2023 (9) TMI 702 - HC - Indian Laws

Court quashes travel restrictions via Look-Out Circulars, upholds personal liberty

Prashant Bothra and another Versus Bureau of Immigrations and others

The court concluded that no grounds were established for issuing Look-Out Circulars (LOCs) against the petitioners. The LOCs were set aside, and the ... Validity of Look-Out Circulars (LOC) issued - cognizable offences or not - curtailing a person's fundamental right to travel under Article 21 - HELD THAT:- Sub-section (6) of Section 212 provides that notwithstanding anything contained in the Code of Criminal Procedure, an offence covered under section 447 of the 2013 Act (which we have also discussed above) shall be cognizable and no person accused of any offence under those sections shall be released on bail or on his own bond unless the Public Prosecutor has been given an opportunity to oppose the application for such release and where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail. In the present case, as rightly pointed by learned counsel for the petitioners, the stage of investigation within the contemplation of Section 212(1) – (4) of the 2013 Act is not yet over. Thus, as of today, whatever may the allegations against the petitioners or the Company of which they were Directors and guarantors, the same cannot tantamount to a cognizable offence against the petitioners. Insofar as classification of an account as fraud is concerned, the same was disclosed only subsequently and does not find place in the SFIO request to the Immigration Authority for issuance of LOC. Whether the high ground of issuance of LOC has been made out at all by the SFIO in its request for issuance of LOC? - HELD THAT:- It has to be kept in mind that the high grounds which are required to be made out for restraining the personal liberty of a person as guaranteed under Article 21 of the Constitution and the right of a person to move within the country under Article 19, a necessary corollary of which is the right to travel abroad, have to be on a much elevated footing than mere pendency of an investigation or allegations of financial frauds against the concerned person - mere paranoia of the authorities whenever a person against whom allegations are levelled seeks to leave the country cannot be sufficient for issuance of LOCs and curtailing the person‟s personal liberty to travel abroad. No ground has been made out for issuance of LOC against the petitioners and/or restricting them from travelling abroad. - Petition allowed. Issues Involved:1. Legality and authority for issuance of Look-Out Circulars (LOCs).2. Impact on petitioners' personal liberty and right to travel.3. Allegations and ongoing investigations by SFIO and BoB.4. Compliance with Office Memorandum and legal provisions.Summary:1. Legality and Authority for Issuance of LOCs:The petitioners challenged the LOCs issued by Immigration Authorities based on requests from Bank of Baroda (BoB) and the Serious Fraud Investigation Office (SFIO). The petitioners argued that the LOCs were issued 'de hors the law' and beyond the authority vested by the Office Memorandum dated February 22, 2021. They contended that no cognizable offence under IPC or other penal laws was cited, and the criteria for issuing LOCs were not met.2. Impact on Petitioners' Personal Liberty and Right to Travel:The petitioners argued that their personal liberty was wrongfully restrained, preventing them from carrying on business abroad. They emphasized that Article 21 of the Constitution guarantees the fundamental right to travel, which was being curtailed without any criminal offences disclosed against them.3. Allegations and Ongoing Investigations by SFIO and BoB:The SFIO cited ongoing investigations under the Insolvency and Bankruptcy Code, 2016, and alleged defrauding of creditors. However, the investigation had not yielded any concrete findings against the petitioners. The SFIO also relied on an interim order by the National Company Law Tribunal (NCLT) indicating prima facie fraud. BoB's request for LOCs was based on a forensic audit report alleging irregularities and a subsequent classification of the account as fraud, but no conclusive proof of illegality was provided.4. Compliance with Office Memorandum and Legal Provisions:The court examined the relevant provisions of the Companies Act, 2013, particularly Section 212, which outlines the investigation process by SFIO. The court noted that the investigation had not yet crossed the stage of Section 212(4), and thus, no cognizable offence could be established against the petitioners. The court also highlighted that the Office Memorandum of 2021 requires a cognizable offence under IPC or other penal laws for issuing LOCs, which was not met in this case. Additionally, the court found that the grounds for issuance of LOCs, such as detriment to the economic interest of India or public interest, were not fulfilled.Conclusion:The court concluded that no grounds were made out for issuing LOCs against the petitioners. The LOCs were set aside, and the respondent authorities were restrained from preventing the petitioners from traveling abroad. The court emphasized the importance of protecting personal liberty and the right to travel, and criticized the use of LOCs as an alternative to recovery proceedings. The order was stayed for a fortnight to allow SFIO to challenge the decision.