MANU/DE/0851/2022

IN THE HIGH COURT OF DELHI

W.P. (C) 1177/2022 and CM Appl. 3397/2022
Decided On: 16.03.2022
Appellants: Samarth Narang
Vs.
Respondent: Union of India and Ors.
Hon'ble Judges/Coram:
V. Kameswar Rao, J.
Counsels:
For Appellant/Petitioner/Plaintiff: Tanmay Mehta, Tanuj Sud, Varij Sharma, Ajay Kumar,
Stuti Vatsa, Shreya Gupta and Harshita Ahluwalia, Advs.
For Respondents/Defendant: Devesh Dubey, O.P. Gaggar, Sachindra Karu, Abhinav
Sharma and Ashutosh Ranjan, Advs.
V. Kameswar Rao, J.
1 . By this order I shall decide an application being CM APPL. 3397/2022 filed by the
petitioner with the following prayers:-
"In the light of the above, it is the humble prayer of the applicant herein that
this Hon'ble High Court may be pleased to:
(a) Allow the present Application;
(b) Issue a writ of mandamus and/or such appropriate writ directing
Respondents to produce all documents/instructions/ letters/
circulars/notifications/office memoranda/orders of the Identification
and Review Committee pursuant to which a Look Out Circular has been
opened against the Petitioner and pending production of all such
documents/ instructions/ letters/ circulars/notifications/office
memoranda/orders of the Identification and Review Committee, to stay
all actions/proceedings/coercive measures taken against the Petitioner
by Respondents No. 2 and 3;
(c) Pass an ad-interim relief that no coercive action or any other action
(that impinges upon the fundamental rights, including as to travel, of
the Petitioner) such as questioning/detention be taken or pursued with
respect to Petitioner, that may render the present writ petition as
infructuous, pending adjudication of the present writ; and
(d) Pass any other orders or direction as it may deem fit in the interest
of justice."
2. Mr. Mehta stated that the petitioner who is citizen of Singapore be permitted to travel
by suspending the lookout circular ('LOC' hereinafter) for a period as deemed to be fit
and appropriate by this Court. According to him, the LOC has been issued by the
respondent No. 2 at the request of respondent No. 3. The petitioner was a partner of the

21-04-2022 (Page 1 of 5) www.manupatra.com Wadhwa Law Offices

firm M/s. United Exports between the year 2013 and 2015, after which the petitioner
resigned from the partnership firm, which was the principal borrower. Between the
period of 2013 and 2015, the credit facilities were renewed in the year 2014 and 2015
by the respondent No. 3 Bank. He stated that the petitioner was a guarantor to the
credit facilities taken by the firm, M/s. United Exports.
3. He stated for non-payment of loan by the firm, the same has been declared as NPA
as a result of which the firm, the partners and the petitioner have been declared as
willful defaulters. The petitioner has also challenged the declaration of willful defaulter
by the respondent No. 3 Bank.
4 . That on December 19, 2021, the petitioner was detained by respondent No. 3 at
Indira Gandhi International Airport, Terminal 3, Delhi in front of his wife and his eight
year old daughter while travelling to Singapore.
5. Upon seeking explanation and reasons for such detention from the respondent No. 2,
the petitioner was informed that such an action has been initiated at the behest of
respondent No. 3 resulting in an action of opening an LOC against the petitioner.
Neither the respondent No. 2 nor the respondent No. 3 has provided the LOC.
6 . According to Mr. Mehta, aggrieved by the action of the respondents, the petitioner
wrote a letter dated January 04, 2022 and requested for disclosure of necessary
documents/information to enable him to respond and challenge the same, to which no
response has been received. Mr. Mehta would submit that the issue pertaining to
guarantee is pending before the Debts Recovery Tribunal being Original Application No.
1245 of 2018 filed by the respondent No. 3 and therein the petitioner has filed the
application seeking his deletion from the array of parties on the ground that he is not a
guarantor to the credit facilities extended to principal borrower since the deed of
guarantee, provisionally executed was obtained by means of coercion. The said
application is still pending. It is also noted that the respondent No. 3 has also issued
notice under provisions of Securitisation and Reconstruction of Financial Assets and
Enforcement of Security Interest Act, 2002. He also stated that the other partners i.e.,
father, brother and mother of the petitioner have challenged the declaration of willful
defaulter by the respondent No. 3 in a writ petition being United Exports & Ors. v.
Union of India & Ors. W.P.(C) 9523/2021, which petition was listed on September 03,
2021 wherein this Court had directed the bank not to take any further steps with regard
to publication of petitioners (therein) names and particulars pursuant to their
declaration as willful defaulters. In support of his submission, Mr. Mehta primarily
stated that the petitioner is a citizen of Singapore and works there. He is working as an
employee of Merrill Lynch, QVT Financial and at House of Grains in Singapore. He
stated that the daughter of the petitioner is studying in Shri Ram School, NCR and this
is not a case where the petitioner is a flight risk. He also stated that the petitioner is
ready to abide by any condition that may be imposed by this Court to enable the
petitioner to travel to Singapore for such period as deemed to be fit by this Court by
suspending the LOC. He also stated, the father, mother and brother are ready and
willing to give any kind of undertaking to ensure the presence of the petitioner in the
country as and when required. He has relied upon 37 judgments / orders of various
Courts including the Supreme Court and this Court, in support of his submissions.
7 . On the other hand, Mr. O.P. Gaggar, learned counsel appearing for the bank would
submit that the present petition per se has been filed with a wrongful narration of facts.
The petitioner was a partner of the partnership firm M/s. United Exports when the loans
were contracted by that firm. The petitioner has concealed the material fact that there

