State cannot interfere in citizens fundamental rights on 'propitious anticipations': Delhi Court sets aside LOC issued in Sterling Biotech case

A Delhi Court recently set aside a look out circular (LOC) against a man who was questioned in a money laundering case registered by the Enforcement Directorate (ED) against the Sandesara brothers, promoters of Gujarat-based pharma firm Sterling Biotech Ltd (SBL) [ED v. Gagan Dhawan & Ors]..While doing so, Additional Sessions Judge Dharmender Rana observed, “In my considered opinion, when the State attempts to curtail the right of life and liberty of an individual, the State action must be necessarily an exercise of utmost responsibility and restraint. State's interference with the fundamental rights of the citizens cannot be countenanced upon mere propitious anticipations.”.Therefore, the Court felt that the LOC against Suresh Nandlal Rohira couldn’t be legally permitted to be continued and was liable to be set aside..The ED had opposed Rohira’s plea contending that he had not furnished the documents or information that were sought from him. Further, it was submitted he had worked for Ashtvinayak Hydrocarbons Limited in Nigeria on the visa of Sterling Petrochemical and received salary from Superflux Nigeria Limited and this was the “same modus operandi adopted by Sandesaras in India who are promoters of Sterling Biotech Limited (SBL) group”..The agency also stressed that there was no requirement in law entitling Rohira to be informed about the issuance of the LOC. It was also contended that the role of the applicant was still being investigated and that there was a strong apprehension that the probe into a matter involving money laundering of over ₹14,500 crore would be stalled if he were to travel abroad..Seeking revocation of the LOC, Rohira’s counsel had argued that he had no connection with the Sandesaras and never worked for them. On the contrary, it was argued that he had bagged a new job at a Singapore-based agricultural company M/s Dorado Nuts, and was scheduled to join the company in Ivory Coast on February 1, 2021, but couldn't owing to the ill health of his wife and the prevailing pandemic situation. However, on April 19, 2021, when he was set to depart to Ivory Coast, he learnt that there was an LOC issued by the ED, restricting him from travelling abroad.On the other hand, the agency contested the genuineness of the offer of employment by the Singapore-based company, highlighting that the accused persons in the case were absconding and that if the LOC was revoked, Rohira’s presence would be difficult to secure..Pertinently, the Court said that ED had failed to cite any plausible explanation as to how applicant taking a job abroad would be prejudicial to the economic interest of the country.“It is simply averred that if the applicant/accused is permitted to leave the country, it shall cause great prejudice to the investigation and his presence is necessary in India for further leads in the investigation of layering of proceeds of crime across multiple jurisdiction in Nigeria,” it noted..The order underlines that Rohira had a fundamental right to travel abroad for earning his livelihood guaranteed under Article 21 of the Constitution of India.It also came on record that the investigation in the case had been pending since 2017 and the applicant had been been extensively examined by the ED under Section 50 of the Prevention of Money Laundering Act on multiple occasions.“Till date, nothing incriminating has been reported against the applicant,” it added..The Court recorded the submissions of the ED prosecutor that Rohira was not divulging the details of the employees and management of M/s Ashtavinayak Hydrocarbons and that he had also refused to provide the documents in respect of Sandesara group of companies.The argument was contested by Rohira’s counsel who said that every relevant information and document available with the applicant had already been provided to the ED. Further, in the present era, a single click would suffice to collate all the necessary information with respect to the Sandesara group of companies..“The primary duty to investigate and collect evidence is of ED and it cannot shift its onus upon the applicant to collect evidence for ED. No palpable explanation has been brought to my notice that as to why appropriate penal action under Section 175 of the Indian Penal Code or any other statutory provision has not been initiated against the applicant during the past four years, if ED was in possession of any credible material to the effect that the applicant is intentionally withholding the relevant documents required for proper investigation in the instant matter,” the Court observed..The Court went on to note that except bare allegations, nothing credible was brought to its notice by the ED to support the contention that Rohira had been deliberately concealing vital piece of evidence.“Furthermore, during the course of arguments, the applicant voluntarily undertook before this court that he shall continue to appear and cooperate, as and when summoned by the ED. Instead of accepting the voluntary undertaking of the applicant, ED is contesting the petition of the applicant on vague and general grounds,” pointed out the Court..The LOC was therefore set aside, with the following conditions:1. The applicant was directed to present himself at the Indian Embassy in Singapore/Ivory Coast at least once in every calendar month during his stay in Singapore/Ivory Coast.2. He shall file an undertaking before this Court, duly supported with an undertaking by his wife, to the effect that he would appear before the ED upon being issued one month's advance notice.3. His wife and kids shall not leave the country without prior permission of this court..According to the ED, the SBL group had taken loans worth crores from public sector banks and allegedly laundered them in tax havens using more than 260 shell companies registered in different jurisdictions.The Sandesaras had been declared “fugitive economic offenders” by the Court in the multi-crore money laundering case in September 2020.Special Public Prosecutor Nitesh Rana appeared for the State whereas Advocates Arshdeep Singh Khurana and Hitesh Rai represented the applicant.