Telangana High Court
Dr. B. Narayana Prasad vs Union Of India And 6 Others on 22 July, 2024
THE HONOURABLE SRI JUSTICE C.V. BHASKAR REDDY
WRIT PETITION No.23508 of 2022
ORDER:
This Writ Petition is filed by the petitioner, seeking following
relief:
"..to issue a Writ, Order or Direction to
a) Declare the action of Respondent No. 4 to 6 in issuing a Look Out
Circular against the Petitioner i.e., Dr. B. Narayana Prasad, holding a
valid passport bearing No. V4065875, from travelling abroad on
02.05.2022 as illegal, violative of his fundamental rights and an abuse
of authority and process of law and consequently set aside the same;
b) Direct the Respondent Nos. 1 to 3 to expunge any remarks/
endorsements/entries that have been entered in the records/passport
(No.V4065875) of the Petitioner i.e, Dr.B.Narayana Prasad in furtherance
of the Look Out Circular.."
2. The case of the petitioner is that he is a Doctor by profession
and working as Head of Department of Orthopedics in Care Hospital,
Hyderabad and he is a passport holder bearing No.V4065875, which
is valid till 08.04.2031. It is further case of the petitioner that he is
an independent, non-executive, part-time director in M/s.Ind-Barath
Thermal Power Ltd ("IBTPL") and M/s. Ind-Barath Gencom Ltd.,
("IBGL") and presently, said companies are undergoing corporate
insolvency resolution under the Insolvency and Bankruptcy Code,
2016. It is further case of the petitioner that said companies availed
certain loans from consortium of banks during the years 2019 and
2021 and basing on the complaint lodged by the respondent No.5, a
case in Crime No.RCBD1/2020/E/0006 dated 06.10.2020 was
registered against the said companies and its directors for the alleged
offences under Sections 120B and 420 IPC, Sections 13(2) r/w
13(1)(d) of Prevention of Corruption Act, and further, basing on the
complaint lodged by the respondent No.6, a case in Crime
No.RCBD1/2020/E/0002 dated 24.03.2021 was registered against
the said companies and its directors for the alleged offences under
Sections 120B r/w 420, 467, 468 and 471 of IPC and Sections 13(2)
r/w 13(1)(d) of P.C Act. It is further case of the petitioner that the
respondent No.4 has not issued any notice or summons insisting
him to appear for investigation. However, basing on the cases
registered against the said companies, on the request of respondent
Nos.5 and 6, the respondent No.4 issued a Look Out Circular against
him preventing him from travelling abroad.
3. The grievance of the petitioner is that in the absence of any
specific allegations levelled against him either in the complaints
made on the file of respondent No.4 or in the FIRs that were
consequently registered, there is no necessity to maintain LOC
against him restricting his movement and the said action on the part
of the respondents amounts to violation of Articles 19 and 21 of
Constitution of India and also various judicial pronouncements.
4. The learned counsel for the petitioner has filed a memo dated
15.07.2024 and submitted that pending adjudication of the writ
petition, the respondent No.6-SBI vide letter dated 03.03.2023
SBI/SAMB/041/05/CLO-1/1171 dated 03.03.2023 deleted the
name of the petitioner from the willful defaulters list and in view of
the same, there is no necessity to maintain the LOC against the
petitioner.
5. The respondent No.5-Bank has filed counter affidavit, inter alia
stating that IBTL company has borrowed an amount of Rs.300
Crores from the consortium banks as working capital and the said
company failed to remit the amount in terms of the agreement, which
necessitated the consortium of banks to classify the account of the
company as Non-Performing Asset (NPA). It is also stated that as per
forensic report dated 06.09.2019, the directors of the companies in
connivance with each other diverted and siphoned the funds of the
borrower company rendering themselves liable for prosecution and
accordingly, acting on the complaint filed by the respondent No.5, a
case in FIR No.RCBID1/2020/E/2006/ dated 06.10.2020 has been
registered. It is further stated that the respondent No.5-bank has not
taken any steps for issuing LOC against the petitioner. It is further
stated the petitioner being the independent director cannot escape
his liablilty for the frauds committed by the Borrower Company as
the same is within the knowledge and consent of the Board and
ultimately, prayed for dismissal of the writ petition.
6. The respondent No.4-CBI has filed counter affidavit inter alia
stating that basing on the complaint submitted by the respondent
No.5, a case in Crime No.RCBD1/2020/E/0006 dated 06.10.2020
was registered against the said companies and its directors including
the petitioner for the alleged offences under Sections 120B and 420
IPC, Sections 13(2) r/w 13(1)(d) of P.C. Act, on the allegation of
causing wrongful loss to the consortium banks to the tune of
Rs.826.17 Crores. Further, basing on the complaint lodged by the
respondent No.6, a case in Crime No.RCBD1/2020/E/0002 dated
24.03.2021 was registered against the companies and its directors,
including the petitioner for the alleged offences under Sections 120B
r/w 420, 467, 468 and 471 of IPC and Sections 13(2) r/w 13(1)(d) of
P.C Act.
7. The respondent No.4 also filed additional counter affidavit
dated 16.06.2022, wherein it is stated that the petitioner was
appointed as Additional/Independent Director of the accused
company on 26.08.2015 and resigned on 10.11.2017. It is also
stated that he was also member of Audit Company of the accused
company during his tenure as independent director. It is further
stated in the counter affidavit that as per Section 149(8) of the
Companies Act, 2013, the company and Independent Directors i.e,
petitioner herein shall abide by the provisions specified in Schedule
IV which provides for Guidelines, Roles and Functions, Duties of
Independent Director among others. It is further stated that since
the specific roles of the accused persons in the said crime including
the involvement of the petitioner, is pending for investigation and as
the petitioner in the position of Board of Director of the company and
also member of the Audit Committee, the presence of the petitioner is
crucial for investigation in the light of the allegations made in the
complaint of siphoning and diversion of funds to grab the inter-
corporate deposits and finally prayed for dismissal of the writ
petition.
8. Considered the submissions of learned counsel for the
respective parties and perused the record.
9. 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
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
2024 SCC Online Bom 1195
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
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
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.
10. 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
Order dated 28.05.2024 passed in W.P (C) No.11707/2012 by the Hon'ble High Court of Delhi at
New Delhi
(supra), and quashed the Look Out Circular issued against the
petitioner therein.
11. In the instant case, Look Out Circular was issued against the
petitioner basing on the request made by the Originating Agency i.e,
respondent Nos.5 and 6-banks and also on the complaints 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 LOC issued against the petitioner at the
request of Originating Agencies is liable to be set aside. Sofaras the
registration of the FIRs by the respondent No.4-CBI is concerned, it
is stated that till date, the respondent No.4 has not issued any
summons or notice seeking presence of the petitioner for the purpose
of investigation. Admittedly, the petitioner is the doctor and he is
working in Care Hospital, a reputed Medical Institution and there is
no difficulty for securing his presence, if required, for investigation.
12. Accordingly, this Writ Petition is allowed and the Look Out
Circular (LOC) issued against the petitioner, is set aside. The
respondent No.4-CBI is permitted to issue notice to the petitioner for
the purpose of investigation in Crime Nos. No.RCBD1/2020/E/0006
dated 06.10.2020 and Crime No.RCBD1/2020/E/0002 dated
24.03.2021 as and when his presence is required. On receipt of such
notice, the petitioner is directed to cooperate with the investigating
agency, failing which, the investigating agency is at liberty to take
appropriate steps, 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: 22.07.2024
scs
