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2023 DIGILAW 1054 (CAL)

Manish Mittal v. Union of India

2023-07-03

SABYASACHI BHATTACHARYYA

body2023
JUDGMENT : Sabyasachi Bhattacharyya, J. 1. The petitioner is the Chief Executive Officer (CEO) of a Steel Conglomerate by the name of Dimensions Steel Private Limited and is required to travel across the globe in connection with his work. A copy of the Passport has been annexed which indicates the travel history of the petitioner. When the petitioner boarded a plane for Bangladesh on May 16, 2022 after completing necessary formalities such as immigration clearance, five men approached the petitioner, out of whom three were in the uniform of the Customs Department, and demanded to see the petitioner’s passport. Upon the petitioner handing over the passport, the petitioner was requested to alight from the aircraft and to accompany the said officials to their office. Subsequently, the petitioner was prevented from boarding the flight and was informed that the petitioner was to be restrained from travelling. However, no further reason was allegedly given to the petitioner. After detaining the petitioner for about 2-3 hours in the Customs Office of the Airport, the passport was handed back to the petitioner and he was allowed to leave the airport with the caveat that he will not be allowed to travel. 2. Challenging such action and seeking to leave India as and when required, the petitioner has preferred the instant writ petition. Although the immediate cause of action was to travel to Dubai for a period between May 19, 2022 and May 26, 2022, the broader challenge in the writ petition is against the unlawful restraint on the petitioner from travelling abroad. 3. During pendency of the writ petition, an affidavit-in-opposition was filed by the Punjab National Bank (PNB) and another by the Immigration Authorities. The petitioner, for the first time from such pleadings, learnt about a Look Out Circular (LOC) having been issued at the behest of the added respondent no.6-Bank (the PNB) in respect of the petitioner by the Immigration Authorities. 4. Learned senior counsel for the petitioner argues that the restraint on the petitioner is absolutely arbitrary and has no valid premise whatsoever. It is contended that the guidelines of the Central Government in respect of LOCs do not apply to the petitioner at all. The parent premise of restraining the petitioner and issuance of the LOC was a communication by the Bank which, according to the petitioner, does not disclose any reason whatsoever. 5. It is contended that the guidelines of the Central Government in respect of LOCs do not apply to the petitioner at all. The parent premise of restraining the petitioner and issuance of the LOC was a communication by the Bank which, according to the petitioner, does not disclose any reason whatsoever. 5. At the time of arguments, the respondents have contended that several proceedings are pending before different authorities against the petitioner. With regard to a declaration of Willful Defaulter by the Identification Committee, it is argued that the same is subject to scrutiny by a Review Committee under the law. The same having not yet been completed even after one year of the declaration by the first committee, the petitioner cannot be detained on such ground. In fact, apparently the proceeding has been dropped against the petitioner, which appears from the inordinate delay in any decision being arrived at by the Review Committee. 6. Insofar as the proceeding pending before the Debts Recovery Tribunal (DRT) is concerned, the same does not have any bearing on the issue. The NCLT proceeding, for Corporate Insolvency Resolution Process (CIRP), was filed two years ago and has not yet been admitted. 7. Even in the alleged investigation by the CBI (Central Bureau of Investigation), no FIR has been registered as yet. Hence, it is argued that the LOC issued against the petitioner is palpably de hors the guidelines of the Central government as well as in violation of law and is an unnecessary restriction on the right to personal liberty and to travel abroad of the petitioner as guaranteed under Article 21 of the Constitution of India. 8. Learned senior counsel for the petitioner cites Vishambhar Saran v. Bureau of Immigration and others, rendered by a co-ordinate Bench of this Court in WPA No.6670 of 2022, where the learned Single Judge had observed that non-payment of loan and dues of the Bank cannot be equated to an act of destabilizing or affecting the economic interest of the country. The freedom of movement of a citizen is a valuable right and cannot be infringed except by imposing reasonable restrictions. It was further observed that the Forensic Audit Report (FAR) relied on in the Liquidation Proceeding and the complaint lodged by the PNB did not show any fraudulent, under-valued and preferential transfer. The freedom of movement of a citizen is a valuable right and cannot be infringed except by imposing reasonable restrictions. It was further observed that the Forensic Audit Report (FAR) relied on in the Liquidation Proceeding and the complaint lodged by the PNB did not show any fraudulent, under-valued and preferential transfer. In any event, the petitioner’s departure was held not to be detrimental to the economic interest of the country and held not to be due satisfaction of the existing pre-condition required to be fulfilled before the originator can make a request. 