TaxTMI 
TaxTMI 
2026 (5) TMI 1312
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmaceuticals Limited (hereinafter referred to as 'Elder'). He continued in such post till 2009. Thereafter, he was employed with Cell Life Therapeutics Pvt. Ltd., Cerberus Venture Pvt. Ltd., AR Printing and Packaging Pvt. Ltd., AR Printpack Ltd. and Stone Sapphire Pvt. Ltd. In the year 2013, he left India and moved to China. He joined Shanghai Shitai Co. Ltd. He eventually joined AD Global Limited in 2014 in Shanghai, and ever since then, he had been employed with the said company. He married a Chinese national and has two children. His elderly parents reside in Kolkata, and he frequently visits them. On 15th December, 2025, he along with his wife and children, came to Kolkata to meet his aged parents. On 21st December, 2025, when he was proceeding to Bangladesh to attend a conference from NSCB International Airport, Kolkata, the immigration authorities cancelled his boarding pass and ticket, and did not allow him to go to Bangladesh. He was asked to meet the higher officials of the Bureau of Immigration at the airport and upon meeting the officials, he came to know that a LOC had been issued against him on 7th February, 2025, in connection with the investigation into the affairs o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ourt so that conscionable justice may be done by quashing and/or setting aside the same, (d) Rule NISI in terms of the prayers. above; (e) An order of injunction be passed restraining the respondent authorities, their men, agents or servants from giving effect or further effect to the respondent no. 1's request for issuing Look Out Circulars issued against the petitioner; (f) An order be passed directing respondents to permit international travel for the petitioner from India to the Peoples Republic of China on such terms as this Hon'ble Court may deem fit and proper. (g) Ad-interim orders in terms of prayers above; (h) Costs; (i) Such further or other orders or orders be passed and/or direction or directions be given as Your Lordship may deem fit and proper." 4. Before the Single Bench, the Serious Fraud Investigation Office, being the respondent No. 1, filed a report in the form of an affidavit disclosing that the appellant did not co-operate with the investigation although there were materials to substantiate the connection between the appellant and the fraudulent activity of Elder. Facts leading to justifying the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Elder was initiated under Section 212 of the Companies Act, 2013, no specific role has been attributed to the appellant. The appellant had co-operated with the investigation. Therefore, the allegation of non-co-operation was misconceived. The investigation had already been completed and report was submitted to the Central Government. v) No direction for prosecution had been issued against the appellant under Section 212(14) of the Companies Act. In the absence of any pending proceedings, the apprehension of evasion of trial was speculative and perverse. The further ground that "economic interest of India" was affected by the acts and deeds of the appellant, lacked fundamental basis. The indefinite continuation of the LOC violated the appellant's fundamental right guaranteed under Article 21 of the Constitution of India. vi) Not a single criterion laid down in the Office Memorandum dated 22nd February, 2021, had been satisfied. Stray allegations of fraud and commission of economic offence detrimental which was to public interest, without attributing any specific role to the appellant, could not be the basis for taking such an extreme measure of restricting the per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....earned senior counsel appearing on behalf of the Respondents submitted as hereunder: - i) In exercise of powers under Section 212(1)(a) read with Section 212(1)(c) of the Companies Act, the Ministry of Corporate Affairs by an order dated 12th December, 2019, directed investigation into the affairs of Elder, a public listed company which, despite its status, was closely controlled by its promoters and had indulged in serious financial irregularities. ii) Winding up proceedings had been instituted before the Bombay High Court on account of non-payment of public deposits and mounting debts, culminating in the appointment of a Court Commissioner, i.e., M/s. T.R. Chadha & Co., to scrutinise the accounts of the company. The report so submitted, revealed large-scale siphoning off of funds, approximating to Rs. 1300 crores. The company was directed to be wound up, and an Official Liquidator was appointed. The Registrar of Companies, Mumbai, upon inspection under Section 206(5), of the Companies Act, 2013 detected grave violations of statutory provisions. iii) The Registrar of Companies, Mumbai, submitted its report, highlighting various violations and non-complia....
