Mr. Rajesh Agarwal vs Union Of India
2023 Latest Caselaw 2929 Tel

THE HON'BLE SRI JUSTICE MUMMINENI SUDHEER KUMAR

                 WRIT PETITION No.7174 OF 2021

ORDER:

Heard Sri L.Ravi Chander, learned Senior Counsel and Sri

Tarun G. Reddy, learned counsel appearing for the petitioner,

Sri Gadi Praveen Kumar, learned Deputy Solicitor General of

India appearing for respondent Nos.1 to 3 and 6 and Smt. M.

Shalini, learned counsel appearing for respondent Nos.4 and 5.

2. This Writ Petition is filed seeking a Writ of Mandamus to

declare the Look Out Circular (for short 'the LOC') vide LOC

No.2020434939 issued against the petitioner restraining the

petitioner from travelling outside India and also the action of

respondent Nos.4 and 5 in requiring respondent Nos.1 to 3 to

restrain the petitioner from travelling outside India, as illegal

and arbitrary.

3. For better appreciation, it is necessary to note certain

undisputed facts, which are as under:-

4. The petitioner herein in the capacity of Managing Director

of M/s. B. S. Global Resources Private Limited

(for short 'the said Company') approached respondent

No.4-Bank for sanction of facility of trade finance. Initially the ::2::

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same was sanctioned with limits of USD 2.00 millions on

23.08.2012 and the same was enhanced to USD 4.00 millions

on 15.08.2013. The said facility was renewed from time to time

and finally renewed on 05.09.2017. For the said credit facilities

availed by the said Company for an amount of

USD 5,000,000 a corporate guarantee was given by

M/s. B.S. Limited which is the holding Company of the said

Company and the petitioner herein also stood as personal

guarantor for the said credit facilities extended by respondent

No.4 in favour of the said Company beside executing corporate

guarantor in the capacity of Chairman and Managing Director

of M/s. B.S.Ltd. As the said Company failed to honor the terms

and conditions of the said credit facilities, the account was

declared as NPA on 09.07.2018 and respondent No.4

approached the High Court of the Republic of Singapore against

the said Company, M/s. B.S. Limited and the petitioner herein

for recovery of dues vide case No.HS/S830/2018 and the same

was disposed of by a Judgment, dated 31.01.2019, directing the

said Company to pay a sum of USD 3,218,358.13 with interest

at 5.33 % per annum from the date of the Writ to the date of

Judgment and costs of USD 2,300,00. The said liability was ::3::

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also equally fastened on the petitioner herein. Seeking

execution of the said Judgment, dated 26.08.2019, passed by

the Singapore High Court, respondent No.5 herein made an

application before the Debts Recovery Tribunal-2, Hyderabad in

O.A.No.195 of 2021 for issuance of a recovery certificate by duly

impleading the petitioner herein as respondent No.3, which is

pending as on date. In the said O.A., respondent No.5 herein

also sought for an interim order restraining the respondents

therein including the petitioner herein from alienating or

creating any third party interest over the properties held by

them. Whether any interim orders are passed in the said O.A.

or not is not brought to the notice of this Court. The petitioner

herein is stated to have entered appearance in the said O.A.

and is contesting the same.

5. While things stood thus, when the petitioner intended to

travel abroad on 17.03.2021, respondent Nos. 2 and 3

authorities stopped the petitioner at Rajiv Gandhi International

Airport, Hyderabad, from travelling abroad and cancelled his

stamping on the ground that there is a LOC issued against the

petitioner by respondent Nos.2 and 3 at the instance of ::4::

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respondent No.4. Aggrieved by the said issuance of LOC, the

present Writ Petition is filed.

6. Sri L.Ravi Chander, learned Senior Counsel and

Sri Tarun G Reddy, learned counsel for the petitioner,

contended that the proceedings for recovery of due amounts are

pending at various stages and the attempt made by respondent

Nos.4 and 5 and certain other Banks to declare the petitioner

herein as willful defaulter and to declare the accounts of the

subject loan as fraud were interdicted by this Court and

consequent to allowing of Writ Petition vide Nos.17500 of 2019

and 19102 of 2019, there is no declaration of willful defaulter or

as fraud account made so far against the petitioner as on date.

