2025 (11) TMI 1211 - HC - Companies Law

Travel-for-treatment plea rejected; director's role in MRA, non-cooperation show flight risk under Companies Act provisions

Mrs Pawanjot Kaur Sawhney Versus Union of India And Anr.

HC dismissed the petition seeking permission to travel to UK for medical treatment. It held that petitioner's claim of being an uninformed non-executive ... Seeking permission to travel to UK for medical reasons - siphoning of about Rs. 208 crores from Indian and foreign banks - petitioner had knowledge of looking into the day to day affairs of the company or had no expertise and was unaware of the working of the company or not - HELD THAT:- The petitioner’s claim that she was a non-executive Director, a simple housewife having no knowledge of looking into the day to day affairs of the company or had no expertise and was unaware of the working of the company is contrary to her own filing of Form PAS-4 before the MCA, describing her as a person of “very vast experience in the field of business and allied activities and great industrialist”, thereby, belying her plea of ignorance. Moreover, she is signatory to MRA by virtue of which the entire business of N4IL was transferred to NNSL for a period of seven years, which as per the complainant, was executed to avoid payment of legitimate dues to the creditors and the banks. As per investigation, the signing of MRA was carried out without attaining the requisite compliances required under the Companies Act and in contravention of Sections 177, 188 & 189 of the Companies Act, 2013. Further, even the non-executive Director, as the petitioner claims herself to be, is also liable to the specific acts and violations committed by them during their tenure in terms of Section 149 (12) of the Companies Act, 2013. The petitioner’s plea for permission to travel abroad proceeds on the assumption that the mere completion of investigation dilutes the apprehension earlier expressed by this Court regarding her lack of cooperation and high flight risk. However, this Court’s orders dated 13.12.2022 and 16.08.2023, passed after detailed consideration of her conduct during investigation, unequivocally record that despite repeated directions, the petitioner failed to comply with the conditions imposed for temporary suspension of LOC, namely furnishing complete bank statements, appointing a competent authorised representative, and providing full particulars of her son, a co-accused who continues to remain outside India. The finding of non-cooperation was therefore not casual but based on a sustained pattern of evasiveness, and the petitioner has been unable to demonstrate any material change in this regard. Further, the plea of medical urgency does not persuade this Court. The petitioner has not been able to establish that the requested medical procedure, implantation of the MICRA AV device, is unavailable in India. On the contrary, the Respondent has pointed out that advanced cardiac treatment of this nature is readily accessible in India at several tertiary medical institutions of good reputation. The petitioner did not plead financial incapacity before the trial court, nor has she placed any medical opinion demonstrating that the procedure must necessarily be performed in the United Kingdom. In light of this, her claim to travel abroad on the mandate of Article 21 is untenable. It is also significant that the petitioner’s son, a co-accused, remains outside India, and another accused her husband, has since expired. These circumstances strengthen the apprehension that granting the petitioner liberty to travel abroad, particularly when she is a foreign national with longstanding ties to the UK, may result in her non-return. Her contention that she has previously travelled freely prior to the LOC is irrelevant, as it was precisely her conduct during investigation that led to the adverse findings of this Court on previous occasions. The Respondent’s apprehension, based on concrete past behaviour, cannot be dismissed as speculative - This Court is conscious of the principles of personal liberty under Article 21, however, these rights must be balanced against the compelling public interest in ensuring that persons accused of grave economic offences remain amenable to the legal process. The petitioner has not shown any exceptional circumstance warranting deviation from the earlier findings of non-cooperation. In view of the petitioner’s past non-compliance, the availability of requisite medical treatment within India, her status as a foreign national with no roots in this country, and the real and subsisting apprehension that she may not return to face trial, this Court finds no ground to interfere with the impugned order dated 21.10.2024 - Petition dismissed. ISSUES PRESENTED AND CONSIDERED 1. Whether the impugned order refusing permission to travel abroad should be set aside in light of claimed medical urgency and asserted completion of investigation. 2. Whether the petitioner's constitutional right to personal liberty under Article 21 (including travel abroad for medical treatment) outweighs the State's interest in preventing absconding in a pending investigation into serious economic offences. 3. Whether the petitioner cooperated sufficiently with the investigation (including disclosure of bank accounts, appointment of competent representative, and disclosure of co-accused particulars) so as to negate the risk of absconding. 4. Whether the Look Out Circular (LOC) and continued travel restriction were justified given the material produced regarding the petitioner's role in corporate arrangements alleged to have diverted funds and violations of statutory duties under the Companies Act, 2013. 5. Whether reliance on sealed-cover material or non-disclosed material vitiated the impugned order. ISSUE-WISE DETAILED ANALYSIS - 1. Legality of refusing permission to travel despite claimed medical urgency and asserted completion of investigation Legal framework: Courts balance Article 21 personal liberty (including travel for medical treatment) against prosecutorial interest in preventing flight risk where serious offences are investigated; medical necessity may justify temporary travel subject to safeguards if treatment is unavailable domestically. Precedent treatment: The Court considered authorities allowing medical travel in exceptional humanitarian cases but distinguished them where bona fide cooperation was absent or adequate domestic treatment existed; reliance placed on recent orders declining travel where equivalent treatment available domestically. Interpretation and reasoning: The Court found no prima facie necessity to permit foreign travel because the petitioner failed to demonstrate that the specific procedure (MICRA AV implantation) was unavailable in India or that she was financially incapacitated to obtain treatment here. The Court emphasized the role of independent medical reports and domestic tertiary facilities' availability in assessing