TaxTMI 
TaxTMI 
2026 (1) TMI 1016
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....6 before the National Company Law Tribunal, Cuttack Bench. The Company was admitted in Corporate Insolvency Resolution Process (CIRP) on 30th November, 2021. During the CIRP, the Resolution Professional has been in charge of the affairs of the Company. At the instance of the Resolution Professional, a Transaction Audit Report was prepared by a Forensic Auditor dated 30th July, 2022. The Auditor did not find any fraud in the transaction carried out by the Company through its Board of Directors. 3. Mr. Sabyasachi Chaudhury, Learned Senior Advocate representing the petitioner submits that despite the Transaction Auditor appointed by the Resolution Professional already reported that there is no fraud in the business transactions by the Company through its erstwhile Board of Directors, the respondent no. 1 has proceeded on the basis of an ex-parte Report in the form of an order prepared behind the back of the petitioner under Section 208 of the Companies Act, 2013, being Order No. 3/67/2109/CL-II(ER). He submits that there is no act of fraud committed by the company or the petitioner. There is no record of fraud against the petitioner or the Company or the Suspended Board. 4. Mr. ....
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....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 invariably be provided without which the subject of an LOC will not be arrested/detained. He submits that Clause 6 (I) says that in cases where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The Originating Agency can only request that they be informed about the arrival/departure of the subject in such cases. 10. Mr. Chaudhury submits that issuance of the LOC has resulted in consequence of curtailing the right of the petitioner to travel under Article 21 of the Constitution of India. The proceeding initiated against the petitioner is still at the stage of investigation and till date no cognizable offence is made out against the petitioner. 11. Mr. Chaudhury in support of his case, has relied upon the judgment in the case of Vishambhar Saran Vs. Bureau of Immigration and Others reported in 2021 SCC OnLine Cal 3074 and submits that in the said case also the respondents have failed to show as to why departure of the petitione....
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....ond India, the petitioner will remain beyond India by which the investigation will be adversely effected and will cause severe detriment to public interest which is the consideration for the Central Government to direct investigation by the SFIO. He submits that the Companies Act, 2013 being a special statute has an overriding effect on the Code of Criminal Procedure, 1973 and the SFIO is a specialized agency to investigate into frauds committed under the Companies Act, 2013. He submits that there is no mandatory timeline to complete investigation with respect to SFIO. 17. Mr. Trivedi relied upon the judgment in the case of Hemanta Kumar Banka Vs. Union of India and Ors. reported in 2023 SCC OnLine Cal 2441 and submits that the Hon'ble Division Bench of this Court held that there can be no second opinion that the health of a public sector banks is a vital qua in Indian economy. The Public Sector Banks play vital role in the growth and expansion of our country's financial system. 18. Mr. Trivedi relied upon the judgment in the case of Chaitya Shah Vs. Union of India & Others reported in 2021 SCC OnLine Bom 3967 wherein the Division Bench of the Hon'ble Bombay High Court held t....
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....er the Indian Penal Code initiated against the petitioner. The respondents have invoked provisions of Section 212(1)(a) and (c) of the Companies Act, 2013. It is the case of the respondents that the matter primarily appears to be a fraud under Section 447 of the Companies Act, 2013. 22. As per Section 212(4) of the Act, the Director, Serious Fraud Investigation Office shall cause the affairs of the Company to be investigated by an Investigating Officer who shall have the power of the Inspector under Section 217. 23. As per Section 212(5) of the Act, the Company and its officers and employees, who are or have been in employment of the Company shall be responsible to provide all information, explanation, documents and assistance to the investigating officer as he may require for conduct of the investigation. 24. Section 212(1) provides that the Central Government may direct SFIO to investigate into the affairs of a company inter alia upon a receipt of the report of the Registrar, on intimation of a special resolution passed by a company, in public interest or on request from any department of the Central Government or the State Government. 25. Section 212(11) provides tha....
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.... the "Investigation Report" can be considered by the Central Government under Section 212(14) for the purposes of commencement of prosecution. On the other hand, an action before NCLT under Section 212(14-A) can be brought on based on either the Investigation Report or even the interim report. 32. It is further clear that the Central Government, under Section 212(14) is required to apply its mind, seek legal opinion (if required) and only thereafter decide whether or not a sanction order is to be issued i.e. if in its opinion prosecution is to be initiated based on the "Investigation Report". Further, only such "Investigation Report", which is considered by the Central Government for the initiation of prosecution under Section 212(14), is to be the police officer's report under Section 173CrPC. 33. Look-Out Circular issued in terms of the order of the Ministry of Corporate Affairs dated 19th July 2022. Admittedly, investigation is still going on. The respondents are not sure whether the offence alleged against the petitioner is fraud under Section 447 of the Companies Act, 2013. As per Section 212(11) SFIO must submit an "interim report" to the Central Government, if SFIO....
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....e." 51. None of the above criteria are satisfied in the present cases. The mere quantum of alleged default cannot be a basis for the extreme measure of restricting the personal liberty of the petitioners to travel inside or outside India. In the absence of any such ground, the LoC was ex facie vitiated. 52. In the event the authorities seek to resort to the quantum of alleged default for restricting citizens' departure outside the country, it is obvious that the quantum is relative and the amount of Rs. 350 crores can be exorbitant or meagre, depending merely on the whims of the authorities or the perspective of the judge. As such, in the absence of any stipulation in that regard in the relevant Office Memorandum, no cut-off line can be drawn between an amount which is detrimental to the sovereignty or security or integrity of India or to the economic interests of India and one which is not." 37. In the case of Vishambhar Saran vs. Bureau of Immigration & Ors. reported in MANU/WB/0692/2023 another Coordinate Bench of this Court held that : "59. In my opinion, personal liberty and the fundamental right of movement guaranteed by the Constitution cannot be curtai....