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2022 (9) TMI 1624 - HC - IBCSeeking quashing of the LOCs issued against petitioner - borrower of huge loan or guarantor of laon - Merely on the ground that the petitioner is a guarantor for the loans taken by the two entities, and there is a default by the said Companies, can the petitioner be prevented from travelling abroad and her fundamental right under Article 21 of the Constitution of India be curtailed? - HELD THAT - The right to travel abroad has been recognized by the Supreme Court of India in the case of MANEKA GANDHI VERSUS UNION OF INDIA 1978 (1) TMI 161 - SUPREME COURT and Satish Chandra Verma Vs. Union of India 2019 (4) TMI 1765 - SUPREME COURT , as falling within the scope of personal liberty enshrined under Article 21 of the Constitution of India. Thus, to deny a person such a right requires a very high threshold. LOCs were permitted to be opened essentially against persons involved in cognizable offences and who were evading arrest and not appearing in the trial Court despite NBWs or other coercive measures and there was a likelihood that they would leave the country to evade trial/arrest. It was intended as a coercive measure to make a person surrender to the investigating agency or Court of law - But where the subject of the LOC is not involved in any cognizable offence, he or she cannot be detained/arrested or prevented from leaving the country. The originating agency can only request that they be informed about the arrival/departure of the subject in such cases. Merely because the word public is used in the exception clause in the OM, it does not elevate a mere default to an exceptional plane. It cannot be said that the departure of the petitioner from the country would adversely impact the economy of the country as a whole and destabilize the entire economy of the country - Since the right to travel abroad flows from Article 21 of the Constitution of India, a very high threshold has to be is mandated to deny such a right to an Indian citizen. Such a threshold is not met in the instant case. In the instant case, when the petitioner is not alleged to have committed any cognizable offence, she could not have been prevented from leaving the country by respondents by issuing LOCs and such action is clearly violative of the Office Memorandums dt.27.10.2010 and dt.22.02.2021. The petitioner is permitted to travel abroad for two months subject to her depositing a sum of 50 Lakhs with the Registrar (General) of this Court in the form of an FDR. This condition is being imposed as the loan accounts of the 2 Companies for which she is a guarantor had been declared a fraud as mentioned above. As and when she returns to India, she should produce her Passport before the Registrar (General) who shall then return the said FDR to her - Petition allowed.
Issues Involved:
1. Validity of the Look Out Circulars (LOCs) issued against the petitioner. 2. Petitioner's right to travel abroad under Article 21 of the Constitution of India. 3. Compliance with principles of natural justice in issuing LOCs. 4. Banks' entitlement to seek LOCs against loan guarantors under Office Memorandums. Issue-wise Detailed Analysis: 1. Validity of the Look Out Circulars (LOCs) issued against the petitioner: The petitioner sought a writ of Certiorari to quash the LOCs issued by the Bureau of Immigration at the request of Indian Bank and Bank of Baroda. The petitioner, a guarantor for loans taken by M/s. SEL Manufacturing Company Ltd. and M/s. SEL Textiles Ltd., contended that she was not provided a copy of the LOCs nor informed on whose behest they were issued. The Court noted that the debt owed by M/s. SEL Manufacturing Company Ltd. had been resolved through the Corporate Insolvency Resolution Process (CIRP), making it doubtful if the petitioner could be proceeded against by the banks. The Court held that the LOCs were issued mechanically without proper application of mind by the Bureau of Immigration, and thus, could not be sustained. 2. Petitioner's right to travel abroad under Article 21 of the Constitution of India: The petitioner argued that her right to travel abroad, a facet of Article 21, was violated. The Court referenced the Supreme Court's recognition of this right in Maneka Gandhi Vs. Union of India and Satish Chandra Verma Vs. Union of India. The Court emphasized that denying this right requires a very high threshold, which was not met in this case. The Court concluded that the issuance of LOCs against the petitioner, who was not involved in any cognizable offence, was a violation of her fundamental right to travel abroad. 3. Compliance with principles of natural justice in issuing LOCs: The petitioner contended that she was denied a hearing before the issuance of the LOCs, violating principles of natural justice. The Court noted that the LOCs were issued without providing the petitioner an opportunity for a post-decisional hearing to explain why the LOCs should be withdrawn or canceled. The Court found this to be arbitrary and illegal, following similar views expressed in previous decisions (Poonam Paul and Noor Paul). The Court held that the non-supply of the LOCs to the petitioner and the denial of a hearing were not in accordance with fair, just, and reasonable procedures. 4. Banks' entitlement to seek LOCs against loan guarantors under Office Memorandums: The respondents argued that the banks were entitled to seek LOCs against the petitioner as per the Office Memorandum dated 22.11.2018, which allows LOCs against fraudsters/willful defaulters. However, the Court noted that the amount of default by a person which would be detrimental to the economic interests of India was not specified in the Office Memorandums. The Court held that merely being a guarantor for loans does not meet the high threshold required to curtail the fundamental right to travel abroad. The Court concluded that the banks' requests for LOCs were not justified under the Office Memorandums, and the LOCs issued against the petitioner were set aside. Conclusion: The Court allowed the writ petition, permitting the petitioner to travel abroad for two months subject to depositing a sum of 50 Lakhs with the Registrar (General) of the Court. The LOCs issued against the petitioner were set aside, and officials of respondents were restrained from preventing the petitioner from traveling abroad. The Court emphasized the importance of adhering to principles of natural justice and the high threshold required to curtail fundamental rights under Article 21.
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