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TMI Blog2025 (1) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in a prior proceeding between the same parties. However, the doctrine of res judicata does not rigidly apply to writ proceedings, especially in cases where ongoing violations of fundamental rights are alleged. Even the principle of constructive res judicata which is often applied to ensure judicial finality, cannot prevent the enforcement of fundamental rights when the cause of action has undergone change. When subsequent developments alter the factual or legal matrix, courts retain the flexibility to revisit and adjudicate such matters to ensure justice. In the present case, while Petitioner s earlier request for suspension of the LOC in W.P.(Crl.) 2332/2022 was declined, the doctrine of res judicata cannot mechanically bar the current petition. This is because the dismissal of the earlier writ petition was premised in the nascent stage of the SFIO investigation and the preliminary nature of the proceedings under the Black Money Act at that time. However, the circumstances prevailing at the time of adjudicating W.P.(Crl.) 2332/2022 have significantly changed - This assessment is currently under challenge by the Petitioner before the Commissioner of Income Tax (Appeals)-31, New ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonably connected to the legitimate - while the SFIO s concerns regarding the gravity of the allegations cannot be dismissed outright, investigations must not become an instrument for imposing indefinite constraints on an individual s fundamental rights, particularly when no substantive evidence has been presented to establish non-cooperation or obstruction by the Petitioner. Discharge from Personal Guarantees. Furthermore, an application filed by the Union Bank of India under Section 95 of the Insolvency and Bankruptcy Code, 2016, seeking to invoke the Petitioner s personal guarantees, was dismissed by the NCLT in its order dated 10th January, 2024. The NCLT s relied on the DRT s findings, which had already discharged the Petitioner from his personal guarantees. Conclusion - The right to travel abroad, being an essential component of the right to personal liberty under Article 21 of the Constitution, cannot be curtailed arbitrarily or indefinitely. Restrictions such as an LOC must pass the test of proportionality and necessity, ensuring that they are imposed only when supported by credible material. In the present case, while the State s interest in investigating allegations of fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he request, citing the gravity of the allegations and the potential risk of evasion. PETITIONER S CASE 3. Mr. Dayan Krishnan, Senior Counsel for the Petitioner, outlined the following facts that form the basis of the present petition: 3.1. The Petitioner s company, PLL, operated in the infrastructure and energy sectors between 1992 and 2014. To support its commercial operations, PLL secured various credit facilities under a multi-banking arrangement. However, due to financial difficulties and a liquidity crunch, PLL s financial condition deteriorated. The situation worsened by delays in sanctioning credit limits by a consortium of lenders, which impeded the implementation of a Corrective Action Plan for restructuring under the guidelines of the Reserve Bank of India [RBI]. Admission of PLL into Corporate Insolvency Resolution Process 3.2. On 8th March, 2019, ICICI Bank Limited filing a petition under Section 7 of the Insolvency Bankruptcy Code, 2016,5 before the Principal Bench, National Company Law Tribunal [NCLT] . PLL was admitted into Corporate Insolvency Resolution Process [CIRP] on the same day. 3.3. During the CIRP, on 19th August, 2020, the Resolution Professional filed an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India through Ministry of Corporate Affairs and Another inter alia seeking quashing of letters dated 22nd May, 2019 and 15th July, 2022. This Court vide order dated 31st October, 2023 restrained SFIO from taking any coercive action against Petitioner while directing him to cooperate with the investigation. Legal Proceedings in relation to the Personal Guarantees furnished by the Petitioner 3.12. On 5th March, 2022 in O.A. No. 02/2020 titled IDBI v. Atul Punj and 6th May 2022 in O.A. No. 400/ 2022 titled SBI v. Atul Punj Ors, the Debt Recovery Tribunal [ DRT ], New Delhi, discharged the Petitioner from financial liabilities arising out of personal guarantees dated 21st May, 2015 and 23rd February, 2018. Previous Writ Petitions 3.13. The Petitioner has previously sought judicial relief through writ petitions. On 6th October, 2022, he filed W.P.(Crl.) 2332/2022 [titled Atul Punj v. IDBI Bank and Others] seeking suspension of the LOCs issued against him to enable travel between 1st November, 2022 until 21st November, 2022. However, this Court by order dated 24th November, 2022, dismissed the same on account of ongoing proceedings under the Black Money (Undisclosed Foreign Income and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OC after considering prima facie evidence of the Petitioner s involvement in fraudulent activities within PLL. The subsequent withdrawal of W.P.(Crl.) 359/2023, filed on similar grounds, further demonstrates the repetitive nature of the pleas urged in the present petition. Findings of Fraudulent Activities 4.2. SFIO specifically highlighted that IDBI Bank, the second-largest creditor of PLL and a member of the lending consortium, initiated an independent investigation under RBI directives to examine potential fraudulent activities, including the siphoning or diversion of funds and loans provided to PLL. Based on its inquiry, IDBI Bank classified PLL s account as fraudulent in its Financial Monitoring Report dated 3rd October, 2020, a finding echoed by HDFC Bank. Although the Central Bureau of Investigation [ CBI ] initially returned the complaint, recommending a fresh forensic audit, IDBI Bank later reclassified PLL s account as fraudulent on 5th July, 2024, after issuing them a show cause notice. While this classification has been stayed by this Court on 16th July, 2024 in W.P.