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Calcutta High Court rejects petition by bankrupt businessman against look-out circular issued at UCO Bank behest

A Single bench of Justice Sabyasachi Bhattacharyya passed this Judgement while hearing the petition filed by Hemanta Kumar Banka.

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The Calcutta High Court on Tuesday dismissed a petition of a Singapore resident challenging the Look-Out Circular issued against the petitioner on the complaint of UCO Bank of India.

A single-judge bench of Justice Sabyasachi Bhattacharyya passed this order while hearing the petition filed by Hemanta Kumar Banka.

The petitioner is a non-resident Indian and holds a passport issued by the Republic of India. The place of issuance was Singapore. The petitioner holds a Permanent Resident Card issued by the Government of Singapore and conducts business primarily at Singapore. The petitioner carries on trading through his company at Singapore and applied for credit facilities with various banks, including the branch of the UCO Bank at Singapore.

The High Court at Singapore passed an order on October 9, 2020 in directing the petitioner’s company to be wound up. By the order dated November 19, 2020, the Singapore High Court issued a Bankruptcy Order against the petitioner.

In connection with his business, the petitioner travels to various destinations including India. On October 8, 2020, allegedly in connection with his business, the petitioner had travelled to Tanzania on a Business visa and returned to India on January 13, 2021. On January 25, 2021, the petitioner was scheduled to travel to Tanzania again and accordingly boarded a flight from Kolkata to Mumbai for the said purpose on January 24, 2021 arriving at Mumbai on January 25, 2021. The petitioner went for immigration clearance, but was disallowed to cross the immigration channel.

The Immigration Officer concerned informed the petitioner that such restraint was imposed pursuant to a Look-Out Circular (LOC) issued on a complaint filed by UCO Bank of India. The LOC prohibits the petitioner from travelling beyond the territorial borders of India, although his domestic travel within the country are exempt. The petitioner then approached the High Court challenging the said Look-Out Circular.

Sabyasachi Banerjee, Counsel for the petitioner, argued that there arose no occasion for such Look-Out Circular to be issued for the petitioner in India. It is argued that the petitioner has been carrying on business legally and travelling to various countries, including India, on valid passport and visas. It is also contended that the petitioner does not have any business with UCO Bank of India but only with its Singapore Branch; as such, UCO Bank of India , which is situated in India, cannot have any cause of action to lodge a complaint asking for an LOC to be issued against the petitioner.The winding up and bankruptcy orders passed by the Singapore Court, under the law of Singapore, could not have any bearing on the present Look-Out Circular.

It is submitted that the respondents have not established any violation by the petitioner of any Indian law and/or any threat to the sovereignty, security or integrity of India and/or the economic interests of India, sufficient to justify issuance of the LOC. Hence, it is argued that the impugned LOC is illegal and ought to be set aside.

The counsel, appearing for UCO Bank of India, submitted that UCO Bank is a nationalized bank and a Government of India undertaking. Thus, any transaction pertaining to any of its branches, including the Singapore Branch, directly affects the interest of the economy of the country and the larger public interest of the Indian populace.

It is further argued that the petitioner has been declared to be bankrupt and his company wound up, which raises sufficient apprehension that the loans taken by the petitioner from the Singapore Branch of the UCO Bank would not be repaid. In such context, if the petitioner travels out of India, UCO Bank, which is the parent body of the Singapore Branch, will have no means to enforce repayment of the loans taken by the petitioner from its Singapore Branch.

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The Court while considering the arguments observed that there was sufficient justification for the apprehension of UCO Bank of India that the petitioner might escape from India, thereby defeating any effort to recover the huge amounts of loan due from him, which led to the request for issuance of LOC.

Even, on a personal level, the petitioner was declared to be bankrupt, albeit by the Singapore High Court. The premise of security for the loan taken by the petitioner from the Singapore Branch of UCO Bank of India was thus denuded by such declarations. Although passed under the Singaporean law, such orders utterly jeopardized financial standing and integrity of the petitioner, which was sufficient to raise apprehension that the petitioner might not be in a position to repay the loan.

The High Court held that no distinction can be drawn, merely on territorial grounds, between the UCO Bank of India and its branch at Singapore. The branches of a bank are, as the nomenclature suggests, outlets of the bank itself and not separate juristic entities. The transactions carried out through those branches are those which have at their source the parent branch which is the UCO Bank in India. Admittedly, the UCO Bank is a nationalized bank and a Government of India undertaking. Thus, the financial interests of the Singapore Branch of UCO Bank are inextricably linked with those of the UCO Bank itself and, consequently, with the interests of Indian public money.

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The winding up and bankruptcy orders were sufficient to freeze the business of the petitioner in Singapore, which was the source of repayment of loan by the petitioner to UCO Bank through its Singapore branch. This, in turn, directly affected the Indian interests vested in UCO Bank, the court further observed.

“Not only the economic interests of India but bilateral relations with Singapore (both of which are recognized in the relevant Office Memoranda as valid grounds of issuance of LOC) will suffer in the event the petitioner is permitted to leave India, thereby evading repayment of the huge loans taken by him from the Singapore branch of UCO Bank, a nationalized and Government undertaking bank of India.”,

-the Court said.

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