Calcutta High Court (Appellete Side)
Debanjan Hazra vs The Serious Fraud Investigation Office … on 30 April, 2026
Author: Shampa Sarkar
Bench: Shampa Sarkar
IN THE HIGH COURT AT CALCUTTA
CIVIL APPELLATE JURISDICTION
Appellate Side
Present:
The Hon'ble Justice Shampa Sarkar
And
The Hon'ble Justice Ajay Kumar Gupta
MAT 474 of 2026
With
CAN 1 of 2026
Debanjan Hazra
Vs.
The Serious Fraud Investigation Office & Ors.
For the Appellant : Mr. Sabyasachi Chowdhury, Ld. Sr. Adv.
Mr. Rajarshi Datta, Adv.
Mr. Pranav Sharma, Adv.
Mr. Deepesh Sharma, Adv.
For the Union of India : Mr. Kumar Jyoti Tewari, Ld. Sr. Adv.
Mr. Arijit Majumdar, Adv.
Heard on : 01.04.2026
Judgment on : 30.04.2026
Judgment uploaded on : 30.04.2026
2
Ajay Kumar Gupta, J:
1. This intra-court appeal has been filed challenging the Judgment and
order dated 13.02.2026 passed by the Learned Single Judge in WPA
2772 of 2026.
2. The learned Single Judge, rejected the prayer for setting aside
and/or quashing the Look Out Circular (in short 'LOC') issued in
respect of the appellant, upon request by the Serious Fraud
Investigation Office (in short SFIO).
3. The case run by the appellant in the writ petition was that, he is a
citizen of India, but a non-resident and a chemist by profession. He
had been appointed as an Assistant Manager at Elder
Pharmaceuticals Limited (hereinafter referred to as 'Elder'). He
continued in such post till 2009. Thereafter, he was employed with
Cell Life Therapeutics Pvt. Ltd., Cerberus Venture Pvt. Ltd., AR
Printing and Packaging Pvt. Ltd., AR Printpack Ltd. and Stone
Sapphire Pvt. Ltd. In the year 2013, he left India and moved to
China. He joined Shanghai Shitai Co. Ltd. He eventually joined AD
Global Limited in 2014 in Shanghai, and ever since then, he had
been employed with the said company. He married a Chinese
national and has two children. His elderly parents reside in Kolkata,
and he frequently visits them. On 15th December, 2025, he along
with his wife and children, came to Kolkata to meet his aged
parents. On 21st December, 2025, when he was proceeding to
3
Bangladesh to attend a conference from NSCB International Airport,
Kolkata, the immigration authorities cancelled his boarding pass
and ticket, and did not allow him to go to Bangladesh. He was asked
to meet the higher officials of the Bureau of Immigration at the
airport and upon meeting the officials, he came to know that a LOC
had been issued against him on 7 th February, 2025, in connection
with the investigation into the affairs of Elder. The appellant was
allowed to leave the Airport only after signing an "undertaking" and
a "request for appearance" at the office of the respondent no. 1. The
appellant appeared in the office of the respondent No. 1 on 22 nd
December, 2025. He was informed that summons had been issued
on January 14, 2025 in exercise of power under the Companies Act,
2013. His statement was recorded in the presence of the
investigation officer. The entire exercise of recording the statement
commenced at 10:03 am and continued till 10:30 pm. He produced
some documents as asked, but those were not retained by the
authorities. He was made to sign, execute and submit three
documents. He answered all the questions and undertook to submit
necessary documents, if called for. He made a representation for
withdrawal of the circular, but the same went unheeded. Being an
expert in the field of Research and Development in oncology, he got
a better opportunity in China and had been working in China since
2013. He was merely an employee of Elder and had left such
4
employment in 2009. The involvement of Elder in the alleged
fraudulent business and mismanagement, was at a later date when
the appellant was no longer with Elder. He did not hold any key
managerial position at Elder. He had been unnecessarily detained in
India despite his innocence and separated from his family. His life
and livelihood were jeopardized and his liberty was wrongly
curtailed. Thus, the writ petition was filed with the following
prayers:-
"a) A writ of or in the nature of Mandamus do issue
commanding the respondents, and particularly the respondent
no.1, its men, agents or servants to recall, rescind and cancel
the Look Out Circulars issued by the respondent no. 1 and the
request made in that regard by the respondent no. 1 against
the petitioner.
(b) A writ of or in the nature of Mandamus do issue
commanding the respondents and particularly the respondent
no.1, its men, agents or servants to provide and/or furnish the
petitioner with a copy of the request of the respondent no.1
based on which the Look Out Circular has been issued against
the petitioner.