9. By citing another co-ordinate Bench judgment of this Court in Mannoj Kumar Jain and another v. Union of India and others, reported at 2023 SCC Online Cal 1442, it is argued that the LOCs which have the effect of restricting the person’s free movement and the right to travel should only be issued in exceptional circumstances. LOCs, it was held, cannot be issued at random and at the slightest provocation, particularly at the instance of a Bank who seeks restriction on travel as a buffer to payments outstanding to the bank. The only acceptable logic - albeit with some effort – is that a person may flee the country and not return to repay his/her outstanding loan. This, however, cannot be the rule across the board and a borrower’s credentials and circumstances for making payment must be taken into account. It was held by the learned Single Judge that there is something draconian and uncivilized in a person being de-boarded from an aircraft without being informed of the reason for such. Accordingly, it is argued that the present LOC may also be set aside and the petitioner be permitted to travel abroad. 10. Learned senior counsel appearing for the PNB argues that the pendency of as many as four proceedings against the petitioner was sufficient to issue a request for LOC. 11. It is further argued that despite the existence of the LOC and the request therefor having been disclosed in the affidavits-in-opposition filed in the writ petition, the petitioner has not amended the writ petition to incorporate any challenge to the LOC, the Bank’s request for the same and/or the FAR which was the basis of the same. In the absence of any challenge, it is argued, the LOC cannot be set aside, nor can the request which forms the basis thereof. 12. In the absence of any challenge, it is argued, the LOC cannot be set aside, nor can the request which forms the basis thereof. 12. It is submitted that the FAR clearly clinches the issue against the petitioner. Having not been challenged before any form, the FAR has attained finality and was sufficient for the Bank to seek issuance of LOC against the petitioner. It is submitted that the petitioner, if allowed to flee the country, would affect the economic interest of the country adversely and would also be detrimental to public interest, both of which are covered by the governing guidelines for LOCs of the Government of India. 13. Learned senior counsel for the Bank places reliance on different clauses of the FAR in this regard. 14. Learned counsel for the Immigration Authorities submits that the said authority acted at the behest of the Bank. It is submitted that the limited scope of the Immigration Authority is merely to act on such a request for issuance of LOC, if the same is made by an authorized person under the guidelines. In the present case, such a request was made by the Bank and was, thus, acceded to by the said Authorities. 15. Learned senior counsel for the petitioner, in rebutting the arguments, reiterates that the FAR contains a strong disclaimer and was not authored by any neutral third party. The same was the result of an audit by the PNB itself and not conducted by any neutral authority. 16. Moreover, the same was not placed before any authority till date and was annexed for the first time with the affidavit filed by the Bank. Hence, no reliance can be placed on the same. 17. That apart, it is argued that no copy of the LOC has, at any point of time, being handed over to the petitioner. Even the request to issue the LOC has been handed over in court at the juncture of the hearing. Hence, there was no scope of challenging the same. 18. A perusal of the materials-on-record clearly reveals that the Bank has sought to rely on an FAR which has been produced for the first time by way of affidavit-in-opposition filed in the writ petition. From the said FAR, it is evident that the same contains a Disclaimer Clause which stares at the face. 18. A perusal of the materials-on-record clearly reveals that the Bank has sought to rely on an FAR which has been produced for the first time by way of affidavit-in-opposition filed in the writ petition. From the said FAR, it is evident that the same contains a Disclaimer Clause which stares at the face. In the Disclaimer, it is clearly mentioned that the same is based exclusively on facts and circumstances described during the engagement and on representations, expressed or implied and based on the auditor’s interpretation of law which may differ from other persons. It is further clarified that in a situation where the financial statement conceals some vital acts, representing a position different from the actual, the financial analysis may not be a definite indicator of any conclusion. Existence of any other factual or historical background not provided to the auditors, it is stated, might have led to a different conclusion. 