TaxTMI 
TaxTMI 
2022 (8) TMI 331
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....of the Parties, both the matters are taken up together and decided in one common judgment. 3. For substantial materials available in W.P.(C) No.9502/2022, this case is taken up as a lead case. 4. Facts, as borne in the lead case, are Petitioner No.1 is the Managing Director of M/s.Utkal Galvanizers Ltd., Petitioner No.2 is the former Director, Petitioner No.3 is one of the Directors of the Company and Petitioner No.4 is the CFO of the Company. It is necessary to bring here that the sole Petitioner involving W.P.(C) No.12872 of 2022 is also one of the Directors of the Company, M/s.Utkal Galvanizers Ltd. As disclosed, O.P.2, the ROC-cum-OL, Odisha forwarded a complaint on 21.10.2020 made by one Bangla Informer through email dated 5.11.2020. The Petitioners denied the contents in the complaint in their email response dated 9.11.2020. Complaint and several email responses are available at Annexure-1 series. While the matter stood thus, almost after a gap of five months, O.P.2 on 13.4.2021 issued a letter to M/s.Utkal Galvanizer Ltd. disclosing therein that there has to be an inspection of the Company under Section 206(5) of the Companies Act, 2013 under the direction of the Ministry ....
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....n vrs. Assistant Director & ors. The Petitioners in the pleadings also took support of the judgments of variety courts touching such issue, vide Annexure-7, 8 series, 9 series & 10 as well. It is on the premises that there is no initiation of any criminal proceeding nor there is any correspondence or observation available on Record indicating the Petitioners entangled in criminal offences. While pleading that there is violation of Fundamental Rights of each of the Petitioners involved herein and there has been unnecessary harassment to each of the Petitioners in absence of their involvement in any non-compoundable offence as of now. 5. The Petitioners on their own have brought to the notice of this Court through Annexure-14 series that there is completion of investigation involving the Odisha part is concerned. Annexure-14 series also clearly depicts no involvement and non-compoundable offences involving the Petitioners. Through each of these documents, at the end of each document involving the show cause notices, vide Annexure-14 series, it is apparent that the Petitioners involved therein are all facing compoundable offences being covered under the provision of Section 441 of th....
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....ere will be huge loss to the Company, which cannot be compensated otherwise. Mr.Mishra, learned senior counsel at this stage took to this Court to the series of decisions to support the Petitioners' case. In the process, Mr.Mishra, learned senior counsel drew attention of this Court the decision of the Delhi High Court in Sumer Singh Salkan vrs. Assistant Director & ors. : ILR (2010) VI Delhi 706, another case of Delhi High Court in the case of Vikas Chaudhary vrs. Union of India & ors. : W.P.(C) No.5374/2021 & Crl.M.(Bail) 605/2021 decided on 12.1.2022, a decision of the Punjab & Haryana High Court in Noor Paul vrs. Union of India & ors. : CWP-5492-2022 (O & M) decided on 5.4.2022 reported in 2022 Live Law (PH) 69, another decision of Delhi High Court in Rana Ayyub vrs Union of India and Another: W.P.(CRL) 714/2022 decided on 4.4.2022, a case of Madras High Court involving Karti P.Chidambaram vrs. Bureau of Immigration : W.P.(C) Nos.21305 & 20798 of 2017 decided on 23.7.2018 and another decision in Rahul Surana vrs. The Serious Fraud Investigation Office & ors. : W.P. No.2477 of 2020 and WMP Nos.2871 of 2020, 7332, 10903, 21891 and 3631 of 2022 decided on 7.3.2022. In the process....
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....his Court through Annexure-A regarding rejection of the request to take out the LOC and taking this Court to their own plea in the Writ Petitions that each of the Petitioners need to travel abroad involving countries like the USA and Dubai, contended, it is too early to consider the taking out of LOC involving the Petitioners. 9. It appears, the preliminary counter affidavit at the instance of O.Ps. was filed on 28.4.2022. The rejoinder affidavit was filed by the Petitioners on 1.5.2022. The Petitioners also filed an additional affidavit on 26.6.2022 bringing therein the level of charges as of now appearing through series of show cause notices. This Court nowhere finds any response to the plea of the Petitioners on the aspect of offences non-compoundable involving the Petitioners as of now. 10. Mr.Parhi, learned Assistant Solicitor General of India for the O.Ps. however took this Court to the further plea of the Department while bringing to the notice of this Court the Office Memorandum issued by the Government of India, Ministry of Home Affairs, i.e., consolidating guidelines for issuance of LOC. Reading through the same, Mr.Parhi attempted to justify issuance of LOC. Mr.....
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....passed. Both the R.O.Cs. involved have not reported on involvement of the Petitioners in non-compoundable offences as of now. LOC involved here appears to be on no concrete material and even on prima facie material. On perusal of the documents available at Pages-91 to 115 of the Brief, this Court finds, either the Company or the Petitioners have been several time rewarded for their best performance. Offences entangled the Petitioners as of now remain maximum within the frame working of Section 441 of the Companies Act, as clearly disclosed from Annexure-14 series. For reference of both sides to the Office Memorandum dated 22.2.2021 also keeping in view the guideline existing since 27.12.2000 and the guidelines issued on 27.10.2010, 5.12.2017, 19.9.2018 and 12.10.2018 all taken into account find place at Annexure-C to the additional affidavit of the O.Ps. on 13.7.2022, this Court finds, the Government of India in the Ministry of Home Affairs taking into account the decision of the Delhi High Court and the guidelines framed therein by such High Court after due deliberation in consultation with various stake holders in supersession of the existing guidelines earlier issued by the same....
