Full Text
HIGH COURT OF DELHI
Date of Decision: 06th FEBRUARY, 2024 IN THE MATTER OF:
SHALINI KHANNA ..... Petitioner
Through: Mr. Hrishikesh Baruah, Mr. Kumar Kshitij and Mr. Anurag Mishra, Advocates.
Through: Mr. Ajay Digpaul, CGSC
Mr. Ashish Verma and Mr. Kartikey Bhargava, Advocates for R-2.
JUDGMENT
1. The Petitioner has approached this Court challenging a Lookout Circular issued by Respondent No.1/Bureau of Immigration at the instance of Respondent No.2/Bank of Baroda.
2. The facts of the case reveal that in June, 2013, Metaphor Exports Private Limited, a company engaged in the business of garment manufacturing through its Directors Pran Nath Khanna, Mr. Sameer Khanna (the husband of the Petitioner herein) and Ms. Anju Khanna, had approached the erstwhile Bank of Baroda for availing cash credit facilities of Rs.[9] crore.
3. It is stated that the Petitioner executed a Deed of Guarantee for repaying the amount disbursed by Respondent No.2/Bank for the cash credit facilities to be extended by the Bank. The Deed of Guarantee, specifically states that the Guarantee shall not exceed Rs. 2.63 crores which is the fair from the value of the property at DLF, Park Place, Gurgaon. The Deed of Guarantee observes that the Petitioner has mortgaged the said property to the company as security for the cash credit for Rs. 9 crore.
4. It is stated by the Bank that cash credit facilities to the tune of Rs. 7 crore based on the stock and book debts of the company were released and out of the said Rs. 7 crore, a sum of Rs. 5.95 crore was withdrawn by the Directors of the company.
5. It is stated that the amount has been misappropriated. The account of the company was classified as a Non-Performing Asset (NPA) on 30.06.2014 and on that date, a balance of Rs. 7.26 crore was due and payable by the company.
6. It is stated that Respondent No.2/Bank initiated proceedings under Section 19 of the Recovery of Debts Due to Banks and Financial Institutions Act (in short ‘RDDBFI Act’) before the Debts Recovery Tribunal (DRT) by filing O.A. No. 295/2014 titled as Bank of Baroda v. M/s Metaphor Exports & Anr., and vide Judgment dated 12.02.2017, the learned DRT held that Respondent No.2/Bank is entitled to recover a sum of Rs. 2,95,74,316/along with pendente lite interest and future interest @ 12% per annum simple interest from the Petitioner, in terms of the guarantee from the Petitioner.
7. It is also stated that a complaint was registered by the Central Bureau of Investigation (CBI) being FIR No- RC-2192016E0014 against the Petitioner herein and the Directors of the company under Section 420 and 120B IPC read with Section 13 (1)(d) and Section 13(2) of the Prevention of Corruption Act.
8. It is stated that in terms of the Office Memorandum issued by the Ministry of Home Affairs, a request was made by the Bank of Baroda for opening a Look Out Circular (LOC) against the Petitioner and the Bureau of Immigration being the executor opened a Lookout Circular against the Petitioner.
9. Material on record discloses that a chargesheet has been filed by the CBI in the abovementioned FIR No- RC-2192016E0014 and the Petitioner has not been arrayed as an accused. She has been kept in column No.12.
10. Learned Counsel for the Petitioner contends that the Petitioner is not an accused in any offence. He also states that the property being Flat No. PPC-124/ 12th Floor, Tower No. C, DLF Park Heights, DLF Park Place, DLF Phase-V, Gurugram, Haryana, has already been sold by the Bank. He states that an LOC cannot be opened against the Petitioner only for recovery of money.
11. Learned Counsel for the Petitioner states that the right of a person to free movement including the right to go abroad has been construed as a Fundamental Right enshrined under Article 21 of the Constitution of India. He states that in view of the fact that civil remedies have already been availed by the Banks against the Petitioner, the LOC issued against the Petitioner deserves to be quashed. He states that the case of the Petitioner cannot be covered by any of the Office Memorandums issued by the Ministry of Home Affairs under which an LOC can be issued.
12. Per contra, learned Counsel for the Respondent No.2/Bank, contends that even if there is no cognizable offence under the IPC or any other penal laws, in exceptional circumstances LOC can be issued whereby departure of a person from India can be declined if it appears to the authorities that the departure of such person is detrimental to the economic interests of the country. He states that substantial amounts of money have been siphoned off by the directors of the company, i.e., Metaphor Exports Private Limited. He states that the Petitioner has not been given a clean chit and has been kept at Serial No. 12 of the chargesheet and, therefore, the LOC should not be quashed.
13. Heard learned Counsel for the parties and perused the material on record.
14. Lookout Circular can be issued against a person at the instance of any of the agencies mentioned in the Office Memorandums issued by the Ministry of Home Affairs from time to time.
15. Relevant portion of the Office Memorandum bearing No.25016/10/2017-Imm (Pt.) dated 22.02.2021 which is the last of the guidelines which have been issued for opening of LOCs in respect of the Indian Citizens and Foreigners reads as under:
58. In Vishambhar Saran v. Bureau of Immigration (W.P. No. 10241(W) of 2020, decided on December 24, 2021) [2021 SCC OnLine Cal 3074.], the Calcutta High Court held that vague allegations of a person's travel being detrimental to the economic interest of the country or the quantum of the alleged default (Rs. 351 crores in this case), is not sufficient to issue a look-out circular thereby restricting the personal liberty of a person to travel. In the said petition, no civil or criminal proceedings were initiated against the petitioner and thus the petitioner was allowed to travel. This view was echoed in Vishambhar Saran v. Bureau of Immigration (W.P.A. No. 6670 of 2022, decided on January 31, 2023).