(c) A writ of or in the nature of Certiorari do issue commanding
the respondent authorities to produce the request for
productions of the lookout circular issued by the respondent
no. 1 against the petitioner before this Hon'ble Court so that
conscionable justice may be done by quashing and/or setting
aside the same,
(d) Rule NISI in terms of the prayers. above;
(e) An order of injunction be passed restraining the respondent
authorities, their men, agents or servants from giving effect or
further effect to the respondent no. 1's request for issuing
Look Out Circulars issued against the petitioner;
(f) An order be passed directing respondents to permit
international travel for the petitioner from India to the Peoples
5
Republic of China on such terms as this Hon'ble Court may
deem fit and proper.
(g) Ad-interim orders in terms of prayers above;
(h) Costs;
(i) Such further or other orders or orders be passed and/or
direction or directions be given as Your Lordship may deem fit
and proper."
4. Before the Single Bench, the Serious Fraud Investigation Office,
being the respondent No. 1, filed a report in the form of an affidavit
disclosing that the appellant did not co-operate with the
investigation although there were materials to substantiate the
connection between the appellant and the fraudulent activity of
Elder. Facts leading to justifying the origination of the LoC were
narrated in the report.
5. It was the contention of the appellant that the findings of the
learned Single Bench were based on surmise and conjecture and the
contents of the report were blindly followed, without any application
of mind. The learned Judge did not consider that the investigation of
the SFIO was over and the report had been sent to the Central
Government way back on 6th May, 2025. No proceeding was
instituted against the appellant. The Central Government had not
decided to initiate prosecution against the appellant. The writ
petition was dismissed on speculation that, as appellant had
6
married a Chinese national, his return to India could not be
guaranteed.
SUBMISSION ON THE BEHALF OF APPELLANT:
6. Mr. Chowdhury, learned senior counsel submitted as under:
i) The parameters necessary for generation of an LOC were not
fulfilled. No reasons as to why the departure of the appellant from
India would be detrimental to the either the sovereignty or
security or integrity of India or to the economic interests of India,
had been assigned. There were no allegations against the
appellant apart from being an ex-employee of Elder and a close
associate of the promoter. Such allegations were incorrect, vague
and fanciful. The role played by the appellant in the alleged
fraudulent business of Elder had not been specified in the report
submitted before the Single Judge. The relationship of the
appellant with the subsidiaries of Elder could not be
substantiated with facts and figures. Unless a criminal proceeding
was pending and the appellant disregarded the summons of the
Special court upon prosecution being instituted, the question of
issuing the LOC did not arise. The LOC was contrary to the
relevant guidelines.
ii) Even after having left India for China to pursue better career
prospects in the year 2013, the appellant visited India frequently.
Therefore, the apprehension that the appellant would not be
7
available or would not appear before the Special Court and/or
would avoid future criminal proceedings, were baseless and
unsustainable in law.
iii) Elder had gone into liquidation and the Bombay High Court
had detected fraudulent activities of Elder sometime in 2014. The
appellant was merely an employee of Elder and left the company
in 2009.
iv) Although, an investigation into the affairs of Elder was
initiated under Section 212 of the Companies Act, 2013, no
specific role has been attributed to the appellant. The appellant
had co-operated with the investigation. Therefore, the allegation of
non-co-operation was misconceived. The investigation had already
been completed and report was submitted to the Central
Government.
v) No direction for prosecution had been issued against the
appellant under Section 212(14) of the Companies Act. In the
absence of any pending proceedings, the apprehension of evasion
of trial was speculative and perverse. The further ground that
"economic interest of India" was affected by the acts and deeds of
the appellant, lacked fundamental basis. The indefinite
continuation of the LOC violated the appellant's fundamental
right guaranteed under Article 21 of the Constitution of India.
8
vi) Not a single criterion laid down in the Office Memorandum
dated 22nd February, 2021, had been satisfied. Stray allegations
of fraud and commission of economic offence detrimental which
was to public interest, without attributing any specific role to the
appellant, could not be the basis for taking such an extreme
measure of restricting the personal liberty of the appellant and
preventing his return to China. In the absence of any valid or
legally justifiable grounds, the LOC could not continue.
vii) "Economic interest of India" was explained by the Calcutta
High Court in Vishambhar Saran v. Bureau of Immigration
decided in WPA 6670 of 2022. Such ground could not be
pressed into service when there was no clear and direct nexus
between the actions of appellant vis-à-vis Elder. There was no real
threat to the country's economic interest. No materials had been
put forward which demonstrated the appellant's role in the alleged
financial irregularities of Elder. Mere reference to "economic
interest of India" was insufficient to justify the issuance of the
LOC. Restriction on the appellant's right to travel did not satisfy
the test of reasonableness and proportionality.
viii) The decisions in the case of Vishambhar Saran v. Bureau
of Immigration in WPA 6670 of 2022, as well as Usha Sindhu
Vs. Union of India & Ors.1 had clarified the position with regard
1
2024 SCC OnLine Del 4799
9
to issuance of LOC. The learned judges in both cases had held
that LOC could not be issued casually.
ix) The only ground repeatedly urged by the respondents was
that, the appellant did not respond to the summons of the SFIO,
which was sent to his last known address and also via email.
