High Court Upholds Suspension of Look Out Circular, Permits Travel Abroad with Conditions.


27 December 2024 Bankruptcy & Insolvency Law >> Business & Commercial Law  

This Letters Patent Appeal (LPA) challenges the order passed by a learned Single Judge of the High Court on 24th December 2024, which temporarily suspended a Look Out Circular (LOC) issued against the respondent. The respondent, an ex-director of M/s Wave Megacity Centre Pvt. Ltd. (the Corporate Debtor), was accused of financial mismanagement and fraud, leading to a penalty under Section 65 of the Insolvency and Bankruptcy Code (IBC) and an investigation by the Ministry of Corporate Affairs (MCA). The appellant, the government agency, had issued the LOC to prevent the respondent from traveling abroad.

The respondent sought to travel abroad for personal reasons and applied to the Court for permission, challenging the LOC. The learned Single Judge allowed the request, imposing certain conditions to ensure cooperation with the investigation. However, the appellant opposed the order, alleging that the respondent was a "flight risk" and had not fully cooperated with the investigation.


 

 

The respondent, in turn, argued that the LOC was improperly issued, as it was not based on a cognizable offense, and he had cooperated with the authorities. Additionally, he claimed that his ties to India were strong, and the LOC infringed upon his fundamental right to travel.

The High Court observed that the respondent had cooperated with the investigation, and the investigation had been ongoing for a significant period without charges being filed. Moreover, the Court noted that the respondent had agreed to return to India promptly if needed. Consequently, the appeal was dismissed, and the learned Single Judge's order allowing the respondent to travel abroad under specific conditions was upheld.


Section 65, INSOLVENCY AND BANKRUPTCY CODE - 2016  

INSOLVENCY AND BANKRUPTCY CODE, 2016