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....OC being the inspecting officer, has performed his duty to conduct the inspection under the direction of the Ministry but after the submission of the report the Ministry has to examine and take appropriate action either for further inspection/investigation or take appropriate steps for initiation of prosecution in accordance with law depending upon the case and circumstances. In the present case in hand the first stage of inspection is over but as there is serious allegation against companies and its key managerial persons (i.e. the Petitioners), there is issuance of LOC. Thus at this junction interference in the process of inspection or subsequent action will affect the public interest as well as the greater economic interest of the Nation." Reading the aforesaid plea of the O.Ps., it becomes clear that inspection involving all the Companies has already been completed by the Inspecting Officer under the jurisdiction of the R.O.Cs., Odisha as well as West Bengal. So far Odisha part is concerned, the Petitioners are already in receipt of show cause notices ultimately establishing no involvement of non-compoundable offences. So far West Bengal part is concerned, there is specific pl....
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....ng so many disputes. Thus, this Court finds, first two decisions relied upon by the learned ASGI doesn't come to his rescue. The third decision relied the by the learned ASGI even the petitioner involving a fraud transaction, a Bank's reporting fleeing of Petitioner may risk recovery and even after proceeding under provisions of the SARFAESI Act initiated, Karnataka High Court allowed the petitioner to have his Foreign Trip but subject to condition proposed. This decision rather supports the Petitioners for their yet to face any such proceeding. 14. In the grim situation, this Court now takes into account the decisions operating the filed as of now, which are discussed herein below. In the case of Noor Paul vs Union of India and Others : reported in 2022 LiveLaw PH 69, Paragraphs-64, 65, 69 & 76 are extracted, as hereunder :- "(64) We may point out that the Office Memorandum No.25016/10/2017 - IMM dt.22.2.2021 placed for our perusal by the learned Additional Solicitor General ( the latest one said to contain consolidated guidelines for issuance of an LOC) states: " In cases where there is non-cognizable offence under the IPC and other penal laws, the LOC subject cannot be detai....
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....extend the benefit to the revisionist-accused of the law laid down in the judgment of Karti P. Chidambaram (Supra) because in the present case, the LOC has been issued with a view to interrogating the revisionist in the matter at hand wherein the FIR has already been lodged and the investigation is going on. Merely because the revisionist so far had been cooperating with the investigation, may not lead us to believe that he would not evade his arrest in future. If some incriminating evidence comes on record against him, the possibility cannot be ruled out in this case of his fleeing abroad." What clearly emerges is that in the aforesaid case, the Court was dealing with a situation, where a FIR had already been lodged and a criminal investigation was ongoing against the person against whom the LOC had been issued. The same was the situation in S. Martin v. Deputy Commissioner of Police SCC OnLine Mad 426. In the present case, as has already been noted, no proceedings under any penal law have, in fact, been initiated against the petitioner. These decisions are therefore, clearly distinguishable and do not, in any manner forward the case of the respondents. 42. For the aforesaid r....
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....uld exercise its discretionary jurisdiction to interfere with the impugned LOC." Here the High Court of Madras held that the LOC can be issued only in cases where the accused in a criminal case was evading arrest and not appearing in the trial court. "Paragraphs- 28-32 of the decision in Rahul Surana Vs. The Serious Fraud Investigation Office : W.P.NO.2477 OF 2020 are extracted hereunder :- "28. The investigation, even after the elapse of three years, is stated to reveal only prima facie materials and no concrete evidences are stated to have been found been found to implicate the petitioner or frame charges. Admittedly, however there are no proceedings against the petitioner so as to implicate him before the Criminal Court or in any other fora to justify the restrictions under which he has been placed. 29. Admittedly, there have been no instances when the petitioner has evaded summons/notices calling for his attendance/appearance. The Central Bureau of Investigation (CBI) has confirmed that there are no investigations that are ongoing in the case of the petitioner, though reserving their right to initiate appropriate action at an appropriate juncture in future. 30.....
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....s allowed. MPs are closed with no order as to costs." Here the Madras High Court again held that bald assertions the Petitioner is a flight risk is not sufficient to issue LOC and therefore, Madras High Court set aside the LOC. 15. This Court here finds, there is support of all above decisions to the case of the Petitioners. 16. Now reverting back to the factual aspect, this Court finds, even though there involves allegation all through that there is information of the Petitioners fleeing away after taking 600 crores to 700 crores from different banks even after a preliminary counter affidavit and an additional affidavit by the Department, there is even no specific allegation on actual loan involved the Petitioners and their Company and any default therein. It is needless to observe here that there is no declaration of NPA involving any account involving the Petitioners by any bank as of now. Allegation at this stage appears to be speculative and imaginary and in the circumstance, there cannot be taking away liberty of any of the Petitioners. 17. The investigation even after so much lapse of time failed in bringing any concrete evidence to implicate any of the Petitioner....