TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1455
X X X X Extracts X X X X
X X X X Extracts X X X X
....mpany M/s Drish Shoes Ltd. The Background facts (3) The petitioner herein, aged about 30 years, was a Director in respondent No.5 Company run by her father and others. (4) Respondent No.5 availed a loan from the respondent No.2- Bank for which the petitioner stood as a guarantor along with others. (5) She resigned from the Board of the respondent No.5 on 13.07.2021 but continues to be the guarantor for the loan taken by respondent No.5 from respondent No.2. (6) There was a default committed by respondent No.5 in servicing the loan availed by it from respondent No.2 and so the said respondent recalled the loan by issuing the demand notice dt. 22.11.2021 to respondent No.5 and its guarantors including the petitioner under Section 13(2) of the SARFAESI Act, 2002 demanding a sum of Rs.121,17,11,148.70. (7) It is stated by petitioner that one of the operational creditors of the respondent No.5 filed on 02.09.2021 an application under Section 9 of the IBC, 2016 before the NCLT, Chandigarh and when the matter had come up on 31.01.2022, counsel for respondent No.5 had informed the NCLT that they are admitting the claim of the said creditor and also sought time to file reply before t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e records/Passport of the petitioner with respect to the said LOC and seeks a Writ of Mandamus directing the respondents to allow her to travel abroad to pursue her studies. Contentions of Petitioner (16) The petitioner contends that on 23.2.2022, she received a caveat petition filed by respondent no.2 mentioning about the LOC dt.28.12.2021 issued at the behest of the respondent No.2 bank, but it's copy was not supplied to her. The petitioner alleges that respondent No.5 sent a letter dt. 02.03.2022 to respondent No.2 specifically requesting for copies of the LOC issued at the instance of respondent No.2, copies of which were also sent to respondents No.3&4, but still they did not provide the petitioner LOC dt. 28.12.2021 or its copy. (17) Petitioner contends that before respondent No.2 requested for issuance of LOC against her and others, it should have at least informed the petitioner and respondent no.5 of the same and that the action of the respondent Nos. 1,3 and 4 in not furnishing even a copy of the said LOC to her was illegal and arbitrary. (18) The petitioner contends that the scholarship secured by her was for study in a prestigious institution and was once-in-a-life....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount had been classified as NPA w.e.f. 08.11.2021, and since Rs.121,17,11,149 was owed by the said respondent to the said respondent-Bank as on 29.10.2021, the respondent No.2 entertained a strong apprehension and had reason to believe that the Directors/guarantors of the respondent No.5-company might leave the country without paying back their huge debt and without informing the respondent No.2, and that was why the LOCs were opened against the present Directors/guarantors of respondent No.5-Company. (24) The filing of proceedings under the IBC and initiation of proceedings under the SARFAESI Act are admitted. (25) Reliance is placed by respondent No.2 on a stock statement ( Annexure R-2) and certain inspection reports ( Annexure R3) pursuant to an inspection said to have been done from 06.12.2021 to 09.12.2021, and it is alleged that the entire stock of the company was siphoned off and only stock worth Rs.5 to 7 crores was left at the godown. (26) It is alleged that the proceeds of the sale of the stock were not deposited with respondent No.2 and there is an apprehension that the stock was removed to some other place to deceive the respondent No.2; and the said respondent ther....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uance of LOC. (33) It is stated that the legal liability for the action taken by the Immigration authorities pursuant to LOC rests with the Originator agency i.e. respondent No.2-Bank and not with respondent No.3; and that the respondent No.3 is only a custodian of LOCs and takes action against the subject at the Immigration checkpoints at the behest of the Originating agency. (34) It is stated that as per the existing instructions, the LOC can be modified/deleted/withdrawn by respondent No.3 only on the specific request of the authorized Originator on whose request the LOC was issued by respondent No.3. (35) It is stated that an Office Memorandum (OM) No.25016/10/2017-Imm (Pt.) dt. 12.10.2018 was issued by the Ministry of Home Affairs authorising the Banks to open LOC against any accused, or as per directions of any criminal court in India, and the LOC dt. 28.12.2021 was issued against the Writ petitioner at the instance of MD & CEO, Bank of India, Badra Kurla Complex, Bandra (East), Mumbai. (36) It is stated that the reason behind opening of LOC was that the petitioner was a guarantor for respondent No.5 which had defaulted in repayment of more than Rs.100 crores to responden....