UNION OF INDIA [Appellant] Vs. MANPREET SINGH CHADHA [Respondent]
(LPA 1253/2024 and CM No. 76660/2024)
(CORAM: MS. JUSTICE NEENA BANSAL KRISHNA and MS. JUSTICE SHALINDER KAUR JJ.)
The Delhi High Court dismissed a Letters Patent Appeal (LPA) challenging the suspension of a Look Out Circular (LOC) issued against an erstwhile director of Wave Megacity Centre Pvt. Ltd., upholding his fundamental right to travel abroad under Article 21 of the Constitution. The Court affirmed a Single Judge’s order granting conditional permission to the respondent to travel internationally.
Wave Megacity Centre Pvt. Ltd. (the Corporate Debtor) raised ₹1,400 crore from 2,300 homebuyers but failed to deliver the booked units. Subsequently, the Corporate Debtor filed a petition under Section 10 of the Insolvency and Bankruptcy Code, 2016 (IBC), before the National Company Law Tribunal (NCLT). While the petition was pending, the Economic Offences Wing (EOW) registered an FIR against the Corporate Debtor and its directors for alleged offenses under Sections 406, 420, and 120B of the IPC.
The NCLT dismissed the petition, imposing a ₹1 crore penalty and directing the Central Government to investigate the Corporate Debtor’s affairs. The Ministry of Corporate Affairs (MCA) then issued a LOC against the respondent, a former director and shareholder.
The respondent applied for permission to travel abroad, arguing that the LOC violated principles of natural justice. The Single Judge allowed the application with certain conditions, including restrictions on the respondent’s travel. Dissatisfied, the appellant filed an LPA, contending that the respondent posed a flight risk and had not fully cooperated with the investigation, failing to disclose offshore assets and other financial details.
The respondent countered by emphasizing his cooperation with investigating agencies and compliance with summons. He also argued that the LOC imposed was unwarranted and infringed on his fundamental rights. The Court took note that the investigation had been pending since June 2022, and no chargesheet had been filed since the FIR was registered in April 2021.
The Division Bench of Justice Neena Bansal Krishna and Justice Shalinder Kaur observed that no evidence suggested the respondent had failed to comply with investigation requirements. The Court noted that the appellant failed to specify a timeline for concluding the investigation, making the restriction on international travel unjustified.
The Court remarked, “The respondent cannot be deprived of his right to travel abroad, especially when there is no substantial evidence of non-cooperation or flight risk.” It emphasized that the Single Judge had imposed sufficient conditions to safeguard the ongoing investigation while granting travel permission.
Consequently, the High Court dismissed the LPA and upheld the respondent’s right to travel abroad, affirming the Single Judge’s decision. The pending application was also disposed of. This ruling reinforces the balance between protecting individual rights and facilitating investigations, ensuring that legal actions are not used as tools to unduly restrict fundamental freedoms.