19. The information contained therein, it is stated in the Disclaimer of the FAR, is specific only to the facts of the present case and cannot be used in any other matter and is not intended to address the circumstances of any particular individual or entity other than what has been described in the report. 20. More importantly, the Auditor clearly stipulated under the Disclaimer that there can be no guarantee that the information contained therein is accurate as of the date it is received or that it will continue to be accurate thereafter. It was recorded further no person should act on such information without appropriate professional advice based on the circumstances of a particular situation. 21. The auditors further went on to state that they have relied on the authenticity of the records made available to them for preparation of the report and, should any of the records turn out to be false at a future date, the auditors should not be held accountable for observations made by them in that part or any other related part of the report. The Disclaimer is thick with such caveats and, as such, vitiates the entire credibility and reliability of the same. The Disclaimer is thick with such caveats and, as such, vitiates the entire credibility and reliability of the same. More so, on such a serious footing as to imply that a person is guilty of acts which would restrain the person’s liberty to move anywhere and to freely lead his own life, including his right to travel abroad, no credence can be lent to the FAR. Moreover, the petitioner has never had any opportunity to deal with the allegations made therein and, as such, the same could not form a basis of any request for issuance of LOC. 22. Irrespective of the petitioner having not challenged the FAR, the same cannot conceivably form a reasonable basis for the issuance of LOC or a request therefor. 23. Insofar as the request itself is concerned, surprisingly, no such specific communication has been disclosed to the Court. The only communication dated June 14, 2021 which might have a bearing is an internal communication by the Chief Manager of the PNB to the Zonal Head at Durgapur, which states that the communication has reference to the recommendation for issuance of LOC in respect of the concerned account. It is stated therein that the Bank has requested the Bureau of Immigration (BOI) vide the Bank’s letter dated May 21, 2021 for issuing LOC in the name of the Promoter/Director/Guarantor including the petitioner. 24. It was stated therein that the LOCs are for a period of one year from the date of issue and that the names of the subjects shall be automatically removed from the LOC thereafter, unless the concerned agency requests for its renewal within a period of one year. 25. Inasmuch as the LOC itself is concerned, the same has, surprisingly, not being produced by the Immigration Authorities on the peculiar pretext that the same is a secret document. It is unthinkable that an LOC issued against a particular person shall not be disclosed to the said person, although the same has a serious effect of being a stigma against the person as well as a severe restraint on the petitioner’s personal liberty and freedom of movement. In the present case, the petitioner sought to leave the country on several occasions for the purpose of his work and, having been restrained, has suffered not only loss of goodwill but also commercially. 26. Such restraint on travel is entirely unwarranted. In the present case, the petitioner sought to leave the country on several occasions for the purpose of his work and, having been restrained, has suffered not only loss of goodwill but also commercially. 26. Such restraint on travel is entirely unwarranted. A perusal of the concerned Office Memorandum of the Government of India, Ministry of Finance indicates that the only plausible allegations against the petitioner which could come within the purview of paragraph 8 of the MHA’s Office Memorandum dated October 27, 2021 are that the departure of the petitioner from the country is detrimental to the economic interest of India or if so permitted, the same would affect larger public interest at any given point of time. A close scrutiny of the allegations against the petitioner indicates that none of them are worth the issuance of an LOC. 27. Insofar as the CBI investigation is concerned, no FIR has yet been registered against the petitioner. That apart, the NCLT proceeding initiated under the Insolvency and Bankruptcy Code, 2016 is pending for over two years has not yet been admitted. Hence, the same cannot be an embargo on any judicial proceeding, let alone restrain the petitioner from leaving the country. 