Although the respondents submitted that the appellant did not
supply the documents which he undertook to provide to the SFIO,
till date there was not a single demand for any specific document.
The investigation was over, but under specious pleas, the
appellant was being detained in India.
x) The appellant was willing to give an undertaking that he would
appear before the jurisdictional court, as and when called for.
Moreover, other legal measures such as impounding the passport
or imposing conditions on travel, could be employed to ensure the
appellant's presence. The decision of the Madras High Court in
Arockia Jeyabalan v. The Regional Passport Officer and
Others2 was relied upon. Further reliance was placed on the
decision of the Single bench in the case of Anant Raj Kanoria
Vs. Union of India & Ors. decided in W.P.(C) 3313/2023. Thus,
the LOC deserved to be quashed.
xi) The LOC should be quashed.
2
2014 SCC OnLine Mad 7733
10
SUBMISSIONS ON BEHALF OF THE RESPONDENTS:
7. Per contra, Mr. Tewari, learned senior counsel appearing on behalf
of the Respondents submitted as hereunder: -
i) In exercise of powers under Section 212(1)(a) read with
Section 212(1)(c) of the Companies Act, the Ministry of Corporate
Affairs by an order dated 12th December, 2019, directed
investigation into the affairs of Elder, a public listed company
which, despite its status, was closely controlled by its promoters
and had indulged in serious financial irregularities.
ii) Winding up proceedings had been instituted before the Bombay
High Court on account of non-payment of public deposits and
mounting debts, culminating in the appointment of a Court
Commissioner, i.e., M/s. T.R. Chadha & Co., to scrutinise the
accounts of the company. The report so submitted, revealed large-
scale siphoning off of funds, approximating to Rs. 1300 crores.
The company was directed to be wound up, and an Official
Liquidator was appointed. The Registrar of Companies, Mumbai,
upon inspection under Section 206(5), of the Companies Act,
2013 detected grave violations of statutory provisions.
iii) The Registrar of Companies, Mumbai, submitted its report,
highlighting various violations and non-compliances of the
provisions of the Companies Act, 1956 and 2013. It was also
found that Elder failed to pay about 23,946 public deposit holders
11
and came to the conclusion that the Company had diverted its
funds to its subsidiaries and group companies. Accordingly, it was
recommended that an investigation be conducted by the SFIO.
iv) The appellant was not a stranger to such transactions of Elder.
Rather, he had been closely associated with the promoter group
since 2006-2007 and functioned as an employee in one of the
group companies, namely Elder Health Care Limited.
v) The appellant was the sole shareholder of an overseas
company, namely, AD Global, to which Elder sold its two overseas
step-down subsidiaries through a fraudulent scheme at grossly
undervalued consideration. Those transactions formed part of a
larger design to siphon off funds to the tune of approximately
₹215 crores, which had originally been advanced by Elder to its
foreign subsidiary viz, Elder International FZCO, Dubai, without
any terms or conditions and with no intention of recovery. The
said subsidiary, which was under the complete control of the
promoters, further routed funds to its UK and Bulgaria-based
subsidiaries, and they subsequently wrote back the loans on the
premise that those were not to be recovered. These downstream
entities also wrote off or impaired their investments, and the
investigation indicated that such subsidiaries were ultimately sold
to the appellant, a close associate of the promoters, at a negligible
value.
12
vi) The appellant played a key role in the sale of Brunel
Healthcare and Biocare Limited under the directions of Anuj
Saxena, and continued to advise and communicate with the
promoters of Elder until 2016, even though he claimed to have left
the employment with the company after 2009.
vii) Considering the materials available on record, the non-
cooperation of the appellant and keeping in view the 'economic
interest of India', the LOC was opened against the appellant in the
month of February, 2025, in terms of the Office Memorandum
dated 22nd February, 2021. The investigation into the affairs of the
Elder was completed, and an investigation report dated 6th May,
2025, had already been submitted to the Ministry of Corporate
Affairs in terms of Section 212(12) of the Companies Act, 2013
and only directions from the Ministry in terms of Section 212(14)
were awaited.
viii) The appellant had persistently evaded the investigative
process. Summons issued to his last known address remained
unserved, and despite receipt of the summons via email, the
apellant failed to either respond to or appear before the
authorities. Even when the appellant admittedly accessed his
email while in Bangkok, he did not take any steps to contact the
SFIO. Further, during his visit to India in December 2025, he
failed to appear before the investigating agency and was stopped
13
only when he was attempting to leave the country to Bangladesh
by road.
ix) Although the appellant undertook to furnish crucial
documents, he failed to honour his commitment, despite repeated
communications. Such conduct, clearly established deliberate
non-cooperation and justified the apprehension that the petitioner
would evade the process of law if permitted to leave India.
8. In the case of Ghanshyam Pandey v. Union of India 3 the request
to quash LOC was rejected by the Court on the basis that, even if no
FIR was registered LOC could be continued.
