TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 208
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 'LOC'] opened against the petitioner, by the respondent no. 1 i.e. Bureau of Immigration, in relation to the ongoing investigation into the affairs of Gensol Engineering Limited [hereafter 'Gensol Engineering'] and its connected/related/associated entities, initiated by the respondent no. 1 (Union of India through Ministry of Corporate Affairs) in terms of Section 210(1)(c) of the Companies Act, 2013 [hereafter 'Companies Act']. 2. By way of the present application (CRL.M.A. 25709/2025), the petitioner is seeking grant of an ad-interim direction suspending the aforesaid LOC, and permitting the petitioner to travel outside India, during the pendency of the present petition. FACTUAL BACKGROUND 3. Succinctly, the facts of the case, as put forth by the respondents, are that the petitioner is a citizen of the United States of America (USA) and presently resides in Switzerland. He was designated as a Non-Executive Director of Blu-Smart Mobility Private Limited [hereafter 'Blu-Smart Mobility'] in the year 2020, and was later re-designated as an Independent Director in July 2024, a position he held until his resignation on 17.05.2025. It is stated that the Gensol Group and BluSma....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ong with other non-executive directors, lodged a formal complaint with the company's promoters, shareholders, and the external auditor, M/s Grant Thornton, on 26.04.2025. Having received no response, the petitioner had also lodged a complaint before the Registrar of Companies, Ahmedabad [hereafter 'ROC'] regarding the alleged irregularities. According to the petitioner, the investigation under Section 210(1)(c) of the Companies Act, was initiated only after his complaint. However, instead of acting on his grievances, the authorities issued summons dated 08.05.2025 under Section 217(4)(a) of the Companies Act, erroneously describing him as the Managing Director of Blu-Smart Mobility. The petitioner alleges that despite the summons being returnable on 19.05.2025, the ROC recommended issuance of an LOC against him on 13.05.2025 - prior to the scheduled date of appearance and before he could respond or appear. The petitioner submits that he responded to the summons on 15.05.2025, clarifying his limited role and seeking permission for virtual appearance due to medical reasons and his residence abroad, but he received no response. He subsequently resigned as a Non-Executive Director on 1....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... formally complained to the promoters, shareholders, and the ROC about alleged irregularities in Blu-Smart Mobility, which led to the initiation of the present investigation. 7. The learned senior counsel also argues that the impugned LOC has been issued in contravention of the Office Memoranda dated 27.10.2010 and 22.02.2021 issued by the Ministry of Home Affairs, which strictly limit the issuance of LOCs to cases involving cognizable offences or where there exists a substantiated apprehension of the person absconding from the legal process. In the present case, no cognizable offence has been alleged or established against the petitioner, and the allegations under the Companies Act are regulatory in nature. Reliance is placed on several judicial precedents to contend that issuance of LOC against a non-executive or independent director, in absence of any criminal case or cognizable offence, is impermissible in law. 8. It is further urged that the petitioner has at all times cooperated with the investigation; he had promptly responded to the summons dated 08.05.2025 by submitting a detailed reply on 15.05.2025, clarifying his limited role and seeking virtual appearance due to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....im to attend to pressing medical, familial, and professional obligations abroad. On Behalf of the Respondent nos. 1 and 3 12. Opposing the prayer for suspension of the LOC, the learned counsel appearing for respondent nos. 1 and 3 submits that the issuance and continuation of the LOC against the petitioner is legally justified, procedurally sound, and necessary in the facts of the present case. It is contended that the LOC was issued strictly in accordance with the Ministry of Home Affairs Office Memorandum dated 22.02.2021, after following due process, based on the Investigating Officer's Status Report dated 13.05.2025. The said recommendation was made upon the discovery of a large-scale financial fraud amounting to approximately Rs. 2,385 crores of public funds, and there existed a credible apprehension that several individuals connected with the entities under investigation, including the petitioner, may abscond from India to foreign jurisdictions. The learned counsel argues that the petitioner's role and connection to the fraudulent transactions cannot, at this stage, be ruled out, as the petitioner had been associated with Blu-Smart Mobility as a Non-Executive Director s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e petitioner's argument that he is a victim rather than a beneficiary, is a matter of defence that can only be examined after the investigation is complete. 15. With respect to the petitioner's alleged cooperation, the learned counsel submits that the petitioner did not appear before the authorities despite issuance of summons dated 08.05.2025 and did so only after this Court's direction dated 01.09.2025. It is argued that merely attending a single hearing or furnishing documents after the intervention of the Court does not justify suspension of the LOC, and cooperation per se does not entitle a person to quashing or suspension of an LOC, particularly when the investigation is at a nascent stage. It is lastly argued that the offences being investigated under Section 447 of the Companies Act are cognizable in nature, and the present investigation concerns a complex, multi-layered financial fraud. Therefore, continued cooperation of the petitioner is important in the larger public interest. In these circumstances, the learned counsel submits that no case is made out for granting unconditional interim relief or for suspension of the LOC, which continues to be essential to ensure th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cannot be determined at this stage. 19. The petitioner has also argued that, in terms of the Office Memoranda of the Ministry of Home Affairs and various judicial precedents, an LOC can be opened only in cases involving cognizable offences, whereas the alleged violations under the Companies Act, 2013 are regulatory and non-cognizable in nature. The respondents, on the other hand, contend that offences under Section 447 of the Companies Act, 2013 are cognizable, and the investigation, which though as of now is at a very initial stage, concerns a large-scale, complex corporate fraud with serious economic implications. It is their case that the LOC was issued in accordance with the MHA Office Memorandum dated 22.02.2021, which permits such preventive measures in matters involving significant economic interests of India. Since these contentions go to the legality and validity of the LOC itself, they shall be considered at the stage of final hearing of the main writ petition. 20. At this stage, the Court is concerned only with the limited issue of whether the LOC ought to remain operative during the pendency of the present petition. 21. Admittedly, the petitioner is a citizen o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the same time, it is the petitioner's case that he is employed with one M/s Partners Group, based in Switzerland, and that his professional responsibilities require him to frequently travel between Switzerland, Singapore, and India. He resides in Switzerland with his wife and two minor daughters, all of whom are stated to be suffering from certain medical conditions. The relevant medical documents in this regard, as produced by the petitioner, have not been disputed by the respondents at this stage. The petitioner also has no prior criminal record. 26. In these circumstances, this Court is of the considered view that while the investigation into the affairs of the concerned companies must be allowed to proceed unhindered and without obstruction, the petitioner's liberty and professional as well as personal life cannot be placed in indefinite suspension, particularly when it is yet to be determined whether he will ultimately be treated as an accused in the matter. The petitioner is admittedly a foreign national - a citizen of USA - who had arrived in India on 28.07.2025 to visit his family, and ever since, he has not been permitted to leave the country owing to the subsistence of....