'Not Accused In Any Crime, Not Shown As Guarantor To Loan': Karnataka High Court Allows Businessman To Travel To Saudi Arabia, UAE

A single judge bench of Justice M Nagaprasanna disposed of the petition filed by Himayath Ali Khan and said.

“The petitioner is authorized to travel to United Arab Emirates and Saudi Arabia for a brief period, which is made subject to filing an affidavit of undertaking before this Court that he would complete his work and come back to the shores of the nation within the time as indicated in the said affidavit from the date he starts his journey.”

Khan had approached the court calling in question a Look Out Circular dated 07-03-2022 issued by the Bank of Baroda and executed by the Bureau of Immigration.

The petitioner said he has been in business in Bangalore in wood products for over 35 years. A Company by name Associate Décor Limited, came to be registered in the year 2007 under the provisions of the Companies Act, 1956.

The Company had obtained finance from Bank of Baroda, mortgaging a property worth Rs.199 crores. The petitioner was at the relevant point in time Director of the Company but had not stood as a guarantor to the loan obtained by the Company.

According to the petition, Khan was only a non-functional Director and there were a number of guarantors who stood guarantee to the loan advanced to the company. When the loan became sticky, a consortium of banks initiated various proceedings against the petitioner as the company had defaulted in repayment after obtaining finance from several Banks.

One such proceeding was instituted before the Debts Recovery Tribunal, Bengaluru (DRT) by the bank against the company for recovery of the amount that was due to be paid to the bank. The petitioner was not a party to the proceedings.

The petitioner wanted to travel to UAE and Saudi Arabia for business purposes but at that point in time, LOC was issued by the bank on the ground that recovery proceedings before the DRT are pending consideration against the petitioner and if he is permitted to travel, he is likely to escape from those proceedings.

Findings

The bench noted that recourse to LOC can be taken in cognizable offences under the IPC or other penal laws. In exceptional cases. LOC can be issued regarding economic offences as well, it said. LOC once issued shall remain in force until and unless a deletion request is made by the originator, the court noted.

"The Bank requests the Bureau of Immigration to issue LOC against the petitioner and several others. The reason for seeking issuance of LOC is conspicuously absent in the communication. The Managing Director of the 2nd respondent Bank has sanctioned issuance of request for opening a LOC against the petitioner and others is all that the communication mentions. The said request for LOC leads issuance of one which the 1st respondent seeks to execute," said the court.

The court said the petitioner is not an accused in any crime and He is not the Director who had signed on the dotted lines seeking any loan.

"The petitioner who is described as Director has produced abundant material to demonstrate that he is only non-functional Director. The petitioner is not shown as a guarantor to any kind of loan advanced. If the petitioner has no role to play in the entire transaction, issuance of LOC against him can hardly be justified." the court said.

It added: “The petitioner, even if it is construed to be that he is the Director of the Company, the travel of a citizen cannot be curtailed by the Bank on the ground that he is in default of loan amount. Issuance of LOC has serious repercussions, first of which is that he will not be able to move out of the shores of the nation, notwithstanding any embargo placed by any Court of law.”

The court relied on the judgment of High Court of Madras in the case of KARTI P.CHIDAMBARAM v. BUREAU OF IMMIGRATION and Delhi High Court judgement in the case of RANA AYYUB v. UNION OF INDIA. 

“What would unmistakably emerge is, taking recourse to LOC against persons like the petitioner if they have a role to play in the alleged episode of default of payment of loan to the tune of several crores. But, the issue would be whether the 2nd respondent/Bank has demonstrated that the petitioner has any role to play in the borrowal account and the default,” it added.

However, since the petitioner asked for permission to travel to UAE and Saudi Arabia for the purpose of business, the bench said, “In the peculiar facts of this case, I deem it appropriate to permit the petitioner to travel for a brief period and come back to the shores of the nation, after conclusion of his work in UAE and Saudi Arabia.”

“This direction is apt to be issued in the light of the fact that the petitioner is not an accused in any crime registered except the recovery proceedings before the Debts Recovery Tribunal, Bengaluru where he is not a party to the proceedings,” it added.

Case Title: Himayath Ali Khan v.  Ministry of Home Affairs & Others

Case No: WRIT PETITION No.24074 OF 2022

Citation: 2023 LiveLaw (Kar) 132

Date of Order: 16-03-2023

Appearance: Senior Advocate K.Shashikiran Shetty a/w Kiran J for petitioner.

Deputy Solicitor General H.Shanthi Bhushan FOR R-1 AND R-3.

Advocate Nagaraj Damodar for R2.

Click Here To Read/Download The Order