DISCUSSION AND FINDINGS: -
9. Having heard the submissions of the rival parties and upon perusal
of the records, the following issues emerge before this court: -
a. Whether the conditions necessary for issuance of the LOC dated
7th February 2025, existed in case of the appellant?
b. Whether the subsistence of the said LOC is legally sustainable, in
the facts and circumstances of the present case, thereby,
justifying infringement of the appellant's right under Article 21 of
the Constitution of India?
10. The memorandum dated February 22, 2021 issued by the Ministry
of Home Affairs, Foreigners Division (Immigration Section),
Government of India, lays down the guidelines to be followed while
3
2023 SCC OnLine Del 936
14
making a request for issuance of an LOC. Unless those parameters
are satisfied, LOC cannot be issued and is liable to be struck down
on the ground of arbitrariness and disproportionality. Paragraph 6
and especially sub-paragraphs H to L provide the general
circumstances under which opening of LOC can be requested by the
originating agency. For convenience some of the paragraphs are
quoted below: -
"6. The existing guidelines with regard to issuance of Look Out
Circulars (LOC) in respect of Indian citizens and foreigners have
been reviewed by this Ministry. After due deliberations in
consultation with various stakeholders and in supersession of all
the existing guidelines issued vide this Ministry's letters/ O.M.
referred to in para 1 above, it has been decided with the approval
of the competent authority that the following consolidated
guidelines shall be followed henceforth by all concerned for the
purpose of issuance of Look Out Circulars (LOC) in respect of
Indian citizens and foreigners: -
(A) The request for opening an LOC would be made by the
Originating Agency (OA) to the Deputy Director, Bureau of
Immigration (Bol), East Block- VIII, R.K. Puram. New Delhi -
110066 (Telefax: 011-26192883, email: [email protected]) in the
enclosed Proforma.
(B) The request for opening of LOC must invariably be issued
with the approval of an Originating Agency that shall be an
officer not below the rank of-
(i) Deputy Secretary to the Government of India; or
(ii) Joint Secretary in the State Government; or
(iii) District Magistrate of the District concerned; or
(iv) Superintendent of Police (SP) of the District concerned;
or
(v) SP in CBI or an officer of equivalent level working in
CBI; or
(vi) Zonal Director in Narcotics Control Bureau (NCB) or an
officer of equivalent level [including Assistant Director
(Ops.) in Headquarters of NCB); or
(vii) Deputy Commissioner or an officer of equivalent level
in the Directorate of Revenue Intelligence or Central Board
of Direct Taxes or Central Board of Indirect Taxes and
Customs: or
(viii) Assistant Director of Intelligence Bureau/ Bureau of
Immigration (Bol); or
15
(ix) Deputy Secretary of Research and Analysis Wing
(R&AW); or
(x) An officer not below the level of Superintendent of
Police in National Investigation Agency; or
(xi) Assistant Director of Enforcement Directorate; of
(xii) Protector of Emigrants in the office of the Protectorate
of Emigrants or ån officer not below the rank of Deputy
Secretary to the Government of India; or
(xiii) Designated officer of Interpol; or
(xiv) An officer of Serious Fraud Investigation Office (SFIO),
Ministry of Corporate Affairs not below the rank of
Additional Director (in the rank of Director in the
Government of India); or
(xv) Chairman/ Managing Directors/ Chief Executive of all
Public Sector Banks.
***
***
(G) The legal liability of the action taken by the immigration
authorities in pursuance of the LOC rests with the originating
agency.
(H). Recourse to LOC is to be taken in cognizable offences under
IPC or other penal laws. The details in column IV in the enclosed
Proforma regarding ‘reason for opening LOC’ must invariably be
provided without which the subject of an LOC will not be
arrested/detained.
(I). In cases where there is no cognizable offence under IPC and
other penal laws, the LOC subject cannot be detained/arrested or
prevented from leaving the country. The originating agency can
only request that they be informed about the arrival/departure of
the subject in such cases.
(J) The LOC opened shall remain in force until and unless a
deletion request is received by BoI from the Originator itself. No
LOC shall be deleted automatically. Originating Agency must
keep reviewing the LOCs opened at its behest on quarterly and
annual basis and submit the proposals to delete the LOC, if any,
immediately after such a review. The BOI should contact the LOC
Originators through normal channels as well as through the
online portal. In all cases where the person against whom LOC
has been opened is no longer wanted by the Originating Agency
or by Competent Court, the LOC deletion request must be
conveyed to BoI immediately so that liberty of the individual is
not jeopardized.
(K) On many occasions, persons against whom LOCs are issued,
obtain Orders regarding LOC deletion/suspension from Courts
and approach ICPs for LOC deletion and seek their departure.
Since ICPs have no means of verifying genuineness of the Court
Order. In all such cases, orders for
deletion/quashing/suspension etc. of LOC must be
communicated to the BoI Through the same originator who
requested for opening of LOC. Hon’ble Courts may be requested
16
by the Law Enforcement Agency concerned to endorse/convey
orders regarding LOC suspension /deletion/quashing etc. to the
same law enforcement agency through which LOC was opened.”