X X X X Extracts X X X X
X X X X Extracts X X X X
....terms of Section 212(14) were awaited. viii) The appellant had persistently evaded the investigative process. Summons issued to his last known address remained unserved, and despite receipt of the summons via email, the appellant failed to either respond to or appear before the authorities. Even when the appellant admittedly accessed his email while in Bangkok, he did not take any steps to contact the SFIO. Further, during his visit to India in December 2025, he failed to appear before the investigating agency and was stopped only when he was attempting to leave the country to Bangladesh by road. ix) Although the appellant undertook to furnish crucial documents, he failed to honour his commitment, despite repeated communications. Such conduct, clearly established deliberate non-cooperation and justified the apprehension that the petitioner would evade the process of law if permitted to leave India. 8. In the case of Ghanshyam Pandey v. Union of India 2023 SCC OnLine Del 936 the request to quash LOC was rejected by the Court on the basis that, even if no FIR was registered LOC could be continued. DISCUSSION AND FINDINGS:- 9. Having heard the submissions of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....equivalent level working in CBI; or (vi) Zonal Director in Narcotics Control Bureau (NCB) or an officer of equivalent level [including Assistant Director (Ops.) in Headquarters of NCB); or (vii) Deputy Commissioner or an officer of equivalent level in the Directorate of Revenue Intelligence or Central Board of Direct Taxes or Central Board of Indirect Taxes and Customs: or (viii) Assistant Director of Intelligence Bureau/ Bureau of Immigration (Bol); or * * * * * * (ix) Deputy Secretary of Research and Analysis Wing (R&AW); or (x) An officer not below the level of Superintendent of Police in National Investigation Agency; or (xi) Assistant Director of Enforcement Directorate; of (xii) Protector of Emigrants in the office of the Protectorate of Emigrants or an officer not below the rank of Deputy Secretary to the Government of India; or (xiii) Designated officer of Interpol; or (xiv) An officer of Serious Fraud Investigation Office (SFIO), Ministry of Corporate Affairs not below the rank of Additional Director (in the rank of Director in the Government of India); or (xv) Chair....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rameters quoted hereinabove were not covered. 12. Sub-paragraph (L) of the 2021 policy lays down the exceptions. The same is quoted below: - "(L) In exceptional cases, LOCs can be issued even in such cases, as may not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (B) above, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point of time." 13. In this case there was no input that the departure of the appellant would be detrimental to the sovereignty, security and integrity of India, or detrimental to the bilateral relationship of India. A general allegation that the appellant was close to the provisions of Elder, who h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n into the affairs of the said company to the Serious Fraud Investigation Office and its Director, may designate such number of inspectors, as he may consider necessary for the purpose of such investigation. (2) Where any case has been assigned by the Central Government to the Serious Fraud Investigation Office for investigation under this Act, no other investigating agency of Central Government or any State Government shall proceed with investigation in such case in respect of any offence under this Act and in case any such investigation has already been initiated, it shall not be proceeded further with and the concerned agency shall transfer the relevant documents and records in respect of such offences under this Act to Serious Fraud Investigation Office. (3) Where the investigation into the affairs of a company has been assigned by the Central Government to Serious Fraud Investigation Office, it shall conduct the investigation in the manner and 131 follow the procedure provided in this Chapter; and submit its report to the Central Government within such period as may be specified in the order. (4) The Director, Serious Fraud Investigation Office shall....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Serious Fraud Investigation Office shall, immediately after arrest of such person under sub-section (8), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Serious Fraud Investigation Office in a sealed envelope, in such manner as may be prescribed and the Serious Fraud Investigation Office shall keep such order and material for such period as may be prescribed. (10) Every person arrested under sub-section (8) shall within twenty-four hours, be taken to a Judical Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate's court. (11) The Central Government if so directs, the Serious Fraud Investigation Office shall submit an interim report to the Central Government. (12) On completion of the investigation, the Serious Fraud Investigation Office shall submit the investigation report to the Central Government. 