2024 (7) TMI 72 - HC - Companies Law

Prayer for suspension of Look Out Circular (LOC) and permission to travel abroad for the period from 14.06.2024 to 04.07.2024 - HELD THAT - It is borne out from the record that SFIO is investigating into the affairs of the FHL and REL and other associated/sister concerns in exercise of its plenary powers under Section 212(4) of the Companies Act, 2013 in larger public interest as the matter involves allegations of fraud, misappropriation and siphoning off of the funds through use of multiple conduit companies, ever-greening of loans from the financial institutions and alleged losses caused to the companies and the public. The deposition by the petitioner in his affidavit dated 18.06.2024 that he has no assets or properties in India is manifestly not bringing forth the correct facts. The deposition is flawed with incomplete disclosure, and thus, not inspiring confidence. The aforesaid narrative coupled with the documents placed on the record invite a strong inference that the petitioner has a huge financial base outside India and he has not come to the Court with clean hands and that by itself disentitles him to grant of any discretionary relief. This Court finds that having regard to the fact that prima facie it appears that the petitioner has sizeable assets and properties, directly or indirectly, outside India in foreign jurisdictions as discussed hereinabove and there is a strong inference that if liberty to go abroad is granted to him, he may not come back to India to face the investigation and trial, as and when it commences. This Court finds that the reliefs claimed by the petitioner seeking permission to go abroad to attend the graduation ceremony of his two sons on the scheduled dates cannot be allowed. There are sufficient grounds to raise an inference that in case such liberty is granted to the petitioner, he may abuse the same and may not come back to India so as to scuttle the entire investigation and the ensuing process. Thus, this Court finds no illegality, perversity or incorrect approach adopted by the learned Special Judge in passing the impugned order dated 05.06.2024. Petition allowed.

Issues Involved:
1. Legality of the Look Out Circular (LOC) issued against the petitioner.
2. Petitioner's request for permission to travel abroad.
3. Petitioner's cooperation with the Serious Fraud Investigation Office (SFIO) investigation.
4. Petitioner's financial interests and assets abroad.
5. Balancing national interest versus individual rights.

Detailed Analysis:

1. Legality of the Look Out Circular (LOC) issued against the petitioner:
The petitioner challenged the legality of the LOC issued by the SFIO, arguing that it was unwarranted since he had not been arrested and had cooperated fully with the investigation. The SFIO justified the LOC, stating that the petitioner was a flight risk due to his significant assets and financial interests abroad. The court upheld the LOC, emphasizing the paramount economic and national interest involved in the case.

2. Petitioner's request for permission to travel abroad:
The petitioner sought permission to travel abroad to attend the graduation ceremonies of his sons in the UK. The court denied this request, highlighting that the petitioner had significant financial interests abroad and there was a strong inference that he might not return to India if allowed to travel. The court noted that the petitioner’s previous permissions to travel abroad were granted under different circumstances and did not apply to the current case.

3. Petitioner's cooperation with the Serious Fraud Investigation Office (SFIO) investigation:
The petitioner argued that he had extended full cooperation with the SFIO investigation and had not been arrested. The SFIO countered that the petitioner’s cooperation was not sufficient to negate the risk of him fleeing the country. The court found that the petitioner’s cooperation did not outweigh the risk of him absconding, given the ongoing investigation into significant financial improprieties.

4. Petitioner's financial interests and assets abroad:
The petitioner claimed he had no overseas business interests or properties. However, the SFIO presented evidence from the petitioner’s Income Tax Returns (ITRs) showing that he had shareholdings in several foreign companies. The court found the petitioner’s affidavit claiming no assets abroad to be incomplete and misleading, further supporting the decision to deny his travel request.

5. Balancing national interest versus individual rights:
The court emphasized the need to balance the petitioner’s individual rights against the national interest. It noted that the investigation involved significant allegations of fraud and misappropriation of funds, amounting to over Rs. 1800 crores, which had been siphoned off out of India. The court concluded that the national interest and the need to safeguard the economic interests of stakeholders took precedence over the petitioner’s personal reasons for traveling abroad.

Conclusion:
The court dismissed the petitioner’s writ petition, finding no illegality or incorrect approach in the impugned order dated 05.06.2024 by the learned Special Judge. The court upheld the LOC issued by the SFIO and denied the petitioner’s request to travel abroad, citing the significant financial interests and assets the petitioner held abroad and the ongoing investigation into substantial financial improprieties.

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