Naman Ajitsaria vs Union Of India And Others
2023 Latest Caselaw 5052 Cal

AD-12
Ct No.09
16.08.2023
TN
                          WPA No. 26103 of 2022
                           IA No: CAN 1 of 2023

                               Naman Ajitsaria
                                     Vs.
                           Union of India and others


             Mr. Arik Banerjee,
             Mr. Arijit Roy,
             Mr. Sumit Biswas,
             Ms. Rajashree Bhowmick
                                               .... for the petitioner

             Mr. Billwadal Bhattacharyya
                                                       .... for the UOI

             Mr. Avishek Guha,
             Ms. Akansha Chopra
                                   .... for the respondent nos. 5 & 6

The present challenge has been preferred

against the issuance of a Look Out Circular (LOC)

against the petitioner. It is contended that the said

LOC was issued without any rhyme or reason at the

behest of the respondent-Bank. It is submitted that a

challenge was preferred against the vires of Sections

95 to 100 of the Insolvency and Bankruptcy Code,

2016 in this court by way of a writ petition, bearing

WPA No. 15042 of 2022, which is now pending. By an

order dated July 15, 2022 passed in the said

challenge, the court was inter alia pleased to restrain

the petitioner from transferring or alienating or

disposing of any of his assets or beneficial interest or

legal rights until the matter is heard out. In the same

breath, CP(IB) No. 86 (KB)/2022 pending before the

NCLT, Kolkata Bench, was also directed to remain

stayed in the meantime.

It is argued by learned counsel for the petitioner

that the petitioner is not suffering from any order of

recovery passed by any tribunal or other forum. That

apart, the alleged willful defaulter declaration has not

been passed against the petitioner but against the

company, where the petitioner was merely a guarantor

at one point of time.

Learned counsel for the respondent nos. 5 and 6

files, as per previous direction, a copy of the request

sent by the Bank to the Immigration Authorities for

origination of an LOC against the petitioner. The said

communication is handed over to court directly, in a

sealed envelope, in deference to the Circular to the

that effect issued by the concerned Ministry of the

Union of India, requesting confidentiality to be

maintained with regard to such document. The

document be made a part of the record.

A perusal of the reason for opening of LOC, as

disclosed in the said request by the respondent nos. 5

and 6, however, does not reveal anything which

would, in any manner, would disclose any secret

source or adversely affect the interest of and/or be to

the detriment of safety and security of the country in

any manner whatsoever. The limited clause,

indicating the reasons for opening of LOC as cited by

the respondent nos. 5 and 6, is as such set out below:

"M/s. Prithvi Ferro Alloy P Ltd availed various credit facilities from our CFS, Branch, Kolkata under consortium banking arrangement. The company were into the business of production of ferro manganese alloys/captive power plant. Mr. Bijay Kumar Garodia, is the director of the borrower company as well as the guarantor to the limits granted to the borrower company along with Mr. Naman Ajitsaria. The account slipped into NPA w.e.f. 01.06.2016 and the balance outstanding dues of our Bank is Rs. 42.86 Crores.

The unit of the Company is closed. The company has been declared as Wilful Defaulter on 11.02.2019 and it is apprehended that the director/guarantors are likely to escape from India. Opening of LOC against Mr. Bijay Kumar Garodia and Mr. Naman Ajitsaria will help in preventing their travel abroad and will also put them in pressure when their names are disclosed to the public as defaulter and will tarnish their image before their business groups. Hence opening of LOC against Mr. Naman Ajitsaria, is recommended, which will also create fear in their minds."

As per the concerned Office Memorandum

issued by the relevant authorities regarding the

issuance of LOCs, two of the grounds may be urged in

the present context, being the economic interest of the

country being adversely affected and/or public

interest being so affected if the petitioner flees the

country.

However, nothing in the reasons cited for

opening of LOC, as quoted above, show anything

which comes directly within the purview of the said

grounds. Insofar as the "economic interest" of the

country is concerned, the Bank has to establish

grounds on a very high footing for restraining the

personal liberty of the petitioner, guaranteed by the

Constitution.

The mere quantum of the debt-in-question

(Rs.42 crore as alleged herein) cannot be a sole factor

for considering the threat to the economic interest if a

person leaves the country.

In the present case, already an order has been

passed by the previous writ court restraining the

petitioner from dealing with or disposing of his

properties, assets and interests.

Such injunction order, for the time being, is

sufficient protection to the Bank, in the event

ultimately any order of recovery is passed against the

petitioner.

That apart, nothing in the reasons cited by the

respondent/Bank contains any immediate threat to

the public interest of the country.

It has been well-settled by judgments of several

High Courts of the country that the Bank or any other

originating authority cannot resort to issuance of LOC

as a mere alternative of a recovery proceeding.

In the present case, the respondent no. 6-Bank

is, in any event, at liberty to initiate appropriate

proceedings and see the same through its logical

culmination, for recovery of the debts-in-question.

However, such right is not justification enough

to curtail or restrict the individual right of movement

and liberty of the petitioner, who is an Indian citizen,

insofar as the movement of the petitioner within the

country and abroad is concerned.

Hence, the very premise of the issuance of LOC

is vitiated and the LOC is required to be set aside.

That apart, the following phrase in the request

for LoC betrays a mala fide intent on the part of the

Bank :

"Opening of LOC against Mr. Bijay Kumar

Garodia and Mr. Naman Ajitsaria will help in

preventing their travel abroad and will also put them in

pressure when their names are disclosed to the public

as defaulter and will tarnish their image before their

business groups."

At this juncture, learned counsel for the

Immigration Authorities submits that the fact that the

petitioner seeks to leave India allegedly for business

purpose to visit UK be recorded as, according to the

Immigration Authorities, such purpose is not

corroborated by the documents contained in the writ

petition, including the VISA of the petitionr.

Learned counsel for the petitioner controverts

such contention.

Be that as it may, in view of the reasons given

above, the LOC and the respondent-Bank's request for

issuance of the same cannot be sustained in the eye of

law.

Accordingly, WPA No. 26103 of 2022 is allowed,

thereby setting aside the Look Out Circular (LOC)

issued against the petitioner and the request of

issuance sent by the respondent-Bank, which

prompted the issuance of the LOC.

The respondent-authorities are restrained from

preventing the petitioner in any manner from leaving

the country, subject to the petitioner carrying a valid

passport and/or VISA, if the latter is necessary

(depending on his destination), on the strength of the

LOC which has been set aside by this order.

The respondent nos. 2 and 3 are directed to

communicate the gist of this order, accordingly, to all

the concerned authorities, to whom the issuance of

LOC has been communicated previously, to ensure

that the endorsements made on the passport of the

petitioner, solely on the strength of the vitiated LOC,

do not stand in the way of the petitioner being

permitted to board flights and/or leave the country in

any legitimate manner whatsoever.

IA No: CAN 1 of 2023 is also disposed of

accordingly.

There will be no order as to costs.

Urgent photostat certified copies of this order, if

applied for, be made available to the parties upon

compliance with the requisite formalities.

(Sabyasachi Bhattacharyya, J.)