(C) 9461/2024 titled Atul Punj v. IDBI Bank, the Court has clarified that IDBI Bank retains the liberty t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was issued to Mr. Shiv Punj, requiring him to provide details and clarify his association with certain entities and bank accounts as the beneficial owner. In his response dated 16th March, 2024, Mr. Shiv Punj confirmed that Mr. Atul Punj was the beneficial owner of these entities, companies, bank accounts and trusts. He further stated that his involvement in these entities was solely at the behest of his father, driven by familial affection, and that he had no active role or involvement in their operations. This submission was taken into consideration, and in the order dated 30th March, 2024, it was formally concluded that Mr. Atul Punj is the beneficial owner of various foreign entities. Flight Risk 4.6. In the previous writ petitions, the Petitioner had previously sought relief to travel abroad from this Court citing consultancy work organized by Domus Llyod Contracting Limited [ DLCL ] and Ecolibrium Incorporated Limited. DLCL is a related entity of the Petitioner himself and therefore, the invitation annexed by the Petitioner as proof of consultancy related work is bogus and not genuine. The Court dismissed petition declining the relief sought by the Petitioner through a det ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable, adhering to the requirements of procedural due process. 6. The Ministry of Home Affairs [ MHA ], as the nodal ministry responsible for issuing guidelines for international travel, has stipulated that an LOC may be issued in cases of cognizable offences under the Bharatiya Nyaya Sanhita, 2023 and other penal laws. Its scope can only be expanded under exceptional circumstances. Clause J of the Office Memorandum dated 27th October, 2010, and its subsequent amendment through the Office Memorandum dated 5th December, 2017, are instructive in this regard, which read as under: Office Memorandum dated 27th October, 2010 g) Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed proforma regarding reason for opening LOC must invariably be provided without which the subject of an LOC will not be arrested/detained. h) In cases where there is no cognizable offence under IPC or other penal laws, the LOC subject 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. xx xx xx j) In exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaving the country. The Originating Agency can only request that they be informed about the arrival/departure of the subject in such cases. (J) The LOC opened shall remain in force until and unless a deletion request is received by BOI from the Originator itself. No LOC shall be deleted automatically. Originating Agency must keep reviewing the LOCs opened at its behest on quarterly and annual basis and submit the proposals to delete the LOC, if any, immediately after such a review. The BOI should contact the LOC Originators through normal channels as well as through the online portal. In all cases where the person against whom LOC has been opened is no longer wanted by the Originating Agency or by Competent Court, the LOC deletion request must be conveyed to BoI immediately so that liberty of the individual is not jeopardized. (K) On many occasions, persons against whom LOCs are issued, obtain Orders regarding LOC deletion/ quashing/ suspension from Courts and approach ICPs for LOC deletion and seek their departure. Since ICPs have no means of verifying genuineness of the Court Order, in all such cases, orders for deletion/ quashing/ suspension etc. of LOC, must be communicated t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al or a non-executive capacity. The circumstances have to reveal a higher gravity and a larger impact on the country. 10. Thus, mere inability to repay loans, absent any criminal wrongdoing or material to show or squandering or siphoning off public money, cannot justify curtailing an individual s right to travel, as guaranteed under Article 21 of the Constitution of India [Vikas Goel v. Union of India, W.P.(C) 14837/2022, decided on 12th July, 2024]. 11. In light of the legal framework and decisions noted above, this Court shall now proceed to examine the allegations levelled against the Petitioner, to determine whether the apprehensions raised by the investigative agencies justify the continued imposition of restrictions on Petitioner s right to travel. Previous Writs for Suspension of LOC 12. To address the Respondents objection of res judicata, it is necessary to examine whether the present petition raises issues that were conclusively adjudicated in W.P.(Crl.) 2332/2022 . The said petition, filed by the Petitioner seeking suspension of the LOC, was dismissed through order dated 24th November, 2022. The relevant observations made in the said decision are as follows: 6. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the petitioner herein and he has received a huge amount as dividend from PLL. 10. Though the petitioner herein has bank account with the First Abu Dhabi Bank but he had denied having any account related to him. The investigation also reveal infusion of funds through ATM cash deposits to the tune of AED 10,461,076.77 and it has further come to the notice these accounts receive huge value inward wire transfer from many companies including M/s. Uphill Profit Worldwide Limited, wherein the petitioner and his son are the beneficial owners. 