necessity. Ratio vs. Obiter: Ratio - where adequate treatment is available domestically and the accused is a real flight risk, Article 21 does not mandate permission to travel abroad for preferred treatment. Obiter - general observations on preference for foreign treatment not constituting necessity. Conclusion: Petition dismissed on this ground; medical urgency did not outweigh prosecutorial interest given availability of treatment in India and absence of demonstrable necessity or financial incapacity. ISSUE-WISE DETAILED ANALYSIS - 2. Balancing Article 21 liberty against flight risk in serious economic-offence investigations Legal framework: Article 21 protects personal liberty but is subject to reasonable restrictions in public interest; courts may impose or uphold travel restrictions where there is a real and substantiated risk of absconding, especially in grave economic offences. Precedent treatment: The Court applied established principles that economic offences attract heightened scrutiny and that travel may be restricted when the accused holds foreign nationality or OCI status and lacks substantive ties to India; past decisions permitting travel in humanitarian contexts were treated as dependent on demonstrated bona fides and cooperation. Interpretation and reasoning: The Court relied on findings of prior orders that recorded non-cooperation, evasiveness, and concealment of accounts, and noted the petitioner's foreign nationality and a co-accused at large as concrete factors increasing flight risk. Completion of investigation alone was not held to extinguish such risk where adverse findings of conduct remain unaddressed. Ratio vs. Obiter: Ratio - heightened public interest in prosecuting grave economic offences justifies maintaining travel restrictions where credible evidence of non-cooperation and flight risk exists. Obiter - commentary that previous free travel prior to LOC is irrelevant to current risk assessment. Conclusion: Article 21 did not require lifting restrictions; the State's interest in ensuring presence for trial prevailed. ISSUE-WISE DETAILED ANALYSIS - 3. Sufficiency of cooperation (disclosure of bank accounts, representative, particulars of co-accused) Legal framework: Cooperation with investigation (full disclosure of financial records, effective authorised representation, and disclosure of co-accused particulars) is material to assess credibility and risk; nondisclosure can justify restrictions. Precedent treatment: The Court treated previous co-ordinate-bench findings and trial-court material regarding non-cooperation as determinative unless shown to be materially altered; decisions allowing travel conditioned on demonstrated cooperation were relied upon as comparative guidance. Interpretation and reasoning: The Court examined documentary record showing limited bank statements provided (two accounts for two years), later confirmations regarding account closure, discovery via investigation of additional accounts, and presence of 33 concealed accounts; it concluded these facts evidenced sustained non-cooperation. The petitioner's appointment of an inexperienced representative and failure to disclose full particulars of her son (a co-accused abroad) further supported the finding of evasiveness. Ratio vs. Obiter: Ratio - substantiated non-cooperation during investigation supports denial of travel permission and maintenance of LOC. Obiter - remarks on modern online banking making retrieval of historical statements easier. Conclusion: The petitioner failed to demonstrate the requisite cooperation; prior adverse findings remain operative and justify continued restriction. ISSUE-WISE DETAILED ANALYSIS - 4. Validity of continued LOC given alleged role in corporate diversion and statutory breaches Legal framework: Investigatory agencies may issue LOCs where there is credible material suggesting involvement in offences and a real risk of absconding; assessment includes role in corporate arrangements, compliance with statutory duties (Sections 149, 177, 188, 189 of Companies Act), and evidence of diversion of funds. Precedent treatment: The Court treated earlier judicial findings upholding the LOC and observed that such findings attain finality unless convincingly displaced; authorities emphasizing seriousness of economic offences informed the approach. Interpretation and reasoning: The Court relied on record showing the petitioner signed the Master Reseller Agreement diverting revenues, held directorship/shareholding positions in subsidiaries, described herself in regulatory filings as having 'very vast experience,' and failed to disclose interests contrary to statutory duties; these facts were taken as sufficient material to justify the LOC given the alleged siphoning of substantial funds and attendant risk to creditors and stakeholders. Ratio vs. Obiter: Ratio - where materials indicate active participation or facilitation in corporate arrangements that allegedly diverted funds and statutory non-compliance, a LOC and travel restriction are justifiable to secure presence for legal process. Obiter - discussion that non-executive status does not absolve liability under section 149(12). Conclusion: The LOC was justified on the record; the Court declined to set it aside. ISSUE-WISE DETAILED ANALYSIS - 5. Use of sealed-cover material and procedural fairness Legal framework: Reliance on sealed or non-disclosed material must not undermine the accused's right to know case against them; courts must ensure material on which adverse findings rest is placed appropriately before the accused unless exceptional justification exists. Precedent treatment: The Court noted the petitioner's contention referencing authorities discouraging sealed-cover reliance but found that the record before it - including status reports and earlier orders - sufficed and that the trial court had provided material to the petitioner. Interpretation and reasoning: The Court found no infirmity in the impugned order on the ground of secret material; it held that adverse findings were based on material that had been placed on record and previously considered by co-ordinate benches, and that the petitioner had opportunities to contest those findings. Ratio vs. Obiter: Ratio - absence of reliance on undisclosed sealed material to reach the impugned conclusion; prior material available to the petitioner formed basis of findings. Obiter - general caution against secret reliance reiterated. Conclusion: No vitiation of the order on grounds of sealed-cover reliance was found. OVERALL CONCLUSION The Court dismissed the petition: the petitioner's Article 21 claim was outweighed by the State interest in prosecuting serious economic offences in the face of recorded non-cooperation, concealment of financial accounts, status as a foreign national/OCI with a co-accused at large, and availability of requisite medical treatment in India; the LOC and travel restriction were held justified on the material before the Court.