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ort Officer, Delhi intimating to her that it has been decided by the Government of India to impound her passport under Section 10(3)(c) of the Act in public interest and requiring her to surrender the passport within seven days from the date of receipt of the letter. The petitioner immediately addressed a letter to the Regional Passport Officer requesting him to furnish a copy of the statement of reasons for making the order as provided in Section 10(5) to which a reply was sent by the Government of India, Ministry of External Affairs on July 6, 1977 stating inter alia that the Government has decided "in the interest of the general public" not to furnish her a copy of the statement of reasons for the making of the order. The petitioner thereupon approached the Supreme Court under Art.32 of the Constitution of India challenging the action of the Government in impounding her passport and declining to give reasons for doing so. (44) A 7-judge Bench of the Supreme Court in 1978 declared that no person can be deprived of his right to go abroad unless there is a law enabling the State to do so and such law contains fair, reasonable and just procedure. It held: " 5. ...Thus, no person ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... provision for supply of copy of the LOC to the subject of the LOC, supply of reasons for issuing of the LOC or for even a post decisional hearing. (51) In State of West Bengal vs. AB.K. Ltd (2 supra) the Supreme Court held that there should be communication of an order adverse to a citizen and only then it would come into effect. (52) In Maneka Gandhi ( 1 supra) it was held that in certain situations, there could also be a post-decisional remedial hearing since the rule of audi alteram partem is a flexible rule. (53) Did the respondent 1,3 and 4 follow fair, just and reasonable procedure to deprive the petitioner of her fundamental right to travel abroad? (54) We do not think so. (55) It may be that before issuing the LOC the respondent No.s 1,3 and 4 may not wish to issue a prior notice to the subject of the LOC like the petitioner because there is every possibility that, after receiving such notice, the subject may clandestinely leave the country. (56) But we see no impediment to give a post decisional opportunity to the petitioner by supplying to the subject of LOC, the copy of the LOC, and the reasons for issuing it so that the subject of the LOC can take legal recourse ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rstand how the petitioner can be termed as an 'accused' as is mentioned in the LOC when admittedly no criminal case has been initiated in any court in the country against her. (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 detained/arrested or prevented from leaving the country. The originating Authority can only request that they be informed about the arrival/departure of the subject in such cases." (65) When there is admittedly not even an FIR registered against the petitioner, and there is no question of her being accused of any non-cognizable offence, no LOC could have been issued by respondent No.3 to detain the petitioner. At best, the respondent No.3 could have only given information to respondent No.2 about the arrival/departure of the subject according to the OM dt. 22.02.2021. (66) No doubt the OM dt. 22.02.2021 contains a clause stating as under:- "In exceptional ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of default which would not fall in the said category. (70) Merely because the word 'public' is used in the exception clause in the OM, it does not elevate a mere default to an exceptional plane. It cannot be said that the departure of the petitioner from the country would adversely impact the economy of the 'country as a whole' and de-stabilize the 'entire economy' of the country. (71) The stand of respondent No.2 in para 6 of its reply that petitioner cannot be allowed to travel abroad without joining investigation cannot be countenaned because there is no criminal investigation initiated by respondent No.2 by filing an FIR. (72) As held in Vishambhar Saran (5 supra), it is incumbent upon the issuing authority of the LOC to ascertain at least whether the grounds disclosed in the LOC and/or the request for LOC fall within the four corners of the OM issued in that regard prima facie, though it may not be able to go into the merits/demerits of the allegations made against the subject by the originating authority. (73) It appears that merely for the asking by the respondent No.2, the LOC dt. 28.12.2021 was issued against the petitioner and she was detained by officials of responde....