The Calcutta High Court has affirmed that a Look Out Circular (LOC) may be lawfully issued against an individual who has settled abroad, repeatedly evaded investigative summons, and is implicated in a large-scale financial fraud involving public deposits. The judgment clarifies that procedural non-compliance by the accused, coupled with a credible risk of flight, justifies preventive immigration measures even in the absence of a formal charge sheet.
Background & Facts
The Dispute
The petitioner, Debanjan Hazra, a chemist by profession, was employed with Elder Pharmaceuticals Limited (EPL) from 2006 to 2009. He later moved to China in 2013, where he became a permanent resident, married a Chinese national, and established a career. Despite his long-term residence abroad, he visited Kolkata annually to meet his elderly parents. In December 2025, while attempting to transit through Kolkata Airport to Bangladesh en route to China, he was detained due to a Look Out Circular issued by the Serious Fraud Investigation Office (SFIO).
Procedural History
- 2019: Ministry of Corporate Affairs directed SFIO investigation into EPL under Section 212(1)(a) of the Companies Act, 2013.
- 2020: Court Commissioner appointed by Bombay High Court found siphoning of Rs. 1,300 crores and non-payment to 23,946 deposit holders.
- 2025: SFIO submitted investigation report under Section 212(12), revealing petitioner’s role in transferring Rs. 215 crores via fraudulent sale of subsidiaries to AD Global EOOD, a company he solely owned.
- February 2025: LOC issued against petitioner under Office Memorandum dated 22.02.2021.
- December 2025: Petitioner detained at Kolkata Airport; signed undertaking to appear but failed to submit requested documents.
Relief Sought
The petitioner sought quashing of the LOC, arguing that no cognizable offence was established against him, that he had cooperated with authorities when summoned, and that the LOC violated the procedural safeguards under the 2021 Office Memorandum.
The Legal Issue
The central question was whether a Look Out Circular can be lawfully issued under the 2021 Office Memorandum against an individual who has settled abroad, failed to respond to multiple summonses, and is implicated in a financial fraud involving siphoning of public funds, even if formal prosecution has not yet commenced.
Arguments Presented
For the Petitioner
The petitioner’s counsel relied on Mritunjay Singh v. Union of India and Vishambhar Saran v. Bureau of Immigration, arguing that LOCs are permissible only in cognizable offences under the IPC or where the accused is actively evading trial. He contended that the petitioner was merely an employee of a group company, not a director or promoter of EPL, and that no direct criminal liability was established. He further argued that the LOC violated Clause (I) of the 2021 Memorandum, which prohibits detention without a cognizable offence.
For the Respondent/State
The State countered that the investigation revealed the petitioner was a close associate of EPL’s promoters and the sole shareholder of AD Global EOOD, which received Rs. 215 crores through fraudulent asset transfers. Summons sent to his Indian address were returned unserved, and emails sent to his registered Yahoo account were acknowledged by him during a trip to Bangkok in February 2025, yet he made no contact. His repeated failure to appear or submit documents, combined with his permanent settlement in China, created a real risk of flight. The State invoked Clause (L) of the 2021 Memorandum, which permits LOCs where departure is detrimental to India’s economic interests.
The Court's Analysis
The Court examined the 2021 Office Memorandum and distinguished between its general provisions and the exceptional carve-out under Clause (L). It held that while Clauses (G)-(J) govern standard LOC issuance for cognizable offences, Clause (L) permits broader action where the departure of a person threatens India’s economic interests. The Court found that the petitioner’s conduct met this threshold.
"The petitioner has not merely left India; he has settled permanently abroad, established family and livelihood there, and deliberately ignored summonses despite being aware of their existence."
The Court noted that the investigation report, though not yet forwarded for prosecution under Section 212(14), was sufficient to establish a prima facie case of fraud under Sections 447, 448, and 449 of the Companies Act, 2013. The transfer of subsidiaries to a company owned by the petitioner for negligible value, after EPL had advanced substantial loans, constituted a clear fraudulent scheme. The Court emphasized that the petitioner’s failure to respond to emails and his refusal to submit documents after being detained demonstrated a pattern of non-cooperation.
The Court rejected the petitioner’s reliance on Mritunjay Singh, noting that in that case, the accused had not settled abroad and had regularly appeared before authorities. Here, the petitioner’s permanent relocation to China, coupled with his refusal to engage with the investigation, created a distinct risk of evasion. The Court held that the LOC was not punitive but preventive, and its issuance was proportionate to the scale of the fraud (Rs. 215 crores) and the number of affected depositors (nearly 24,000).
The Verdict
The petitioner’s challenge was dismissed. The Court held that a Look Out Circular may be sustained under Clause (L) of the 2021 Office Memorandum where an individual, though not formally charged, has settled abroad, deliberately evaded investigative summons, and is implicated in a large-scale financial fraud detrimental to India’s economic interests.
What This Means For Similar Cases
Economic Interest Justifies Preventive Action
- Practitioners must now argue that economic harm to public depositors or systemic financial integrity can independently justify an LOC, even without a cognizable IPC offence.
- Cases involving siphoning of funds from public companies, especially where assets are transferred offshore to shell entities, now fall squarely within Clause (L).
Non-Response to Summons Is Material
- Failure to respond to email summonses, even if sent to a foreign address, constitutes evasion if the accused acknowledges receipt and takes no action.
- Petitioners claiming technical barriers (e.g., blocked email servers) must provide contemporaneous evidence; mere assertions are insufficient.
Permanent Settlement Alters Risk Assessment
-
Individuals who have settled permanently abroad, married foreign nationals, and established family and employment overseas are presumed to pose a higher flight risk.
-
Annual visits to India for personal reasons do not negate the presumption of intent to evade prosecution.
-
Practitioners should advise clients to proactively engage with investigating agencies even before formal charges are filed.
-
Authorities must document all attempts at communication and maintain a clear paper trail to satisfy judicial scrutiny under Clause (L).
