Delhi HC issues notice in challenge to ‘Look out Notice’ on Public Sector Banks’ request

Delhi HC issues notice in challenge to ‘Look out Notice’ on Public Sector Banks’ request

Aditi Singh

The Delhi High Court has issued notice in a plea challenging Central Government’s decision to issue ‘Look out Notice’ at the request of Public Sector Banks.

Notice was issued to the Central Government and other respondents by a single Judge Bench of Justice Vibhu Bakhru in a petition by Saral Verma.

Advocates Neeha Nagpal and Aditi Phatak represented the petitioner.

Advocates Rajesh Gogna, Anurag, Upendra Sai, Aditya Kapoor, Karan Khanna and Asmita Kumar appeared for the respondents.

In the petition, Verma has challenged the LOC issued against his name at the request of Bank of India and Indian Overseas Bank. He has also assailed the Ministry of Home Affair’s October 2018 Office Memorandum which introduced the policy for issuance of LOC at the request of Public Sector Banks.

The Petitioner has argued that the Office Memorandum is ex facie arbitrary and violative of the fundamental rights guaranteed under the Constitution of India.

The LOC against the Petitioner was requested in the context of defaults in repayment of dues owed by M/s Forrest International Ltd (FIL) to Bank of India and Indian Overseas Bank.

The Court was informed that FIL, which has turned an NPA, was only virtual office and had created fictitious inventories on paper to avail loans from various banks. It was further alleged that the money borrowed from the banks was siphoned off and complaint had already been filed by the banks.

The Petitioner stated that he was not a Director of FIL and only stood as a guarantor for the loans provided to FIL. It was further submitted that the petitioner held approximately 5.62 percent of the outstanding equity share capital of FIL and was never a part of the management of FIL.

After perusing the request for a LOC against the Petitioner, the Court observed that there is no specific allegation against the petitioner of being involved in the offence allegedly committed by FIL and other persons in control.

The Court thus allowed the Petitioner’s prayer for an ad-interim order to suspend the LOC against him to enable him to travel to China pursuant to his association with another company.

The Petitioner was employed as a whole-time director in a company named FTA HSRP Solution which was founded by him.

Clearly, insofar as possible the petitioner’s legitimate business ought not be impeded. In view of the above, this Court considers it apposite to permit the petitioner to travel overseas (China) for a period of two weeks commencing from 10.06.2019.”, the court said.

The travel was however made conditional on the petitioner furnishing a personal bond and a fixed deposit in the sum of Rs 50 lakh to the Registrar General of the High Court along with an affidavit undertaking his return. He was also directed to furnish his compete itinerary for the trip.

The matter would be heard next on August 2.

[Read Order]

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