59. In Vikas Chaudhary v. Union of India (W.P. (C) No. 5374 of 2021, decided on January 12, 2022) [(2022) 442 ITR 119 (Delhi).], the petitioner was a businessman engaged in the export of garments to a number of foreign countries. A look-out circular was issued against the petitioner on the ground of undisclosed foreign assets and interests in foreignentities liable for penalty and prosecution under the Income-tax Act, 1961, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of tax Act, 2015, as also the proceedings under the Prevention of Money Laundering Act, 2002, having been commenced against the petitioner. The petitioner did not hold any foreign assets and any undisclosed assets. xxx
61. The court noted that the phrase “detrimental to the economic interests of India” was introduced for the first time in the Office Memorandum (hereinafter “OM”) dated December 5, 2017. The said phrase did not exist in the previous Office Memorandum dated October 27, 2010. However, it continues to exist in all the subsequent Office Memoranda. In this context, the court observed as under ( ITR): “36. However, the matter does not end here and the crucial issue which needs to be now determined is as to whether the clause „detrimental to the economic interests of India‟ introduced vide the amendment in 2017, with a specific rider that the same would be used only in exceptional circumstances, could have, in the facts of the present case, been resorted to, for issuing the impugned look-out circular, as also whether the impugned look-out circular could be continued for the last almost three years without any proceedings under the Penal Code, 1860 or any other penal law being initiated against the petitioner. It has to be kept in mind, that the issuance of a look-out circular necessarily curtails the rights of an individual to travel abroad and therefore, I am of the view, that for invocation of this clause, which, in any event, is meant to be used only in exceptional circumstances, a mandatory precondition would be a formation of a reasonable belief by the originating authority that the departure of an individual would be ‘detrimental to the economic interests of India’ to such an extent that it warrants curtailment of an individual's fundamental right to travel abroad… xxx
39. Merely because the Office Memorandum dated December 5, 2017 permits the issuance of a look-out circular, in exceptional circumstances, even when the individual is not involved in any cognizable offence under the Penal Code, 1860 or any other penal law, it has to be remembered that this power is meant to be used in exceptional circumstances and not as a matter of routine, it must therefore, be interpreted in a manner that indicates an offence of such a magnitude so as to significantly affect the economic interests of the country. Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company cannot, in my view, be accepted as the basis for holding that the petitioner being allowed to travel abroad would be „detrimental to the economic interest of India‟, when it is undisputed that this suspicion has remained a suspicion for such a long period of almost three years.”
62. Thus, the conclusion of the court was that exceptional circumstances could exist even if a person was not involved in any cognizable offence under the Penal Code, 1860 or under any other penal law. In the said petition, the look-out circular was quashed by the court. xxx
82. The term “detrimental to economic interest” used in the Office Memorandum is not defined. Some cases may require the issuance of a look-out circular, if it is found that the conduct of the individuals concerned affects public interest as a whole or has an adverse impact on the economy. Squandering of public money, siphoning off amounts taken as loans from banks, defrauding depositors, indulging in hawala transactions may have a greater impact as a whole which may justify the issuance of look-out circulars. However, issuance of look-out circulars cannot be resorted to in each and every case of bank loan defaults or credit facilities availed of for business, etc. Citizens ought not to be harassed and deprived of their liberty to travel, merely due to their participation in a business, whether in a professional or a non-executive capacity. The circumstances have to reveal a higher gravity and a larger impact on the country.” (emphasis supplied)
20. Though Paragraph (L) of the aforesaid Office Memorandum permits the Banks to issue a request for opening a lookout circular, in exceptional cases, even if they are not covered by the guidelines, even in such of those cases, the same can be issued only if departure of such person is detrimental to the sovereignty or security of the country, or departure of the person is threat to the bilateral relations to any country, or to the strategic or economic interest of the country, or if such person is allowed to leave, he may potentially indulge in acts of terrorism or offences against State or that such departure ought not be permitted in larger public interest at any given point of time.
21. It is well settled that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offence under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine.
22. The term ‘detrimental to the economic interests’ must be of such a magnitude that it can significantly affect the economic interest of the country. In the present case, the total loan amount disbursed is about Rs.[7] crores and even if one adds the interest to it, it cannot be said that the amount is so large that it will affect the economic interests of the country.
23. The issuance of lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts.
24. Paragraph 16.52 of the chargesheet which has been filed in the present case discusses the role of the Petitioner herein. Paragraph 16.52 of the chargesheet reads as under:- “16.52 During investigation role of Smt. Shalini Khanna w/o Sanjay Khanna (A-4), Guarantor of the credit facility given to M/s. Metaphor Export Pvt Ltd (A-6) have also been looked into. It is revealed that she had not prior knowledge of fraudulent acts or omission of accused person at the time of her giving Collateral Security and Personal Guarantee to the Bank. Hence, her name has been kept in the column no. 12 of Charge sheet.”
25. The aforesaid paragraph indicates that after investigation, the CBI was of the opinion that the Petitioner herein had no prior knowledge of the fraudulent acts or omission of the accused at the time of her giving collateral security and personal guarantee.
26. In view of the foregoing, this Court is inclined to quash the Lookout Circular (LOC) issued against the Petitioner. However, in case during the course of the criminal proceedings, the Petitioner is arrayed as an accused, it is always open for Respondent No.2 to make a request to the Bureau of Immigration to open a fresh LOC against the Petitioner.
27. With these observations, the petition is allowed. Pending application(s), if any, stand disposed of.
SUBRAMONIUM PRASAD, J FEBRUARY 06, 2024