21-04-2022 (Page 2 of 5) www.manupatra.com Wadhwa Law Offices

was a categorical assertion by the bank that in spite of the petitioner's partnership firm
not being permitted to change the partnership structure without authorization from the
bank in writing, they have repeatedly changed the partnership structure by dropping the
partners and taking out their share from the firm which is nothing but a device for
siphoning the funds from the partnership. The petitioner was also a guarantor to the
entire loan. The petitioner tried to absolve himself from the liability of repayment of the
loan by going out of the partnership but the same was not recognised by the bank who
categorically informed him that he cannot be discharged as a guarantor of the loan and
therefore his joint and several liability for repayment of the whole loan stays. The
petitioner is therefore equally liable to return the money due to the bank along with
other partners of the firm.
8 . According to him, the stocks of material which formed the basis of security of the
bank for the loan has been disposed of by the petitioner's firm without depositing in the
sale proceeds to the bank which is an express act of siphoning of the funds and
securities resulting in the bank's security being eroded. In spite of an express condition
of the loan, that the bank and its officers/auditors shall be allowed access to the stocks
which are hypothecated with the bank, any time, they repeatedly did not allow the bank
officials to enter the premises where the stocks were kept which indicates that the
stocks were not as per the books and the petitioner had concealed the diversion of the
same.
9. He justified the issuance of LOC which power has been granted by the by the Central
Government to the executive head of the public sector bank to expeditiously stop the
big financial debtors from fleeing the country. The same is only to prevent the borrower
from escaping liability and is done only in the cases where the banks have filed criminal
complaints before the investigating agency or are in the process of filing the same. This
arrangement is meant for providing a stop gap.
10. According to him, in the present case, the bank has initiated criminal action by
filing a complaint before the Economic Offences Wing of the Central Bureau of
Investigation. As per last communication received by the bank from that agency, they
are taking cognizance of the same and had sought some clarifications from the bank. He
conceded to the fact that no regular case has been registered by the CBI. In other
words, investigations have not yet started against the petitioner. He stated, the prayer
made on behalf of the petitioner by Mr. Mehta for suspension of LOC for a period as
deemed fit, should not be granted in the facts of this case. More so, when the
outstanding amounts against the borrowers is huge. He seeks the dismissal of the
application.
1 1 . Learned counsel for the respondent Nos. 1 and 2 has drawn my attention to
paragraphs 3 to 5 of the status report filed by the said respondents wherein the
following has been stated:
"3. It is further submitted that vide OM No. 25016/10/2017-Imm (PT) dated
12.10.2018 (hereinafter referred to as the "OM dated 12.10.2018"), it has been
provided that LOC could also be issued on the request of "Chairman/Managing
Directors/Chief Executive of all Public Sector Banks". It is further submitted that
the reason for issuance of OM dated 12.10.2018 is that in the recent past there
have been incidents where the willful defaulters or economic offenders of public
financial institutions have left the country after usurping public money or
defrauding such public financial institutions.

