The SFIO has the authority to issue a Look Out Circular during fraud investigations under the Companies Act, and principles of natural justice do not apply to criminal complaints regarding fraud.

JUDGMENT :

DEBANGSU BASAK, J.

Contents

Preface

1. Two appeals have been heard analogously as they emanate out of the same impugned judgment and order dated September 5, 2024 passed by the learned Single Judge in WPA 25668 of 2022.

2. Bank of Baroda has filed MAT 1889 of 2023 while Union of India and its functionaries have filed MAT 1823 of 2023 assailing the same impugned judgment and order.

3. Bank of Baroda had, sought leave to withdraw its appeal on July 17, 2025 when, after observing that Bank of Baroda is the lead banker of a consortium of bankers who lent and advanced various credit facilities to the borrower company, we postponed the decision on the request of Bank of Baroda not to proceed with their appeal.

Contentions of SFIO

4. Mr. Sukanta Chakraborty, learned Advocate appearing for the appellants in MAT 1823 of 2023 (for the sake of convenience, the appellants therein are referred to as SFIO) has contended that, SFIO issued a Look Out Notice in terms of the Issuance of Look Out Circular. He has submitted that, such Look Out Circular was amended from time to time and ultimately, on October 12, 2018. He has contended that, the private respondent attempted to leave the country as will appear from the pleadings in the writ petition filed by the private respondent. He has referred to paragraph 10 of the writ petition in this regard.

5. Learned Advocate appearing for SFIO has referred to the order of the Central Government passed under Section 212 of the Companies Act, 2013 dated June 3, 2020. He has contended that, the borrower company suffered proceedings under the provisions of the Insolvency and Bankruptcy Code, 2016 and that, a Resolution Professional was appointed in respect of the borrower company. The Resolution Professional had made a representation to the Central Government and consequently, Central Government authorised SFIO to nominate inspectors to investigate into the affairs of the borrower company.

6. Learned Advocate appearing for the SFIO has contended that, from time to time, personnel of the investigator was changed. SFIO has undertaken the investigation as directed. SFIO has submitted charge sheet before the jurisdictional Court.

7. Learned Advocate appearing for the SFIO has contended that, his client applied before the National Company Law Tribunal (NCLT), Kolkata Bench in CP 365 (KB) 2022 IA 1 (KB) 2023 for various reliefs. NCLT by an order dated February 7, 2023, had directed the borrower and others to disclose on affidavit their assets. NCLT had also issued various other directions.

8. Learned Advocate appearing for the SFIO has contended that, subsequent to the conclusion of the investigations, SFIO filed a complaint, seeking prosecution against the private respondents amongst others, for violation of and offences punishable under the Companies Act, 1956 and Companies Act, 2013. He has pointed out that, Ministry of Company Affairs, by a writing dated April 1, 2024 granted approval for necessary action against the private respondents herein under Section 212 (14) of the Act of 2013.

9. Learned Advocate appearing for the SFIO has contended that, since, there are materials on record to establish that, the private respondents committed fraud and that, it was in public interest that, none of the private respondents leave the country, the decision to issue the look out notice should not be faulted. He has contended that the banks and financial institutions of the country stood defrauded of a sum of Rs. 2,677 crores at the behest of the private respondents