In spite of the same, the impugned LOC was issued by

respondent Nos.2 and 3 at the instance of respondent Nos.4

and 5 behind the back of the petitioner and no such

information was furnished to the petitioner at any point of time

and for the first time, the petitioner came to know about the

said LOC only when he went to the Airport for travelling abroad

on 17.03.2021. Thus, it is contended that the issuance of LOC

against the petitioner without putting the petitioner on notice

and without following the principles of natural justice is totally ::5::

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illegal and arbitrary. He also relied upon decisions in the cases

of Mannoj Kumar Jain and another v. Union of India and

others 1, Noor Paul v. Union of India and others 2 and Dasari

Sudheer v. State of Andhra Pradesh and others 3.

7. On the other hand, respondent Nos.2 and 6 filed counter

affidavit stating that on the request made by the Managing

Director and Chief Executive Officer of respondent Nos.4 and 5

through letter, dated 29.09.2020, the impugned LOC was

issued against the petitioner herein in terms of the Office

Memorandums governing the field.

8. Respondent Nos.4 and 5 filed counter affidavit contending

that the impugned LOC was issued at the instance of the

Managing Director of respondent Nos.4 and 5 and the same is

in accordance with the Office Memorandum

No.25016/31/2010-Imm, dated 27.10.2010, as amended

through the Office Memorandum, dated 05.12.2017. It is

further stated that M/s. B. S. Ltd. which is holding Company of

the said Company represented by the petitioner herein availed

loans to a tune of Rs.1000 Crores from consortium of Banks led

by the State Bank of India and proceedings initiated for

1 WPA 22748 of 2022 2 MANU/PH/0561/2022 3 MANU/AP/0240/2015 ::6::

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recovery of said amounts are pending before the Debts Recovery

Tribunal and the High Court of Telangana at various stages,

including proceedings under Section 7 of the Insolvency and

Bankruptcy Code, 2016 (for short 'the Code, 2016'). Further, it

is stated that cases are also pending before the Central Bureau

of Investigation and Enforcement Directorate for investigation.

9. It is the contention of respondent Nos.4 and 5 that in

terms of paragraph 8(j) as inserted by the Office Memorandum,

dated 05.12.2017, in the Office Memorandum, dated

27.10.2010, the Managing Director of the respondent-Bank is

entitled to make a request for issuance of a LOC against the

petitioner herein as the economic interests of India would be

detrimentally effected if the petitioner is allowed to leave the

Country. In the counter affidavit filed by respondent Nos.4 and

5 several other aspects were also stated including about the

amounts that are payable by the petitioner and the said

Company to the consortium of Banks led by the State Bank of

India and various orders passed by the Debts Recovery

Tribunal for recovery of such amounts against the petitioner

and the said Company etc. But, for the reasons best known,

respondent Nos.4 and 5 failed to place before this Court the ::7::

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request that was made to respondent Nos.2 and 3 for issuance

of LOC against the petitioner herein.

10. This Court, after having heard the learned counsel on

either side, by an order, dated 15.06.2023, directed respondent

Nos.4 and 5 to produce a copy of the request made by the

respondent-Bank resulting in issuance of the impugned LOC.

In response to the same, Mrs. M.Shalini, learned Standing

Counsel for respondent Nos.4 and 5, placed before this Court a

copy of said request in a sealed cover on 16.06.2023. After

having perused the said request, this Court is convinced that

there is no necessity to go into all other aspects that are raised

by the petitioner as well as the respondents in their respective

pleadings and arguments and the validity of the impugned LOC

can be decided independently. The request for issuing LOC

against the petitioner and four others was made through

Ref:HO/RCR/2020-21/1135, dated 29.09.2020, which reads as

under:-

"Ref:HO/RCR/2020-21/1135 Date:29.09.2020

The Deputy Director, Bureau of Immigration (BoI), East Block-VIII, R.K. Puram, New Delhi-66.

Sub:-Request for issuance of Look Out Circulars (LOCs)

Ministry of Home Affairs, GOI have issued OM No.25016/10/2017-imm (pt.) dated 12.10.2018 vide which it is informed that Sub Para (Xv) in Para 8(b) of "OM ::8::

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No.25016/31/2010-imm dated 27.10.2010" has been amended to add "Chairman/Managing Directors/Chief Executives of all Public Sector Banks" in the list of officers who can make a request for opening of Look Out Circulars (LOC).

