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TMI Blog2023 (9) TMI 1467X X X X Extracts X X X X X X X X Extracts X X X X ..... .25 crores from Respondent No. 2/Bank of Baroda. The said facilities were secured by way of mortgage of an immovable property as well as Personal Guarantees of the Promoters/Directors. It is stated that the Petitioners were made to sign a document styled as 'Personal Guarantee Bond' in favour of the Respondent No 2/Bank of Baroda. 3. It is pertinent to mention here that the Petitioner in W.P.(C) 5674/2023 was appointed as a Director of the company in the year 2006. He resigned as the Director of the company in the year 2019. The Petitioner in W.P.(C) 5675/2023 was appointed as a Director of the company in the year 2010 and she resigned as Director of the company in the year 2014. 4. It is stated that the credit facilities were enhanced to Rs. 28.50 crores by the Respondent No 2/Bank of Baroda. It is stated that between 2015-2019, the business operations of the company were severely hit due to the introduction of GST and other factors due to which the company was trapped in a vicious cycle of tax complexities. On 31.07.2019, the loan account of the company was declared as non-performing asset (NPA) by the Respondent No 2/Bank of Baroda. It is stated that, thereafter, proce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present Petitioner being guarantor: 1. The account of M/s AAA Paper Limited (Formally known as M/s AAA Marketing Limited) turned NPA on 29.07.2019 having balance outstanding Rs. 28.01 Crores with the bank; 2. Unit of Borrower firm is closed. 3. Despite having capacity to pay Borrower has not paid the dues. 4. From Audited Balance Sheet of the borrower, it is observed that the borrower has made repayment of the unsecured loans availed from its related parties to the tune of Rs. 379.52 Lakhs in the year 2018 to 2020. Borrower has diverted bank funds. 5. On analysis of Audited Balance Sheet (ABS) as on 31.03.2020, it was observed that there are outstanding trade receivables of Rs. 11,283.22 Lakhs as trade receivable by the borrower. 82.75% debtors out of total debtors outstanding or four related parties, i.e., M/s PKM Overseas Private Limited, M/s VPM Overseas Private Limited, M/s Nilkanth Enterprises and M/s Bangalore Paper Stories etc. 6. It is observed that the borrower has given advance to M/s PKA Projects Pvt Ltd of Rs. 1,034.23 lakhs which is recoverable as on 31.03.2020. As per Ministry of Corporate Affairs (MCA), Registrar of Company records, it is observed that M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons against the Petitioners that they have siphoned off any amount from the company or that they were involved in siphoning off of the money. No FIR has been filed against the Petitioners that they were involved in any kind of mismanagement/siphoning off of assets of the company. He further states that a One-Time Settlement (OTS) has been entered into between the company and the Respondent No. 2/Bank, and the borrower company has time to pay the entire OTS amount till 30.09.2023. 13. Learned Counsel for the Petitioner further states that it is well settled that Look Out Circular cannot be opened only for recovery of money. He states that opening of Look Out Circular is a complete abuse of the process of law which has tarnished the reputation of the Petitioners and also impeded the movement of the Petitioners. He states that right to travel abroad is a fundamental right under Article 21 of the Constitution of India as held by the Apex Court in Maneka Gandhi v. Union of India, (1978) 1 SCC 248, and the Look Out Circular is a complete affront to the constitutional guarantee of Article 21 of the Constitution of India. 14. Learned Counsel for the Petitioner has taken this Court to a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of the above referred OM, 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. Instead of: "In exceptional cases, LOCs can be issued without complete parameters and/or case details CI suspects, terrorists, anit-national elements, etc in larger national interest." 19. Another Office Memorandum dated 04.10.2018 was issued by the Ministry of Finance, Government of India empowering the heads of Public Sector Banks to issue requests for opening of Look Out Circulars. By virtue of this Office Memorandum, Chairman (State Bank of India), Managing Directors and Chief Executives Officers (MD & CEOs) of all Public Sector Banks could request for opening of LOCs against the persons who are fraudsters and persons who wish to take l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dia 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 parson 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. 3. It is requested that the instructions contained in MHA's OM dated 27.10.2010 (as amended by MHA's OMs dated 05.12.2017 and 12.10.2018), vide which the heads of PSBs have now been empowered to issue requests for opening of Look Out Circulars, may be strictly complied with henceforth, so that all persons who are covered under the said amended OM of MHA, including fraudsters and persons who wish to take loans and wilfully default or launder money and then escape to foreign jurisdictions to avoid paying back, are restricted from escaping from the country. MHA's Proforma for issue of LOCs is also enclosed." (emphasis supplied) 21. By virtue of the aforesaid Office Memorandums and their amendments from time to time, banks can request for opening of Look Out Circulars in exceptional circumstances when it is felt th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the respondent's own case are not conclusive. The respondents, are therefore, awaiting a response to their FT & TR references to the authorities at Dubai, United Arab Emirates to proceed against the petitioner under the Black Money Act, 2015, Income Tax Act, 1969, and the Prevention of Money-Laundering Act, 2002, which were, in fact, the reasons provided by Respondent 3 itself to Respondent 1, while forwarding its request for issuance of the LOC. 24. The High Court of Punjab and Haryana in the case of Kartik Tayal vs. Central Bureau of Investigation, 2020 SCC OnLine P&H 1618 has observed as under: 13. This answer has also been reproduced in office memorandum dated 27.10.2010 issued by the Ministry of Home Affairs. Thus, there can be no doubt that according to the prevailing instructions, an LOC can be opened against an accused person who is (a) deliberately evading arrest, (b) not appearing in the trial Court despite non-bailable warrants and other coercive measures. Coupled with either of these conditions should be a likelihood of the accused leaving the country to evade trial/arrest. Neither of these conditions exist in the instant case. The petitioner is not evading a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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