28. The proceeding before the DRT has not yet culminated even in any award against the petitioner. Hence, there cannot be any occasion for the same to instigate of an LOC against the petitioner. In any event, even if an award was passed, the extreme measure of issuance of an LOC cannot be a substitute for recovery proceedings as contemplated in law. 29. The declaration of willful defaulter by the Identification Committee has not yet reached finality by being affirmed upon independent scrutiny by a Review Committee. It is well-settled that unless a Review Committee looks into the same and approves it, the declaration does not attain finality. In any event, the Review Committee has sat tight over the matter for about a year, which itself indicates, as rightly argued by the petitioner, that there may not be any substance in such declaration by the first committee. 30. Hence, there could not be any occasion for the request made by the Bank for issuance of an LOC against the petitioner. 31. 30. Hence, there could not be any occasion for the request made by the Bank for issuance of an LOC against the petitioner. 31. In fact, the LOC issued by the Immigration Authorities, by its own admission, has spent force on the expiry of one year, which is its stipulated tenure as per the Government guidelines. In the absence of any further renewal or extension of the same or any request being made therefor from any quarter, there cannot be any conceivable reason why the petitioner should be further restrained from travelling abroad. 32. In any event, the said LOC and the request therefor, being patently de hors the Central Government guidelines, cannot survive judicial scrutiny at all. Hence, the impugned action of the respondent-Authorities in restraining the petitioner from leaving India is deprecated and set aside. 33. The LOC and the request for the same, whatever may be their worth, have not only spent force but are also de hors the law and could not be a stimulus for restraining the petitioner from travelling abroad. 34. Taking into consideration the judgments cited by the petitioner, none of the yardsticks for issuance of LOC, as stipulated therein, are satisfied in the present case. With utmost respect, I fully agree with the observations of the two co-ordinate Benches cited before me to the extent that, apart from exceptional circumstances, the right of a person of free movement and right to travel cannot be restricted and the restriction on travel cannot be used as a buffer to recovery of payments allegedly outstanding to the Bank. 35. The learned Single Judge rightly held in Mannoj Kumar Jain and another (supra) that there is something draconian and uncivilized in a person being de-boarded from an aircraft without being informed of the reason for such. 36. In the present case, the same draconian event visited the petitioner, which was entirely unwarranted and avoidable. 37. There is nothing on record to indicate that the petitioner would flee the country if allowed to travel abroad and/or that his leaving the country would, in any manner, affect the economic interest of the country and/or be detrimental to public interest in any manner whatsoever. 38. In view of the above observations, WPA No.9191 of 2022 with IA No.CAN 1 of 2023 is allowed on contest, thereby restraining the respondent-Authorities from preventing the petitioner from travelling abroad. 39. 38. In view of the above observations, WPA No.9191 of 2022 with IA No.CAN 1 of 2023 is allowed on contest, thereby restraining the respondent-Authorities from preventing the petitioner from travelling abroad. 39. The alleged LOC issued to the petitioner cannot be further acted upon, having spent its force and being de hors the law. Even apart from the same, the said LOC is hereby set aside, being contrary to the Government Guidelines. 40. The respondents are directed to ensure that any communication, if made by the said respondents to any authority for restraining the petitioner from travelling abroad or leaving the country in any manner shall be reversed and the gist of this order shall be communicated by the respondents to all such authorities to ensure that the petitioner is not prevented from travelling abroad in any manner whatsoever. 41. There will be no order as to costs. 42. Urgent certified server copies, if applied for, be issued to the parties upon compliance of due formalities.