial

transactions, it was held.

20. Learned counsel appearing for the Union of India takes a rather

neutral stand in submitting that the Immigration Authorities are

bound by law to issue an LOC if so requested by a competent

authority, being the SBI in the present instance.

21. Learned counsel appearing for the respondent no.3-Bank contends

that the present liability of the borrower-Company is over Rs.144

crore. Learned counsel harps on the contention that the petitioner is

also a guarantor of the Company, whose liability is co-extensive with

the borrower.

22. It is further submitted that the allegation of being a guarantor, made

in paragraph no.20 of the affidavit-in-opposition of respondent no.3,

was not dealt with in the relevant paragraph (paragraph no.27) of the

affidavit-in-reply filed by the petitioner.

23. Since, if the writ petitioner decides to flee the country, public money

may be lost, the economic interest of the country being squarely

affected.

24. Upon considering the materials-on-record and hearing learned

counsel for the contending parties, it is clear that the only reason

disclosed in the request of the Bank as well as in the LOC itself was

that the petitioner was a Director of the borrower-Company. Such

allegation was made in the present tense in both the request and the

LOC. However, such allegation is, by itself, insufficient to fall within

any of the grounds for issuance of LOC, as contemplated in the

relevant Office Memoranda.

25. The petitioner has clearly shown that the petitioner had resigned long

back, even before the discovery of alleged fraud in 2014 by the Bank.

26. As regards the other ground that the petitioner's liability was co-

extensive with the borrower-Company in the capacity of a guarantor,

it is well-settled that a new ground cannot be supplanted by pleadings

if not furnished in the original LOC or the request therefor.

Introduction of such an allegation post facto cannot justify the

issuance of the LOC and subsequent renewal at the relevant juncture.

27. That apart, in paragraph 20 of the affidavit-in-opposition filed by

respondent no.3-Bank, a mere cursory reference has been made in the

passing regarding the petitioner being a guarantor of the borrower-

Company. There is no specific allegation, let alone any document

disclosed by the Bank, to exhibit that the petitioner was a guarantor

at the relevant point of time. Thus, even in the absence of any specific

denial to such vague allegation, the issuance of the LOC and its

subsequent renewal cannot be justified.

28. Economic offence or any other ground contemplated in the relevant

Office Memoranda was not disclosed either in the request of the Bank

or the LOC itself to justify the issuance thereof. Apart from the CBI

Court and Sessions Court having given a clean chit to the petitioner

on similar allegations, the loan-in-question is sufficiently secured in

view of the DRT award obtained by the Bank against the borrower-

Company and the attachment order passed by the Adjudicating

Authority under the PMLA at the instance of the ED relating to the

writ petitioner's movable and immovable properties.

29. Moreover, in the present case, the petitioner earns his livelihood as a

sailor, being the Captain of the Merchant Navy, an integral part of

which is overseas travel on the high seas for the major part of the

year. Hence, in the present case, the LOC would not only amount to

curtailing the fundamental right to liberty of the petitioner, as

guaranteed by the Constitution of India, it would also take away the

livelihood of the petitioner which would directly affect his life, also

guaranteed by the Constitution.

30. Neither the LOC nor the request therefor discloses any ground as

envisaged in the relevant Office Memoranda to justify the issuance of

the LOC and/or the subsequent renewal thereof.

31. Among the judgments cited on behalf of the petitioner, Deept Sarup

Aggarwal (supra) clearly lays down the proposition that reasons have

to be disclosed in the LOC and in the subsequent extension thereof

which come within the purview of the relevant Office Memoranda. In

the present case, no such reasons were disclosed either in the LOC or

the subsequent extension and/or in the request for issuance of LOC,

which was the very basis of issuance of the LOC.

32. In any event, a vague allegation made post facto in the affidavit-in-

opposition of respondent no.3 as regards the petitioner being a

guarantor to the borrower-Company, without any material to

substantiate such allegation, cannot retrospectively validate the

reasons given in the request for issuance of LOC and/or the LOC or

subsequent extension thereof.

33. The facts of Nimish Kalyanbhai Vasa (supra) somewhat match with the

present case insofar as the borrower-Company has suffered an Award

of the DRT and the petitioner has travelled overseas on several

occasions, each time returning within the stipulated period.

34. The proposition laid down in UCO Bank (supra) holds good in the

present case as well, since there is nothing on record to show that the

economic interests of India would be adversely affected in the event

the petitioner travels abroad. No such ground was disclosed in the

LOC or preceding request for its issuance.

35. Neither the LOC nor its subsequent extension, in any event, could go

beyond the reasons furnished by the respondent no.3-Bank in its

request for issuance of LOC. Such request being based merely on the

allegation that the petitioner "is" (present tense) a Director of the

Company is utterly insufficient to issue a Look-Out Circular.

Moreover, the3re is no justification in withholding the petitioner

unnecessarily from leaving the country, particularly in view of the fact

that the livelihood of the petitioner depends on such overseas travel,

since the interests of the bank are sufficiently protected by the award

passed against the borrower-company by the DRT as well as the order

of attachment of the petitioner's property, both movable and

immovable, passed by the Adjudicating Authority under the PMLA at

the instance of the ED.

36. The petitioner has successfully demonstrated that he was not a

Director of the Company at the relevant juncture when the borrower-

company is alleged to have committed fraud. Thus, there is no basis

whatsoever for issuance of the impugned LOC and the consequential

subsequent extension thereof against the petitioner.

37. Neither the grounds mentioned in the Office Memorandum issued by

the Government of India, Ministry of Home Affairs on December 5,

2017, nor the Circular dated October 27, 2010, which was amended

by the 2017 Memorandum, are applicable in the present case to

justify issuance and renewal of the LOC against the writ petitioner.

38. In view of the reasons set forth above, WPO No.105 of 2020 is allowed

on contest, thereby quashing the Look-Out Circular and the

subsequent extension thereof, issued against the writ petitioner.

Respondent nos. 1 and 2 shall take immediate steps for circulation of

this Order to the concerned Airport Authorities and/or other agencies

which were intimated about the issuance and extension of the LOC so

that no further steps are taken against the petitioner on the basis of

the said Look-Out Circular as well as the subsequent extension

thereof.

39. There will be no order as to costs.

40. Urgent certified copies of this order shall be supplied to the parties

applying for the same, upon due compliance of all requisite

formalities.

( Sabyasachi Bhattacharyya, J. )