Delhi HC Suspends LOC against Punj Lloyd Promoter-director Atul Punj

Moneylife Digital Team 17 January 2025

Economy & Nation

Holding that prolonged restrictions on the right to travel cannot be justified in the absence of conclusive findings, the Delhi High Court (HC) suspended conditionally a lookout circular (LOC) issued against Punj Lloyd Ltd's promoter and director, Atul Punj. While permitting Mr Punj to travel to the UK for 15 days, the HC asked him to deposit a security of Rs5 crore, title deeds of property owned by his wife and provide a detailed travel itinerary.

In an order last week, justice Sanjeev Narula observed that the serious fraud investigation office (SFIO)'s investigation has extended over five years without a final report, during which Mr Punj has consistently cooperated by attending hearings and submitting documents. Mr Punj, having been relieved of liabilities related to PLL's financial obligations by the debt recovery tribunal (DRT) and absolved from personal guarantees by the NCLT, should not face enforced self-incrimination, the bench says.

Further, the HC says there are no substantiated claims of evidence tampering, witness intimidation, or other obstructive behaviour by Mr Punj that could jeopardise the investigation.

"…while the state's interest in investigating allegations of financial impropriety is undeniable, this court finds that the absence of tangible material on record of Mr Punj's intent to abscond or tamper with the investigation tilts the balance in favour of permitting conditional travel," the bench says.

Justice Narula also interpreted the term 'detrimental to economic interest'. He clarified that mere inability to repay loans, absent any criminal wrongdoing or material to show or squandering or siphoning off public money, cannot justify curtailing an individual's right to travel, as guaranteed under Article 21 of the Constitution of India.

The HC dismissed the applicability of res-judicata in writ proceedings, noting the changed circumstances since previous denials, especially with the conclusion of the Black Money Act proceedings and the null valuation of Mr Punj's son's assets.

The bench also clarified that the Reserve Bank of India (RBI)'s classification of Punj Lloyd's account as 'fraudulent' is "an administrative measure, not a definitive finding of wrongdoing and that this administrative measure cannot justify restrictions on personal liberty without proper adjudication."

Following direction from the Union government in 2019, the SFIO started an investigation into Punj Lloyd's defaults on credit payments to lending consortiums.

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