The Delhi High Court has quashed the look-out-circular restricting Sobha’s Managing Director Jagadish Nangineni to travel abroad on the grounds that he was allegedly involved in the money laundering under Prevention of Money Laundering Act, 2002 (PMLA).
The bench of Justice Neena Bansal Krishna has observed that the LOC was issued to secure presence of the Petitioner and that he is at flight risk and would evade trial, however, it is evident that the Petitioner has been duly cooperating with the Investigating Agency by furnishing the requisite documents and by responding to queries raised by the Enforcement Directorate (ED).
In November 2009, the Petitioner joined Sobha Limited, as the General Manager, Business Development, purely in a professional capacity with no prior financial or other interest, and worked in the registered Office of the Company at Bangalore. In 2010, he shifted to the Sobha’s NCR office at Gurugram and continued as Deputy Managing Director & Regional Head until March 2022. The Petitioner was promoted and designated as the Managing Director of Sobha on April 1, 2022 and is currently fulfilling his official duties while residing at Bangalore.
The initial F.I.R was registered against Sobha for the alleged offences punishable under Section 10 of the Haryana Development and Regulation of Urban Areas Act, 1975 (HDRUAA) and Section 420 of the Indian Penal Code, 1860 (IPC). On the basis of the scheduled offences in the F.I.R., ED, has recorded the ECIR dated 25.01.2019 under section 3 and 4 of PMLA 2002, against the Petitioner for the offence of Money Laundering.
The Enforcement Directorate (ED) has claimed that Sobha is allegedly involved in violation of the provisions of the Bilateral Agreement executed between the Director, Town and Country Planning, Haryana (DTCP). However, it is asserted by the petitioner that there is no violation of any law committed by the Petitioner or Sobha and even if there is any violation, the same constitutes only a civil wrong/contractual dispute.
ED had initiated its investigation and interrogation in which the Petitioner has duly cooperated and has furnished all requisite details/ information/ papers and documents sought.
Even before the Charge Sheet was filed by the Police, ED raided the Petitioner’s residence on 20.08.2019 and office on 20.08.2019 to 21.08.2019, and seized various documents and devices, which still remain in the custody of the ED.
Thus, by creating a backdoor entry, the ED has revived the ECIR and has continued with the investigations and for the past 4 years, the Petitioner along with other representatives of Sobha have been duly cooperating with the ED and have been furnishing information as and when needed/called for.
The Petitioner has appeared in person before the ED about 13 times and has duly responded to all queries via email or through counsels. Even the then Vice Chairman and Managing Director of Sobha, Jagdish Chandra Sharma, the then Chief Financial Officer of Sobha, Subhash M Bhat and other personnel of Sobha, including the IT Personnel, have appeared before the ED on multiple occasions and provided access to all relevant documents, statements, digital database, etc.
During the pendency of the Quashing Petition, ED issued the provisional Attachment Order against Sobha and provisionally attached the properties worth INR 201.60 Crores, as the proceeds of crime. The ED has filed Original Complaint before the Adjudicating Authority, which is pending for disposal.
The Petitioner had filed a Special Leave Petition seeking Anticipatory Bail in the ECIR. The interim protection was granted to the Petitioner which was made absolute on 15.02.2022. On 05.09.2022, leave was granted and the SLP was disposed of in favour of the Petitioner.
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The petitioner contended that the petitioner, being a Managing Director of a reputed listed Company, is required to frequently travel abroad to fulfil his professional commitments. It is apposite to note that while allowing the Anticipatory Bail SLP, no restrictions or conditions were imposed with respect to the travel of Petitioner.
The petitioner apprehended that the LOC has been issued against the Petitioner at the instance of the ED, restricting the Petitioner’s travel abroad. Though the Petitioner had sent a letter dated 09.02.2023 to the ED seeking clarification if any LOC had been issued against the Petitioner restricting the Petitioner’s overseas travel. However, ED neither responded to the Petitioner’s letter nor provided any clarification on restriction on the Petitioner’s travel.
The petitioner submitted that in absence of a response from the ED, if the Petitioner were to proceed with the assumption that there is no LOC and undertake business or other travel abroad, he risks the embarrassment of being publicly humiliated by being deboarded from the aircraft or being refused exit by the Immigration department at the airport, in addition to the financial loss for the travel arrangements.
The Petitioner has asserted that he is not a flight risk and cannot be deemed to in any manner, evading the process of law. The Petitioner has deep roots in India including his family, property, employment, and residence. The Petitioner is a regular taxpayer in India and has filed his Income Tax Return up to Assessment Year 2022-23.
ED contended that the Look-Out Circular had been issued on 15.02.2021 as departure of the Petitioner from India, is detrimental to the economic interest of India and ought not to be permitted in the larger public interest.
The court noted that investigation would not be prejudiced in any manner if the petitioner is permitted to travel abroad temporarily, to attend its office duties and personal obligations. Also, since the Petitioner and his family are holding Indian Passport, he shall return back to the country.
The court opined that the very issuance of the LOC against the Petitioner is illegal, unlawful, unjust, and amounts to an act of unreasonable curtailment of the personal liberty of the Petitioner. It is submitted that such an action vitiates the constitutional rights of the Petitioner enshrined under Article(s) 14, 19 and 21 of the Constitution of India. The LOC, if any, is thus liable to be quashed.
The court while allowing the writ petition held that petitioner has joined investigations, is not evading the process of law and there is no likelihood of the petitioner leaving the country to evade trial; none of the grounds for continuing the LOC continue to exist. The Lookout Circular (LOC) issued against the Petitioner is hereby quashed.
The court directed the petitioner to keep the Trial Court informed about his place of residence and his updated contact details. In the event of travelling abroad, he may inform the concerned Trial Court by way of an Application with his itinerary annexed and details of the intended place of residence abroad.
Case Title: Jagadish Nangineni Versus ED
Case No.: W.P.(CRL) 1184/2023
Date: 06/09/2024
Counsel For Petitioner: Sidharth Aggarwal
Counsel For Respondent: Zoheb Hossain