In milieu of the instructions, we are hereby requesting for issuance of Look Out Circular (LOCs) against the following persons:-

         S.No.              Name of Person
           1.               Mr. Arun Amolakram Kapur
           2.               Mr. Indrajit Sabharwal
           3.               Mr. Rajesh Agarwal
           4.               Mr. Arunachalam Nandaa
                            Kumar
           5.               Mr. Manish Goel

The necessary details and information regarding the above is enclosed in the prescribed format with a request to do the needful in the matter.

Please inform us the issuance and effective LOC number of the above request.

With regards,

(P.Manoj) General Manager, Recovery and Law.

Encl:- Five original filled format in above mentioned names."

11. The above said letter was signed by the General Manager,

Recovery and Law of the respondent-Bank. This cannot be

treated as a valid request for issuance of LOC in terms of the

Office Memorandum, dated 05.12.2017, as it is only the

Chairman/Managing Directors/Chief Executive Officers of all

Public Sector Banks can make a request for opening of LOC. In

the Form that was enclosed with the said letter, dated

29.09.2020, the details of the petitioner were furnished and in

paragraph (iv), the reason for opening of LOC was stated as ::9::

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"guarantor of a NPA account'' and the same was signed by the

Managing Director and Chief Executive Officer of respondent

No.4. Except stating that the petitioner herein is a guarantor of

a NPA account, there is no other reason furnished by

respondent Nos.4 and 5 for making a request for issuance of

LOC against the petitioner. No doubt the said Form was signed

by the Managing Director and Chief Executive Officer of

respondent No.5-Bank who is competent officer in terms of

Paragraph 8(b) of Office Memorandum, dated 27.10.2010.

Therefore, this Court is not inclined to treat the request made

through letter, dated 29.09.2020, as incompetent, though the

same was signed by the General Manager only. There is no

dispute that the petitioner herein is a guarantor of a NPA

account. But, the same by itself does not entitle respondent

Nos.4 and 5 to make a request for issuance of LOC against the

petitioner. In the absence of recording of satisfactory conclusion

by the respondent-Bank that the petitioner leaving India would

be detrimental to the economic interests of India, the question

of making such a request to respondent Nos.2 and 3 does not

arise. Merely, being a guarantor of a NPA account is not one of

the guideline laid down under the Office Memorandum, dated ::10::

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27.10.2010, as amended from time to time. Paragraph 8(j) of

the said Office Memorandum reads as under:-

"In exceptional cases LOCs can be issued even in such cases, as would 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) of the above-referred OM, 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."

In order to bring any action of the petitioner within the ambit

and scope of paragraph 8(j), the respondents need to undertake

a serious exercise and on application of mind have to arrive at a

conscious conclusion that the act of petitioner leaving the

Country would adversely affect the economic interests of India.

In the instant case no such exercise was undertaken and the

concept of economic interests of India itself is not spelt out in

the request made for issuance of the LOC.

12. No doubt, in the counter affidavit filed by respondent

Nos.4 and 5 an attempt is made to say that the petitioner

leaving the Country would be detrimental to the economic

interests of India as huge amounts are due and payable by the

petitioner to the respondent-Bank as well as to the consortium

of Banks led by the State Bank of India. Unless and until the ::11::

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reason for making a request for issuance of LOC against the

petitioner falls within the guidelines, as provided under

paragraph 8 of the Office Memorandum, dated 27.10.2010, as

amended from time to time, and in the absence of a conclusive

satisfaction being recorded by the officer or authority

authorised under paragraph 8(b) of the said Office

Memorandum by recording sufficient reasons, any action on the

part of respondent Nos.2 and 3 in issuing LOC without

application of mind on mere request made by respondent Nos.4

and 5 is totally arbitrary and illegal.

13. The contents of the request, dated 29.09.2020, made by

respondent Nos.4 and 5, as noted above, were also confirmed

by respondent Nos.2 and 6 in the counter affidavit and it is only

basing upon the said request, the impugned LOC was issued by

respondent Nos.2 and 3. The relevant paragraph from the

counter of respondent Nos.2 and 6 reads as under:-

"In reply to the para 2 of the petition, it is respectfully submitted that the LOC has been raised in the name of Rajesh Agarwal, S/o Satyanarayan Agarawal on the requisition of Managing Director and chief Executive Officer, UCO Bank, Head Office, Kolkata vide letter No.HO/RCR/2020-21/22354 dated 29.09.2020. The requisition seeking for opening of LOC against the petitioner was received in a prescribed proforma on grounds "Guarantor of an NPA account" with the action "Prevent subject from leaving India and inform originator."