11. Thus, analysing the policy which existed from 2010 and which were
amended from time to time and ultimately found its expression in
the memorandum dated February 22, 2021, this court is of the view
that only in exceptional cases LOCs can be issued even if the
parameters quoted hereinabove were not covered.
12. Sub-paragraph (L) of the 2021 policy lays down the exceptions. The
same is quoted below: –
“(L) In exceptional cases, LOCs can be issued even in such cases,
as may not be covered by the guidelines above, whereby
departure of a person from India may be declined at the request
of any of the authorities mentioned in clause (B) above, if it
appears to such authority based on inputs received that the
departure of such person is detrimental to the sovereignty or
security or integrity of India or that the same is detrimental to
the bilateral relations with any country or to the strategic and/or
economic interests of India or if such person is allowed to leave,
he may potentially indulge in an act of terrorism or offences
against the State and/or that such departure ought not be
permitted in the larger public interest at any given point of time.”
13. In this case there was no input that the departure of the appellant
would be detrimental to the sovereignty, security and integrity of
India, or detrimental to the bilateral relationship of India. A general
allegation that the appellant was close to the provisions of Elder,
who had siphoned off funds of the depositors was made. The fact
that the appellant was the sole shareholder of an overseas Company,
to which Elder had sold its two overseas step-down companies at a
grossly undervalued consideration could not be a parameter for
17
issuance of LOC under the guidelines. According to the respondents,
the above actions of the promoters of Elder and the relationship
between the appellant and his ex-employer necessitated an
exceptional measure under clause L above.
14. LOC may be issued in cases involving cognizable offences under the
IPC or other penal laws, where the accused is deliberately evading
arrest or failing to appear before the trial court despite the issuance
of Non-Bailable Warrants (NBWs) and other coercive measures. LOC
may be issued if there is a likelihood that the accused may leave the
country in order to evade arrest or trial. It was further clarified that
an LOC was essentially a coercive measure, intended to secure the
presence of a person before the investigating agency or the court of
law.
15. In the present case, the main allegation against the appellant is that
he did not cooperate with the investigation and was involved in the
alleged offence of fraud under Section 447 of the Companies Act,
2013. Pursuant thereto, an LOC was issued against the appellant at
the request of the SFIO through the Bureau of Immigration with
effect from February, 2025, which continues to remain operative
even today.
16. It would be appropriate and convenient to refer to the relevant
sections/provisions of law governing investigation by the SFIO, into
18
the affairs of a company as Mr. Tiwari has placed heavy reliance on
the same.
212. Investigation into affairs of Company by Serious Fraud
Investigation Office. —
(1) Without prejudice to the provisions of section 210, where the Central
Government is of the opinion, that it is necessary to investigate into the
affairs of a company by the Serious Fraud Investigation Office–
(a) on receipt of a report of the Registrar or inspector under section 208;
(b) on intimation of a special resolution passed by a company that its
affairs are required to be investigated;
(c) in the public interest; or
(d) on request from any Department of the Central Government or a
State Government, the Central Government may, by order, assign the
investigation into the affairs of the said company to the Serious Fraud
Investigation Office and its Director, may designate such number of
inspectors, as he may consider necessary for the purpose of such
investigation.
(2) Where any case has been assigned by the Central Government to
the Serious Fraud Investigation Office for investigation under this Act,
no other investigating agency of Central Government or any State
Government shall proceed with investigation in such case in respect of
any offence under this Act and in case any such investigation has
already been initiated, it shall not be proceeded further with and the
concerned agency shall transfer the relevant documents and records in
respect of such offences under this Act to Serious Fraud Investigation
Office.
(3) Where the investigation into the affairs of a company has been
assigned by the Central Government to Serious Fraud Investigation
Office, it shall conduct the investigation in the manner and 131 follow
the procedure provided in this Chapter; and submit its report to the
Central Government within such period as may be specified in the
order.
(4) The Director, Serious Fraud Investigation Office shall cause the
affairs of the company to be investigated by an Investigating Officer
who shall have the power of the inspector under section 217.
19
(5) The company and its officers and employees, who are or have been
in employment of the company shall be responsible to provide all
information, explanation, documents and assistance to the
Investigating Officer as he may require for conduct of the investigation.
(6) Notwithstanding anything contained in the Code of Criminal
Procedure, 1973 (2 of 1974), 1 [offence covered under section
447] of this Act shall be cognizable and no person accused of
any offence under those sections shall be released on bail or on
his own bond unless–
(i) the Public Prosecutor has been given an opportunity to oppose the
application for such release; and
(ii) where the Public Prosecutor opposes the application, the court is
satisfied that there are reasonable grounds for believing that he is not
guilty of such offence and that he is not likely to commit any offence
while on bail:
Provided that a person, who, is under the age of sixteen years or is a
woman or is sick or infirm, may be released on bail, if the Special Court
so directs:
Provided further that the Special Court shall not take
cognizance of any offence referred to this sub section except
upon a complaint in writing made by–
(i) the Director, Serious Fraud Investigation Office; or
(ii) any officer of the Central Government authorised, by a
general or special order in writing in this behalf by that
Government.