21-04-2022 (Page 3 of 5) www.manupatra.com Wadhwa Law Offices

 4 . It is further submitted that once such willful defaulters or economic
offenders leave the shores of India, the process of tracking them down and
bringing them to justice is a long drawn battle, which inordinately delays in the
recovery of public funds.
5. That, Bureau of Immigration, Ministry of Home Affairs is only the custodian
of LOCs who maintains LOCs and take action against LOC subjects at
Immigration Check Posts (ICPs) at the behest of originating agency. Further,
the legal liability of the action taken by immigration authorities in pursuance of
LOC rests with the originating agency."
12. Having heard the learned counsel for the parties and perused the record, the issue
that arises for consideration in the application is whether the LOC issued by the
respondent No. 2 at the behest of the respondent No. 3 is liable to be stayed to enable
the petitioner to visit Singapore of which he is a citizen subject to the conditions as may
be imposed by this Court.
13. Mr. Gaggar has opposed the prayer by stating that huge amounts are due to the
Bank and a complaint has been filed with the CBI, who had sought certain clarification.
The prayer as made be denied.
14. Admittedly, no Regular Case, ('RC', for short) has been registered by the CBI, the
role of the petitioner is yet to be ascertained. Even if RC is registered, the investigation
may take time, at the same time the petitioner has his employment obligation in
Singapore, whereas his daughter is studying in a school located in the NCR.
15. Mr. Mehta has highlighted that the parents and brother of the petitioner shall stand
surety for him. He also stated that the petitioner shall also undertake to this Court that
he will return to India after the visit to Singapore for a period as fixed by this Court.
1 6 . In view of the aforesaid, it is directed that the LOC issued in the name of the
petitioner by the respondent No. 2 shall be suspended for a period of four weeks from
the date of departure of petitioner to Singapore subject to the following conditions:
(A) The petitioner shall furnish a security of a sum of ' 20 Crores (Rupees
Twenty Crores) to the satisfaction of the Registrar General of this Court in the
form of an FDR/ Bank Guarantee or an unencumbered immoveable property /
properties of the same value belonging to the petitioner or any of his
relative(s), who will also furnish an undertaking to the Registrar General of this
Court that he / she / they shall not create any third party rights or interests in
such property / properties during the period the petitioner is travelling to
Singapore.
(B) The petitioner shall also furnish an undertaking to this Court in the form of
an affidavit affirming that he would join the investigation, as and when called
upon to do so, provided at least 15 days' notice is issued to him and shall also
return to India within the time stipulated by this Court in this order.
(C) He shall also secure a surety bond from his parents and brother undertaking
that the petitioner shall act in terms of this order and shall return to India as
and when called upon by the investigating agency for the purposes of
investigation and also within the time granted by this Court. The petitioner shall
also furnish the affidavits of his parents and brother to the aforesaid effect.

21-04-2022 (Page 4 of 5) www.manupatra.com Wadhwa Law Offices

 (D) He shall furnish the details of his address where he would be staying in
Singapore along with the particulars of his passport to the respondents.
(E) He shall also provide details of his employer including the name of the
Company; name of the person-In-charge along with his / her contact details
including phone numbers etc. to the respondents.
(F) The parents and the brother of the petitioner shall not leave India without
seeking leave of this Court, while the petitioner is traveling to Singapore.
(G) He shall also furnish to the respondents his phone number(s) (including his
mobile number) which he shall be using during his stay in Singapore which
number shall be kept in operational mode at all times.
(H) The copies of all the documents which the petitioner will file with the
Registrar General of this Court shall also be furnished by the petitioner to all
the respondents.
(I) The petitioner shall also furnish to the respondents a copy of the air tickets
of his journey from Delhi to Singapore and back.
(J) The petitioner shall return to India within a period of four weeks from the
date of his departure to Singapore.
17. The parties / counsels to appear before the Registrar General on March 22, 2022 at
12:00 noon, for further proceedings.
18. The application is disposed of.
W.P.(C) 1177/2022
Rejoinder be filed within four weeks.
List the petition for consideration on April 25, 2022.
© Manupatra Information Solutions Pvt. Ltd.

21-04-2022 (Page 5 of 5) www.manupatra.com Wadhwa Law Offices