In W.P.(CRL) 2332/2022-DEL HC- Investigation under Black Money Act is at initial stage: Delhi HC rejects petition for suspension of Look Out Circular issued against Punj Lloyd promoter Atul Punj over allegations of siphoning off funds
Justice Yogesh Khanna [24-11-2022]

Read Order:ATUL PUNJ Vs. IDBI BANK AND ORS 

Tulip Kanth

New Delhi, November 25, 2022: In a case where the SFIO has been investigating the matter of cheating by Atul Punj’s company to the tune of approx. Rs 12,300 crore, the Delhi High Court has refused to suspend the Look Out Circular against the Punj Lloyd promoter.

Justice Yogesh Khanna was considering Atul Punj’s petition seeking suspension of Look Out Circular (LOC) issued against the petitioner for the period between November 1, 2022 to November 21,2022 to enable him to travel Abu Dhabi, Bahrain, Riyadh and London for his consultancy work related to his business.

It was the petitioner’s case that he was unaware whether LOC was in operation against him but he had an apprehension in the light of investigation being conducted by SFIO and/or on account of proceedings under the RBI fraud declaration circular in relation to the affairs of M/s.Punj Lloyd Limited (PLL) of which the petitioner herein was a promoter/director. 

The background of the Punj Lloyd matter was such that in 2019, the National Company Law Tribunal, PB, New Delhi titled as ICICI Bank vs. Punj Lloyd Limited had directed initiation of corporate insolvency resolution process of PLL under the provisions of IBC. Presently it is under liquidation.

After investigation by SFIO into the affairs of PLL,PLL’s account was declared as fraud by the IDBI Bank. In a Writ Petition, the Court had also passed an order directing status quo be maintained in respect of declaration of the account of PLL as fraud and from taking any further steps pursuant thereto.

It was contended from SFIO’s side that they have been investigating the matter qua cheating by the petitioner’s company of the banks to the tune of approx. Rs 12,300 crore and it had given a list of 38 such banks in its status report. Alleging that the petitioner has been the Managing Director of PLL who has been in direct and indirect control of the affairs of PLL, it was further argued that the payments of huge amounts have been made to number of entities in the name of consultancy fee in overseas from PLL and its group companies and also to the promoters of PLL i.e., the petitioner and his son.

The Bench took note of the allegations that Atul Punj, a citizen of India and a resident for taxation purpose for F.Y. 2018-19, is the beneficial owner of M/s Trejo Associated, SA and Uphill Profit Worldwide Limited. Both entities are registered out of India in British Virgin Islands and the beneficial ownership details of these entities have not been declared in his ITRs filed in India. 

Noticing that Atul Punj is also a beneficial owner of the assets of the bank account held in Julius Bear Bank Account, Zurich which has also not been declared in his ITRs filed in India, the Bench held that he is also liable for consequences under Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 which include criminal prosecution and the offences are cognizable.

The Bench also referred to the judgment in Ram Jethmalani v Union of India (2011) 8 SCC 1 where the Top Court considered the fact that thousands of crores of Indian rupees are stashed away abroad in foreign bank accounts posing a serious threat to the financial health and economy of the country.

“ The factum of foreign assets of the petitioner only came to light in 2019-2020 and therefore his prior travels would make no difference to the present case as offences under the Black Money Act has only been revealed from 2020 onwards and proceedings have been initiated thereunder”, the Bench held.

The Bench observed that the investigation is at initial/crucial stage and the petitioner allegedly is evading queries. Stating that millions have been transferred by him to foreign accounts per investigation till date, the Bench opined that the discretion needs to be exercised cautiously more so when the petitioner’s son has not returned to India for the last two years and is not co-operating. 

Thus, considering the allegations of siphoning off huge amounts and the investigation under the Black Money (Undisclosed Foreign income and assets) and Imposition of Tax Act, 2015 being at initial stage, the Bench dismissed the Petition.