(7) The limitation on granting of bail specified in sub-section (6) is in
addition to the limitations under the Code of Criminal Procedure, 1973
(2 of 1974) or any other law for the time being in force on granting of
bail.
(8) If the Director, Additional Director or Assistant Director of
Serious Fraud Investigation Office authorised in this behalf by
the Central Government by general or special order, has on the
basis of material in his possession reason to believe (the reason
for such belief to be recorded in writing) that any person has
been guilty of any offence punishable under sections referred to
in sub-section (6), he may arrest such person and shall, as soon
as may be, inform him of the grounds for such arrest.
20
(9) The Director, Additional Director or Assistant Director of Serious
Fraud Investigation Office shall, immediately after arrest of such
person under sub-section (8), forward a copy of the order, along with
the material in his possession, referred to in that sub-section, to the
Serious Fraud Investigation Office in a sealed envelope, in such
manner as may be prescribed and the Serious Fraud Investigation
Office shall keep such order and material for such period as may be
prescribed.
(10) Every person arrested under sub-section (8) shall within twenty-
four hours, be taken to a Judical Magistrate or a Metropolitan
Magistrate, as the case may be, having jurisdiction: Provided that the
period of twenty-four hours shall exclude the time necessary for the
journey from the place of arrest to the Magistrate’s court.
(11) The Central Government if so directs, the Serious Fraud
Investigation Office shall submit an interim report to the Central
Government.
(12) On completion of the investigation, the Serious Fraud
Investigation Office shall submit the investigation report to the
Central Government. 1. Subs. by Act 21 of 2015, s. 17, for
certain words, brackets and figures (w.e.f. 29-5-2015). 132
(13) Notwithstanding anything contained in this Act or in any other law
for the time being in force, a copy of the investigation report may be
obtained by any person concerned by making an application in this
regard to the court.
(14) On receipt of the investigation report, the Central
Government may, after examination of the report (and after
taking such legal advice, as it may think fit), direct the Serious
Fraud Investigation Office to initiate prosecution against the
company and its officers or employees, who are or have been in
employment of the company or any other person directly or
indirectly connected with the affairs of the company.
(15) Notwithstanding anything contained in this Act or in any
other law for the time being in force, the investigation report
filed with the Special Court for framing of charges shall be
deemed to be a report filed by a police officer under section 173
of the Code of Criminal Procedure, 1973 (2 of 1974).
(16) Notwithstanding anything contained in this Act, any investigation
or other action taken or initiated by Serious Fraud Investigation Office
under the provisions of the Companies Act, 1956 (1 of 1956) shall
21
continue to be proceeded with under that Act as if this Act had not
been passed.
(17) (a) In case Serious Fraud Investigation Office has been investigating
any offence under this Act, any other investigating agency, State
Government, police authority, income-tax authorities having any
information or documents in respect of such offence shall provide all
such information or documents available with it to the Serious Fraud
Investigation Office;
(b) The Serious Fraud Investigation Office shall share any information
or documents available with it, with any investigating agency, State
Government, police authority or income-tax authorities, which may be
relevant or useful for such investigating agency, State Government,
police authority or income-tax authorities in respect of any offence or
matter being investigated or examined by it under any other law.
17. The learned Judge came to the following conclusions, which are
quoted below: –
“18. As per report submitted by M/s. T.R. Chaddha and
Company in terms of the order passed by the Bombay High
Court it reveals that Rs. 1300 crores have been siphoned out of
the Company/ Elder Pharmaceuticals Ltd. The inspection
conducted by the Registrar of Companies, Mumbai it was also
found that EPL failed to pay about 23,946 public deposit
holders and diverted the funds illegally. As per investigation, it
reveals that EPL fraudulently siphoned off the funds resulting
in no repayment of deposits collected from the Public to the
tune of Rs. 176.59 crores pertaining to 23,946 holders.
***
***
22. At the time of investigation, summons was sent to the
petitioner as per last known address but the same was returned
“unserved”. An e-mail was also sent to the petitioner but the
petitioner has taken the plea that in China there is restriction
on Yahoo’s servers but has admitted that he came to know
about the email when he accessed his Yahoo email when he
was in Bangkok in February, 2025 but inspite of the same, the
petitioner failed to contact with the Investigating Agency or sent
any reply to the said email. As per the case of the petitioner, the
petitioner came to Kolkata on 15th December, 2025 but failed
to meet the Investigating Agency. The authorities have
apprehended the petitioner when the petitioner was intending
to proceed to Bangladesh on 21st December, 2025.