11. Similarly, the Income Tax Department has also found in investigation a quantum of 1.7 million USD being sent to M/s. Trejo Associated SA in British Virgin Islands (BVI). Secondly, an amount of GBP 2,12,907 first parked in the Julius Baer Bank Singapore account of petitioner was transferred to M/s. Uphill Profit Worldwide Limited in which the petitioner and his son are the beneficial owners. It is alleged replies have been received from the competent authority and EOI request is still pending. 12. Thus, it is argued LOC was necessitated by the fact the petitioner has committed multiple violations including a bank fraud of siphoning off funds to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on fundamental rights, particularly when the justification for such restrictions has dissipated. 14. In the present case, while Petitioner s earlier request for suspension of the LOC in W.P.(Crl.) 2332/2022 was declined, the doctrine of res judicata cannot mechanically bar the current petition. This is because the dismissal of the earlier writ petition was premised in the nascent stage of the SFIO investigation and the preliminary nature of the proceedings under the Black Money Act at that time. However, the circumstances prevailing at the time of adjudicating W.P.(Crl.) 2332/2022 have significantly changed. The assessment proceedings under the Black Money Act have since been concluded. These proceedings have quantified the taxable undisclosed assets of the Petitioner at INR 4,37,19,020/-, resulting in a computed tax liability of INR 1,31,15,710/-. This assessment is currently under challenge by the Petitioner before the Commissioner of Income Tax (Appeals)-31, New Delhi. Moreover, vide Assessment Order dated 30th March, 2024, the total quantified taxable undisclosed assets of the Petitioner s son, Mr. Shiv Punj, has been assessed at NIL. 15. Hence, the primary factor that influenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... significant consequences for borrowers and associated individuals. Such classifications are intended as administrative measures for safeguarding the banking system and cannot, by themselves, justify punitive actions or restrictions on personal liberty without proper judicial or statutory adjudication. 20. In the instant case, in absence of any definitive findings or legal proceedings, an imminent risk warranting the continuation of the LOC against the Petitioner cannot be established. Status of SFIO Investigation 21. The SFIO has laid significant emphasis on allegations of fraudulent activities by PLL and its group entities, asserting that these entities engaged in unlawful trading transactions, which ultimately led to their default on financial obligations. The Petitioner s role as Director during the relevant period has been highlighted to establish his involvement in these activities. 22. The SFIO investigation against the Petitioner commenced on 22nd May, 2019. However, despite the passage of more than five years, no interim or final report has been filed under Sections 212 (11) and 212 (12) of the Companies Act, 2013. The Petitioner, on his part, has actively participated in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petitioner from his personal guarantees. The DRT, New Delhi, in two separate orders dated 5th March, 2022 [in O.A. No. 02/2020 titled IDBI v. Atul Punj] and 6th May, 2022, in O.A. No. 400/ 2022 titled SBI v. Atul Punj Ors relieved the Petitioner of liabilities arising from personal guarantees furnished in connection with PLL s financial obligations. These orders determined that the Petitioner s guarantees were no longer enforceable, thereby extinguishing his direct liability towards the creditors of PLL. 26. Furthermore, an application filed by the Union Bank of India under Section 95 of the Insolvency and Bankruptcy Code, 2016, [in (IB)-68(PB)/2021 titled Union Bank of India v. Atul Punj] seeking to invoke the Petitioner s personal guarantees, was dismissed by the NCLT in its order dated 10th January, 2024. The NCLT s relied on the DRT s findings, which had already discharged the Petitioner from his personal guarantees. CONCLUSION 27. The right to travel abroad, being an essential component of the right to personal liberty under Article 21 of the Constitution, cannot be curtailed arbitrarily or indefinitely. Restrictions such as an LOC must pass the test of proportionality and ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one numbers and residential/ hotel addresses. He shall also file an undertaking that he shall strictly adhere to the itinerary mentioned in the affidavit and not visit any other stations. He shall also furnish a copy of the air tickets purchased by him before the Registrar General. (d) Petitioner shall file an undertaking before the Registrar General that he shall return to the country by 15th February, 2025. Petitioner shall intimate the Registrar General before leaving as well as within 72 hours of his return from abroad. (e) Petitioner shall also provide contact numbers where he shall be available during his stay abroad and at least one of the said contact numbers shall be kept operational at all times, subject to all fair exceptions, including the period he is on board the aircraft. (f) Petitioner shall file a self-attested copy of his passport to the Court, along with a copy of the visa, on his return to India. (g) Petitioner shall also deposit the passport of his wife in India with the Registrar General of this Court. 29. The permission to travel abroad given in this order shall be subject to all other applicable conditions and shall not be deemed as a direction to any other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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