14. The impugned LOC and the basis for issuing such LOC

have to stand or fall on the reasons furnished in the said ::12::

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proceedings. In the light of the law laid down by the Hon'ble

Apex Court in the case of Mohinder Singh Gill v. Chief

Election Commissioner 4, the impugned LOC cannot be

sustained on the grounds and reasoning mentioned in the

counter affidavit filed by the respondents. Even assuming that

the reasons given by respondent Nos.4 and 5 in the counter

affidavit are true, it is highly doubtful whether the same would

fit into the ground of being detrimental to the economic

interests of India. Thus, there is no application of mind by the

Managing Director of the respondent-Bank before making a

request for issuance of LOC, and also on the part of respondent

Nos.2 and 3, who issued LOC.

15. It is not the case of the respondent-Bank that the

issuance of impugned LOC was requested/issued because of

pendency of Central Bureau of Investigation and Enforcement

Directorate cases nor there was any request from consortium of

Banks, led by the State Bank of India. Before imposing

restriction on a freedom of a citizen more so on the right to

travel proper application of mind is required and mere

availability of power cannot be a ground to exercise such power

especially when such an action would affect the fundamental

4 1978 (1) SCC 405 ::13::

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rights of a citizen. It shall not be construed as if this Court is

acknowledging the actions of the petitioner in any manner.

16. The other grounds raised by the petitioner about

non-compliance of the principles of natural justice before

issuing the LOC etc., and the reliance placed by learned

counsel on either side on various decisions need not be

considered in the light of the conclusion arrived at by this

Court on the validity of the impugned LOC issued against the

petitioner.

17. It is also necessary to notice that a coordinate Bench of

this Court by order, dated 16.11.2022 and 25.01.2023 in this

Writ Petition permitted the petitioner herein to travel abroad

and petitioner had travelled accordingly and returned to

Country, and it is also not in dispute that the wife of the

petitioner is suffering from cancer, requiring the petitioner to

travel abroad.

18. Before parting with the case, this Court is constrained to

make certain observations in the manner in which the

respondent-Bank is prosecuting the matters for recovering the

amounts due to it. Consequent to the Judgment of the High

Court of the Singapore, dated 31.01.2019, and after a lapse of ::14::

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two years the respondent-Bank filed O.A.No.195 of 2021,

seeking execution of the said judgment. But, for the reasons

best known, the said O.A. is still stated to be pending and no

interim order also appears to have been obtained. But, the

respondent-Bank by simply making a request for issuance of

LOC against the petitioner herein appears to have kept quiet for

more than four years since the date of Judgment of the High

Court of the Singapore. This Court is not able to understand

what it is that achieved by the respondent-Bank by merely

getting the impugned LOC issued against the petitioner without

taking any steps for execution of the orders passed in its

favour.

19. In the light of the above, this Court is left with no other

option except to come to the conclusion that the ground on

which the impugned LOC was issued does not fit into any of the

guidelines mentioned in the Office Memorandum, dated

27.10.2010, as amended by Office Memorandum, dated

05.12.2017, as such, the impugned LOC issued by respondent

Nos.2 and 3 is bound to be declared as the one issued without

application of mind, illegal, arbitrary and the same is liable to

be set aside and accordingly the same is set aside.

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20. However, it is further directed that, in case if the

petitioner intends to travel abroad, he shall keep respondent

No.5-Bank informed about his travel details and shall strictly

adhere to such schedule, and report to respondent No.5-bank

on arrival to Country, every time.

21. Accordingly, the Writ Petition is allowed, to the extent

indicated above.

As a sequel, miscellaneous petitions, pending if any in

this Writ Petition, shall stand closed. No costs.

___________________________________ MUMMINENI SUDHEER KUMAR, J Date: 06.10.2023 NDS ::16::

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THE HON'BLE SRI JUSTICE MUMMINENI SUDHEER KUMAR

WRIT PETITION No.7174 OF 2021

Date: 06.10.2023 NDS