22
23. When the petitioner was apprehended at the airport as per
the LOC issued against the petitioner, the petitioner has
assured the authorities that the petitioner will submit
documents but the petitioner has not submitted the same. The
authorities have also sent an email to the petitioner for
submission of documents but inspite of receipt of email, the
petitioner has not submitted documents to the authorities.
24. It is the admitted case of the petitioner that the petitioner
has left India and settled in China and also married to the
Chinese National and out of the said wedlock, two children
were born. It is also the admitted case of the petitioner that the
petitioner had to go to Bangladesh and from Bangladesh, the
petitioner will go to China.
***
***
29. If the Central Government directs the SFIO to initiate
prosecution on the basis of the investigation report, and if the
report is filed before the Special Court, the Special Court will
take cognizance of the case and will issue summons upon the
petitioner for appearance before the Learned Special Court,
there is every chance that the petitioner will not appear before
the Special Court and will avoid the proceeding. It will be
difficult for the Indian Government to bring the petitioner back
to India to face trial before the Special Court.”
18. At the outset, it is evident that the learned Single Judge refused to
quash the LOC primarily on the apprehension that, in the event
prosecution is initiated in future under Section 212(14) of the
Companies Act, the appellant, being an Indian citizen residing ate
China and having been favoured with a resident permit and work
visa and being married to a chinese may not return to face trial. This
reasoning, however, is founded on a contingent and speculative
premise, when admittedly no proceeding has been initiated before
the special court.
19. This alone cannot be held to be a ground to issue LOC to protect the
economic interest of the country. Again, the appellant being
23
responsible for setting up a company in Bulgaria as a single
shareholder, cannot be a reasonable ground to hold that the
activities of the appellant was detrimental to the economic interest of
India.
20. In Vishambhar Saran (supra) the issue of economic interest has
been discussed as follows: –
“50. BOB requested the Bureau of Immigration to issue
LOC. It is not on record whether such LOC has been issued
or not. The Bureau of Immigration, Ministry of Home Affairs
(Foreigners Division) and all the other members of the
consortium of banks, apart from PNB were impleaded as
respondents in this proceeding. None of these respondents
have come up before the Court in support of the request of
BOB. They have not contested the proceedings. Clause 3.1
of the SOP (Annexure P2, Page no. 26 of Writ petition)
states that the responsibility for requesting issuance of LOC
in respect of a defaulter would be on the leader of the
consortium of banks or on the holder of the biggest share or
exposure amongst them. In this case, the LOC originated by
the lead bank, having the highest exposure has been
quashed by a Co-ordinate Bench for the reasons which
have already been quoted hereinabove. Default of the
borrower cannot be read into the expression “detrimental to
the economic interest of the country”. In order to cause
injury to the economic interest of the democracy of India,
the commission of alleged offence of default must be of high
degree so as to shake the growth, financial stability,
business transactions, bilateral trade relations,
investments, stock markets etc. There is no evidence that
on account of the default committed by the Visa Power
Limited, the economy of India had been shaken. The bank
has not provided any contemporaneous material against the
petitioner which would satisfy the exceptions clause. The
bank is also silent as to whether any input had been
received from any agency that the petitioner was likely to
flee the country and his departure would disrupt the
economy.
51. Admittedly, in the facts of this case, no investigation is
pending before any authority. It is also not a case where the
bank had come to a conclusion on the basis of inputs
24received from an intelligence agency or any other agency
that the petitioner was trying to leave India in order to
evade the consequences of the legal actions that may be
taken against him, both under the civil and the criminal
laws.”
21. The legal position governing LOCs is no longer res integra. In Sumer
Singh Salkan (Supra), it has been held that recourse to an LOC is
permissible only where the person is deliberately evading arrest, or
he is not appearing before the authorities despite coercive processes,
or he is likely to leave the country to evade trial. The issuance of an
LOC must therefore be predicated upon cogent and tangible
material, and not on mere conjecture.
22. It is an undisputed fact that the investigating agency has recorded
the appellants’ statements on 22nd December, 2025. The
investigation of the matter was concluded by SFIO, and the same
was communicated to the Central Government long back. The final
opinion as to whether a proceeding against the appellant would be
initiated or not has not yet been taken despite lapse of almost a
year. No such proceeding or case is pending against the petitioner in
any court of law.
23. Tested on the aforesaid parameters and facts in hand, the
continuation of the LOC in the present case is unsustainable.
Admittedly, the investigation has already culminated into a report,
which has been submitted under Section 212(12) of the Companies
Act. No prosecution has yet been launched, nor is there any
proceeding presently pending before a competent court. In such
25
circumstances, the apprehension of non-appearance of the appellant
in any proceeding before a court of law remains premature and
hypothetical, lacking the immediacy required to justify curtailing an
individual’s personal liberty. Thus, the very foundation of the
decision of the learned Single Judge is erroneous speculative and
misplaced.
