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2022 (11) TMI 1158 - HC - Companies LawSeeking suspension of Look Out Circular (LOC), if any, issued against the petitioner - Permission to travel Abu Dhabi, Bahrain, Riyadh and London for his consultancy work related to his business - allegation of siphoning of huge amount - investigation under the Black Money (Undisclosed Foreign income and assets) and Imposition of Tax Act, 2015 at initial stage - HELD THAT - The issuance of an LOC is in nature of an administrative action and the scope of judicial review is limited. While reviewing administrative action it was held Courts do not substitute the wisdom of the authorities as if it is sitting in appeal. The Hon ble Supreme Court in the case of RAM JETHMALANI VERSUS UNION OF INDIA 2011 (7) TMI 844 - SUPREME COURT had taken judicial notice of the fact thousands of crores of Indian rupees are stashed away abroad in foreign bank accounts posing a serious threat to the financial health and economy of the country. Considering the fact the investigation is at initial/crucial stage and the petitioner allegedly is evading queries and has promised to give replies only on 09.12.2022 and millions have been transferred by him to foreign accounts per investigation till date, hence the discretion needs to be exercised cautiously moreso when the petitioner s son has not returned to India for the last two years and is not co-operating. Thus, considering the allegations of siphoning off huge amounts and the investigation under the Black Money (Undisclosed Foreign income and assets) and Imposition of Tax Act, 2015 being at initial stage I am not inclined to suspend the LOC at this stage. Petition dismissed.
Issues:
1. Suspension of Look Out Circular (LOC) for travel abroad for consultancy work related to business. 2. Allegations of bank fraud, siphoning off funds, and creation of foreign assets. 3. Legal provisions governing the issuance of LOC and judicial review of administrative actions. 4. Investigation under the Black Money Act, 2015 and implications for undisclosed foreign income and assets. Issue 1: Suspension of Look Out Circular (LOC) The petitioner sought suspension of any LOC issued against him to travel abroad for consultancy work. The petitioner, a former promoter of a company under insolvency, was under investigation for alleged fraud and non-cooperation. The petitioner claimed the need to travel for work and highlighted past permissions granted by the Debt Recovery Tribunal for foreign visits. Issue 2: Allegations of Bank Fraud and Siphoning of Funds The Serious Fraud Investigation Office (SFIO) alleged that the petitioner was involved in cheating banks of significant amounts and had control over multiple companies. The petitioner's son was also implicated in financial transactions abroad. The petitioner was accused of diverting funds to offshore accounts, creating foreign assets, and evading accountability. Issue 3: Legal Provisions and Judicial Review The issuance of an LOC was justified based on the petitioner's alleged flight risk and potential threats to national interests. The court referenced legal provisions allowing LOC issuance in cases detrimental to national security or economic interests. Judicial review of administrative actions was limited, with courts refraining from substituting authorities' decisions. Issue 4: Investigation under the Black Money Act, 2015 The Income Tax Department investigated the petitioner for undisclosed foreign income and assets under the Black Money Act, 2015. Foreign entities owned by the petitioner were not declared in Indian tax filings, leading to potential criminal prosecution. The court considered the seriousness of the allegations, the stage of investigation, and the petitioner's lack of cooperation in deciding not to suspend the LOC. The court dismissed the petition, emphasizing the ongoing investigations, allegations of fund siphoning, and the petitioner's non-cooperation. The decision highlighted the need to exercise caution in such cases, especially with significant amounts transferred to foreign accounts and the petitioner's son's absence and lack of cooperation. The court's decision reflected the gravity of the allegations and the potential impact on national interests and financial integrity.
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