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PRATHIBA M. SINGH
Brij Bhushan Kathuria – Appellant
Versus
Union of India – Respondent
JUDGMENT
Prathiba M. Singh, J. (Oral)--This hearing has been done through hybrid mode.
2. The Petitioner in the present petition has challenged the Look Out Circular (hereinafter, `LOC') issued against him by Respondent Nos. 3 and 4 i.e., the Ministry of Corporate Affairs (hereinafter, `MCA') and the Serious Fraud Investigation Office (hereinafter, `SFIO') and prays for the same to be quashed.
3. The brief background of the matter is that the Petitioner is a Chartered Accountant who was inducted in the Board of M/s Techpro Systems Limited, as a Non-Executive Independent Director, in the Annual General Meeting dated 26th September 2007. The Petitioner is working in Oman and relocated there on 24th October, 2009. He is stated to have resigned from the post of Independent Director of M/s Techpro Systems Limited on 13th January, 2015 due to his full time employment in Oman and health concerns. In 2017, Corporate Insolvency Resolution Proceedings were initiated against M/s Techpro Systems Limited, and on 5th May 2019, the Resolution Plan was approved by the NCLT.
4. The case of the Petitioner is that he had travelled to India on 2nd February, 2021 and was scheduled to fly back to Oman
The Court considered the question of whether the Look Out Circular deserves to be stayed and suspended its operation based on the absence of a flight risk and specific conditions imposed on the Petit....
Look Out Circulars cannot be issued without a cognizable offense, violating fundamental rights, as established by the relevant Office Memorandum.
The judgment establishes the exceptional circumstances under which Look Out Circulars (LOC) can be issued, emphasizing the need for credible material and reasons to support the issuance of an LOC.
The issuance and continuation of a Look-Out Circular must be justified by compelling reasons, specifically regarding flight risk or evading justice; lack of fresh evidence can render it arbitrary.
The court emphasized the authority of the Serious Fraud Investigation Office (SFIO) and the necessity of the Petitioner's presence for effective investigation into the affairs of Gitanjali Gems Limit....
Lookout Circulars must be periodically reviewed and cannot be misused as debt collection mechanisms against independent directors after they cease their directorship.
The court's decision was based on the consideration of the petitioner's medical condition, cooperation in the investigation, and the ongoing nature of the investigation by the Enforcement Directorate....
Look Out Circulars must adhere strictly to legal frameworks and cannot deny fundamental rights without justifiable grounds.
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