The right to travel abroad is protected under Article 21, and restrictions must be justified by credible evidence of flight risk or obstruction of justice.

JUDGMENT :

SANJEEV NARULA, J.

1. The Petitioner, formerly a Promoter and Director of Punj Lloyd Limited [“PLL”] impugns the Look Out Circular [“LOC”] issued against him at the behest of the Department of Revenue (Respondent No. 1) and the Serious Fraud Investigation Office [“SFIO”] (Respondent No. 2). The LOC, which restricts his international travel, was initially impugned to enable a trip to the United Kingdom from 14th August, 2024 to 30th August, 2024 for business purposes. During the course of proceedings, the Petitioner, through additional affidavits, modified his request to travel from 5th December, 2024 to 20th December, 2024. Although this period too has elapsed, the Petitioner persists in seeking suspension of the LOC, emphasizing the ongoing relevance of his business commitments and asserting that the meetings can be rescheduled if relief is granted, by this Court.

2. The present case necessitates a careful examination of the competing interests at play the Petitioner’s fundamental right to travel abroad and the State’s imperative to ensure that ongoing investigations into serious allegations of financial impropriety are not thwarted. While the Petitioner asserts that his long-standing cooperation with investigative authorities and absence of criminal antecedents negate any apprehension of flight risk, SFIO and the Income Tax Department strongly oppose the request, citing the gravity of the allegations and the potential risk of evasion.

PETITIONER’S CASE

3. Mr. Dayan Krishnan, Senior Counsel for the Petitioner, outlined the following facts that form the basis of the present petition:

3.1. The Petitioner’s company, PLL, operated in the infrastructure and energy sectors between 1992 and 2014. To support its commercial operations, PLL secured various credit facilities under a multi-banking arrangement. However, due to financial difficulties and a liquidity crunch, PLL’s financial condition deteriorated. The situation worsened by delays in sanctioning credit limits by a consortium of lenders, which impeded the implementation of a Corrective Action Plan for restructuring under the guidelines of the Reserve Bank of India. [“RBI”]

Admission of PLL into Corporate Insolvency Resolution Process 

3.2. On 8th March, 2019, ICICI Bank Limited filing a petition under Section 7 of the Insolvency Bankruptcy Code, 2016 [“the Code”] before the Principal Bench, National Company Law Tribunal. [“NCLT”] PLL was admitted into Corporate Insolvency Resolution Process [“CIRP”] on the same day.

3.3. During the CIRP, on 19th August, 2020, the Resolution Professional filed an Avoidance Application before the NCLT, alleging suspect transactions involving PLL. A Transaction Auditor was appointed to review the PLL’s financial records.

3.4. Despite all efforts, CIRP proved unsuccessful, and the NCLT ordered PLL’s liquidation as a going concern on 27th May, 2022.

Proceedings under the RBI’s Master Circular on Fraud- Classification  and Reporting

3.5. In July, 2017, at the insistence of its lenders, a forensic audit of PLL was conducted for the period 2014-2017 to investigate potential improprieties in its financial dealings. Subsequently, on 22nd March, 2018, a joint meeting of the consortium of lenders was convened to deliberate on a loan restructuring package. The minutes of the meeting revealed that neither the forensic audit nor inquiries by the Central Economic Intelligence Bureau found any evidence of misconduct by PLL or the Petitioner regarding the lenders’ funds.

3.6. Based on the Transaction Audit Report filed in insolvency proceedings, PLL was classified as a “fraud” account. This order was subsequently set aside by this Court through order dated 12th May, 2023 in W.P. (C) 10796/2020. [Atul Punj v. Reserve Bank of India and Ors.]

3.7. Subsequently, the State Bank of India appointed M/s Pipara and Company LLP to conduct a fresh forensic audit of PLL which concluded that PLL’s account was not fraudulent. In light of this report, the consortium of lender