2019 (10) TMI 594 - Tri - Insolvency and Bankruptcy

Direction to the Ex-Director/Promoter not to leave the country without permission of this Tribunal and to impound their passports - HELD THAT - The non-applicant-respondent Nos. 1 to 3 would be required by the law enforcing agencies and there are substantial allegations which cannot be brushed aside merely on the ground that the non-applicants have co-operated with the Resolution Professional or other investigating agency so far or on the ground that the non-applicants have roots in society which would prevent them to flee this country. Therefore, the direction issued on 23.04.2019 that non-applicants-respondent Mr. Athar Zia, Mrs. Sheeza Zia Mr. Mohammad Zulfiqar Ullah Siddiqui are not to leave the country without prior permission of this Tribunal is made absolute - Accordingly, it is directed the aforesaid persons are not to leave the country without prior permission of this Tribunal. Impounding of passport - HELD THAT - The Resolution Professional - applicant is granted liberty to move an appropriate application, if so advised, to the passport authorities under Section 10 or Section 10A of the Passport Act, 1967 for impounding of the passport of the non-applicant-respondent Nos. 1 to 3. The rejection of the prayer in that regard shall not be construed any bar on the right of the Resolution Professional-applicant to move the passport authorities. Application disposed off.

Summary

Issues:
Application seeking direction to prevent Ex-Director/Promoter from leaving the country and to impound passports.

Analysis:
The Resolution Professional filed an application seeking direction to prevent the Ex-Director/Promoter from leaving the country without permission and to impound their passports. The Corporate Insolvency Resolution Process was initiated for the Corporate Debtor, and allegations of under-value, wrongful, and fraudulent transactions were made against the Ex-Director/Promoter. The Committee of Creditors expressed apprehension that the Ex-Director/Promoter might flee the country in light of pending forensic audits and significant financial involvement. The Resolution Professional relied on this resolution to file the application.

The Ex-Director/Promoter, in their reply, denied the allegations and asserted their cooperation with the Resolution Professional. They argued that impounding passports was unwarranted, citing family ties and societal roots as reasons they would not flee the country. The Resolution Professional, in the rejoinder, reiterated the allegations and stated that the Ex-Director/Promoter's explanations were rejected by the forensic auditor.

During the hearing, the Resolution Professional argued that the Ex-Director/Promoter's involvement in fraudulent transactions necessitated preventing them from leaving the country to face legal processes. Conversely, the Ex-Director/Promoter's counsel emphasized the right to travel as a fundamental human right and challenged the Tribunal's jurisdiction to impound passports.

The Tribunal held that the Ex-Director/Promoter should not leave the country without prior permission and made the earlier direction absolute. However, it acknowledged that the jurisdiction to impound passports lies with passport authorities under the Passport Act, 1967. The Resolution Professional was granted liberty to approach the passport authorities for impounding passports, as per the law.

In conclusion, the Tribunal directed the Ex-Director/Promoter not to leave the country without permission and granted the Resolution Professional the right to seek impounding of passports through appropriate channels under the Passport Act, 1967. The application was disposed of accordingly.