24. The constitutional dimension of the issue further fortifies the
appellant’s case. In Maneka Gandhi v. Union of India4, the
Hon’ble Supreme Court unequivocally held that the right to travel
abroad is an integral facet of personal liberty under Article 21, and
any restriction thereon must satisfy the test of being just, fair and
reasonable. The impugned LOC, which effectively prevents the
appellant from resuming his professional commitments abroad, and
separation from his family, constitutes a serious invasion of his
right.
25. It is equally well-settled that such restrictions must meet the test of
proportionality, namely, that the measure must have a legitimate
aim, be rationally connected to that aim, be necessary in the sense
that no lesser restrictive alternative is available. The measure must
strike a proper balance between competing interests. In the present
case, while the objective of securing investigation into alleged
economic offences may be legitimate, the continuation of the LOC,
4
(1978) 1 SCC 248
26
after completion of the investigation and without any prosecution
being initiated, fails the tests of necessity and balance.
26. The decision in Ghanshyam Pandey (Supra), relied upon by the
respondents, doctrinally supports the present appellant’s case, as it
highlights the requirement of a live proceeding and non-speculative
justification. In the said case, the LOC was sustained because it was
anchored to an ongoing investigative or legal process, together with
conduct suggesting non-cooperation. However, in the present case,
the LOC has been continued even after the completion of the
investigation, and without any pending proceeding. It is solely based
on a speculative apprehension that the appellant may try to evade
appearance before the special court in the event the Central
Government decides to institute a proceeding before the competent
court.
27. The contention of the respondents that the LOC is justified keeping
in view the “economic interest of India” also does not withstand
judicial scrutiny. While economic offences are undoubtedly grave,
the mere reference to such interest, cannot be a substitute for
specific and individual satisfaction regarding the necessity of
restraining a particular individual from travelling abroad. The
materials on record do not disclose any clear or direct role
attributable to the appellant that would warrant such a drastic
restriction, particularly when the LOC against the promoter of Elder
27
as we have been informed by Mr. Tiwari, in the course of this
proceeding does not continue.
28. The foundation of the arguments of the respondents that stringent
measures should be adopted as the appellant resides in China and
in the absence of an extradition treaty, it would be impossible to
ensure the appearance of the appellant to face trial, is unacceptable
and not supported by the guidelines. Merely because he resides in
China on a work visa and has married a Chinese National, there
cannot be a presumption of either a flight risk or evasion of court
proceedings. What is required is demonstrable conduct indicating
evasion. On the contrary, the records reveal that the appellant has
periodically visited India and, appeared before the authority to give
his statements. The investigation by the SFIO was closed in May
2025.
29. In Arockia Jeyabalan (Supra), the Madras High Court recognised
that mechanisms such as impounding of passport, imposition of
travel conditions, or securing undertakings may adequately
safeguard the interests of the authorities without resorting to an
absolute restraint on travel.
30. We find the decision in Dr. Prannoy Roy v. Union of India in
W.P.(C) 5316/2021 to be relevant. The Delhi High Court emphasised
that mere existence of allegations or pendency of investigation does
not, by itself, justify the issuance or continuation of an LOC. The
28
decision further underlines the requirement to adopt the least
restrictive measure to make sure that an individual does not evade
appearance in court. The Court recognised that conditions such as
undertakings, intimation of travel, or other safeguards are sufficient
to protect the interests of the investigation, while also protecting the
rights of the individual which have been guaranteed under Article 21
of the Constitution.
31. In view of the above, the impugned action suffers from the vice of
arbitrariness and disproportionality and is inconsistent with the
settled legal principles governing origination of LOCs. The
continuation of the LOC, in the absence of any pending proceeding
and based on speculative apprehension, results in an unwarranted
infringement of the appellant’s fundamental right under Article 21.
32. Thus, the impugned LOC against the appellant is hereby quashed,
subject to the appellant furnishing a notarized affidavit before the
Respondent No.1 and 3, inter alia undertaking to make himself
available before the jurisdictional court as and when required in the
event any prosecution is instituted, and to render full co-operation.
The affidavit shall be filed within a week from date. The affidavit will
disclose his local Indian address, residential address in China,
phone numbers, work place addresses, the email id which is
operational in China and at all times. He will undertake not to
29
surrender his Indian Passport for a period of two years or until
further orders of any competent court of law, whichever is earlier.
33. If such affidavit is not filed within the time stipulated, the LOC will
continue.
34. Accordingly, MAT 474 of 2026 is allowed. CAN 1 of 2026 is also,
thus, disposed of. The LOC is quashed.
35. Consequently, the Judgment and order dated 13.02.2026 passed by
the Learned Single Judge in WPA 2772 of 2026 is hereby set aside.
36. Urgent photostat certified copy of this Judgment, if applied for, is to
be given to the parties on priority basis on compliance of all legal
formalities.
I Agree.
(Shampa Sarkar, J.) (Ajay Kumar Gupta, J.)
Later:
Learned counsel for the respondent prays for a stay.
Such prayer is considered and rejected.
(Shampa Sarkar, J.) (Ajay Kumar Gupta, J.)
