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In the matter of Saral Verma V. UOI single division bench of the Delhi HC has issued a notice challenging Central Government’s decision to issue ‘Look out Circular’(LOC) at the request of Public Sector Banks. In the petition filed before Delhi HC the petitioner has challenged the LOC issued against his name at the request of Bank of India and Indian Overseas Bank along with it also questioned the Ministry of Home Affair’s Office Memorandum dated 27.10.18 which introduced the policy for issuance of LOC at the request of Public Sector Banks.
The Petitioner before the court has contended that the LOC issued against him 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. It was further argued that the OM is ex-facie arbitrary and violative of the fundamental rights guaranteed under the Constitution of India. The Court was also informed by the respondents that the above said FIL Company has been turned into an NPA and holds only virtual office. FIL had created fictitious inventories on paper to avail loans from various banks. The respondents had alleged that the money borrowed from the banks by FIL was siphoned off and complaint had already been filed by the banks in that regard. The Petitioner in his response to above allegations has clearly 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 % of the outstanding equity share capital of FIL and was never a part of the management of FIL.
The HC bench after hearing the counsels observed that there is no specific allegation against the petitioner of being involved in the offence allegedly committed by FIL. The Court therefore 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. However, restrictions were imposed on the travel such as the petitioner was required to furnish a personal bond and also deposit a fixed amount of Rs 50 Lakh to the High Court. He was also directed to furnish his compete itinerary for the trip. The matter is next listed on August 2 for further hearing.
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