1. Subs. by Act 21 of 2015, s. 17, for certain words, brackets and figures (w.e.f. 29-5-2015). 132 (13) N....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... by the Registrar of Companies, Mumbai it was also found that EPL failed to pay about 23,946 public deposit holders and diverted the funds illegally. As per investigation, it reveals that EPL fraudulently siphoned off the funds resulting in no repayment of deposits collected from the Public to the tune of Rs. 176.59 crores pertaining to 23,946 holders. * * * * * * 22. At the time of investigation, summons was sent to the petitioner as per last known address but the same was returned "unserved". An e-mail was also sent to the petitioner but the petitioner has taken the plea that in China there is restriction on Yahoo's servers but has admitted that he came to know about the email when he accessed his Yahoo email when he was in Bangkok in February, 2025 but inspite of the same, the petitioner failed to contact with the Investigating Agency or sent any reply to the said email. As per the case of the petitioner, the petitioner came to Kolkata on 15th December, 2025 but failed to meet the Investigating Agency. The authorities have apprehended the petitioner when the petitioner was intending to proceed to Bangladesh on 21st December, 2025. 23. When the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is not on record whether such LOC has been issued or not. The Bureau of Immigration, Ministry of Home Affairs (Foreigners Division) and all the other members of the consortium of banks, apart from PNB were impleaded as respondents in this proceeding. None of these respondents have come up before the Court in support of the request of BOB. They have not contested the proceedings. Clause 3.1 of the SOP (Annexure P2, Page no. 26 of Writ petition) states that the responsibility for requesting issuance of LOC in respect of a defaulter would be on the leader of the consortium of banks or on the holder of the biggest share or exposure amongst them. In this case, the LOC originated by the lead bank, having the highest exposure has been quashed by a Co-ordinate Bench for the reasons which have already been quoted hereinabove. Default of the borrower cannot be read into the expression "detrimental to the economic interest of the country". In order to cause injury to the economic interest of the democracy of India, the commission of alleged offence of default must be of high degree so as to shake the growth, financial stability, business transactions, bilateral trade relations, investments, s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erty. Thus, the very foundation of the decision of the learned Single Judge is erroneous speculative and misplaced. 24. The constitutional dimension of the issue further fortifies the appellant's case. In Maneka Gandhi v. Union of India (1978) 1 SCC 248, the Hon'ble Supreme Court unequivocally held that the right to travel abroad is an integral facet of personal liberty under Article 21, and any restriction thereon must satisfy the test of being just, fair and reasonable. The impugned LOC, which effectively prevents the appellant from resuming his professional commitments abroad, and separation from his family, constitutes a serious invasion of his right. 25. It is equally well-settled that such restrictions must meet the test of proportionality, namely, that the measure must have a legitimate aim, be rationally connected to that aim, be necessary in the sense that no lesser restrictive alternative is available. The measure must strike a proper balance between competing interests. In the present case, while the objective of securing investigation into alleged economic offences may be legitimate, the continuation of the LOC, after completion of the investigation and without an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uring undertakings may adequately safeguard the interests of the authorities without resorting to an absolute restraint on travel. 30. We find the decision in Dr. Prannoy Roy v. Union of India in W.P.(C) 5316/2021 to be relevant. The Delhi High Court emphasised that mere existence of allegations or pendency of investigation does not, by itself, justify the issuance or continuation of an LOC. The decision further underlines the requirement to adopt the least restrictive measure to make sure that an individual does not evade appearance in court. The Court recognised that conditions such as undertakings, intimation of travel, or other safeguards are sufficient to protect the interests of the investigation, while also protecting the rights of the individual which have been guaranteed under Article 21 of the Constitution. 31. In view of the above, the impugned action suffers from the vice of arbitrariness and disproportionality and is inconsistent with the settled legal principles governing origination of LOCs. The continuation of the LOC, in the absence of any pending proceeding and based on speculative apprehension, results in an unwarranted infringement of the appellant's funda....