TaxTMI 
TaxTMI 
2022 (7) TMI 316
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....forthwith withdraw travel restrictions and LOC issued against the Petitioner. 2. The facts giving rise for filing of the present Petition can be summarized as under: The Petitioner is carrying out his business for a long period and had earned goodwill and reputation in the business particularly, in the diamond industries. The Petitioner is regular tax payer and his accounts are regularly audited. For the peculiar nature of the business namely, importer, exporter and manufacturer of the diamonds, the Petitioner is required to travel abroad and particularly the destinations such as, Hong-Kong, Antwerp (Belgium), Moscow (Russia) and New York (USA) etc. The Petitioner had purchased certain shared in the year 2015 in one Gitanjali Gems Limited (for sake of brevity, hereinafter referred to as 'said company') by placing private officers. After 18 months, Petitioner sold those shares through registered broker subjecting this transaction to BSE and NSE. The necessary clearance order was also passed by Securities Exchange Board of India (for sake of brevity, hereinafter referred to as 'SEBI') on 16th April, 2021. The various documents in respect of the purchase of sale of these shares are ....
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....me Petitioner came to know that an LOC is issued against the Petitioner. 5. A communication dated 02nd December, 2020 was received by the Petitioner wherein the Petitioner was informed that the SFIO is investigating into the affairs of the said company and the Petitioner had informed the SFIO that he had invested his own funds in the said investment, but as the necessary details are not submitted, SFIO sought for the details of interparty transaction between Excel Overseas Pvt. Ltd and Excel as a firm. To the letter dated 02nd December, 2020, the Petitioner immediately replied by letter dated 04th December, 2020. Petitioner submitted to the Assistant Director that all the necessary information and the relevant documents are submitted to the office of SFIO. It was also requested to withdraw LOC and permit him to travel abroad. It was also submitted that because of the action of SFIO business of the Petitioner is seriously affected. Then other exchange of communications between the Petitioner and Respondent - SFIO are placed on record. The Petitioner submitted various letter for lifting LOC and permission to travel abroad for the business purpose as well as on the ground of ailment ....
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....ed on behalf of Respondent - SFIO through Mr. Munish Garg, Assistant Director (Investigation). It is submitted before this Court that the initial restriction put up upon the Petitioner by exercising powers under Section 217 of the Companies Act, 2013 and as such, it cannot be said that the restriction was illegal. Then there are certain material points raised in support of issuance of LOC against the Petitioner under caption 'Brief Background'. It would be useful for our purposes to refer to these factual aspects as under: 7. That the Ministry of Corporate Affairs ('MCA'), Government of India, in exercise of its powers u/s 210(1)(a) & (c) r/w 212(1)(a) & (c) of the Companies Act, 2013, vide Order F.No. 3/106/2018-CL-II (WR) dated 17.02.2018, assigned the investigation into the affairs of Gitanjali Gems Ltd ('GGM') & 106 other Companies and 7 Limited Liability Partnership concerns to the answering respondent/SFIO. 8. Investigation into the affairs of above entities has revealed, as on date, that Mehul Choksi the promoter and director of Gitanjali Group of companies, with the active participation of his few trusted employees and in connivance with the bank officials, caused huge ....
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....he SEBI which is filed by the Petitioner with the present Petition has discussed and proceeded in the proceeding on the ground that the word "disposal" was inserted in Regulation 29(3) of SAST Regulation, 2011 by amendment which was effective from 11th September, 2018. However, here it is pertinent to mention that Mehul Choksi (one of the key person in the entire fraud) has left the country within one month of the sales of the shares by the Petitioner which was not within the purview of the Adjudicating Officer and thus the Petitioner cannot take the benefit of the said order in present Petition. 15.Moreover, it is also revealed that presently the company promoted by the Petitioner was approximately Rs. 100 Crore to different Banks in the firm of the term loans and payments for outstanding LC (letter of credit) discounting. 9. Respondent - SFIO then expressed its apprehension submitting that if the Petitioner is permitted to travel abroad, he may misuse the liberty and evade the course of investigation as the Petitioner being at flight risk cannot be ruled out. 10. In so far as the ailment of wife of Petitioner is concerned, it is sated in the affidavit-in-reply that the detail....
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....r purchasing the shares of the said company and though, there was an order of SEBI on some aspects the Petitioner had not supplied the true and complete information and the investigating agency needs to unearth various links and if the Petitioner is permitted to travel abroad, the possibility of evading of the Petitioner and ultimately hampering the investigation cannot be ruled out. 14. Mr. S.K. Halwasia, was also justified in placing reliance in the judgment of Chaitya Shah (cited supra). It may not be out of place to refer to certain observations made in this judgment as under: 20. Before considering the facts of this case it is necessary to refer to certain provisions under the statute and to the Guidelines issued in respect of the Look Out Circulars. Chapter XIV of the Companies Act, 2013 (for short, "said Act") makes provisions for inspection, inquiry and investigation in respect of the affairs of a company. Section 210 provides the circumstances under which the Central Government can order investigation into the affairs of the company. Section 211 of the said Act provides for establishment of Serious Fraud Investigation Office (SFIO), which the Central Government is empow....
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....anies. 22. In this context it cannot be said that the Petitioner has absolutely no connection with the investigation which is being conducted by the SFIO. It cannot be mere a co-incidence that within a short span of time of the Petitioner selling his share holding, Mr. Mehul Choksi had left the country. It is case of the SFIO that the money used by the Petitioner actually belonged to Mr. Mehul Choksi and it was routed through different countries. The Petitioner has to explain these allegations and for that he has to fully co-operate with the investigation. It is a specific case of the Respondents that the Petitioner has not co-operated with the investigation. Merely attending the office of the SFIO will not mean that the Petitioner has fully co-operated with the investigation. 30. All these judgments and submissions of Shri Ponda will have to be looked in the background of the Office Memorandum dated 22nd February 2021. The relevant important clauses in those Guidelines are as follows: "(H) 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 invar....