Non-supply of LOC copy at airport violative of Article 21: Punjab & Haryana High Court awards ₹1 lakh compensation

The Punjab & Haryana High Court recently held that not supplying a copy of a Look Out Circular (LOC) to the concerned person at the airport is violative of Article 21 of the Constitution [Noor Paul v Union of India]..A Division Bench of Justices MS Ramachandra Rao and Harminder Singh Madaan made the observation while setting aside an LOC issued against the petitioner by the Union Home Ministry's Bureau of Immigration at the instance of Bank of India, due to which she could not travel abroad to Dubai.“In our opinion, non-supply of a copy of the LOC to the subject of the LOC at the time the subject is stopped at the airport for travel abroad, non-supply of reasons for issuing LOC, and absence of a post decisional hearing to the subject of the LOC, is not just, fair and reasonable procedure. It is violative of Art.21 of the Constitution of India,” the Bench held..The High Court directed the respondent authorities to serve a copy of the LOC and reasons for issuing the same to the petitioner as soon as possible, and to provide a post decisional opportunity of hearing to her.“These requirements shall be read into the OMs issued by respondents concerning the issuance of the LOCs.”.The petitioner was a director of a company run by her father and others which availed a loan from Bank of India. The petitioner was one of the guarantors for the loan. She resigned from the Board of Directors of the company in 2021, but continued to be a guarantor.The company defaulted and the Bank recalled the loan via a demand notice. The company eventually filed a petition before the National Company Law Tribunal seeking initiation of the Corporate Insolvency Resolution Process..In the background of this ongoing dispute, the petitioner was meant to travel to the Dubai Expo-2022 and was to board a flight from New Delhi on February 22, 2022. She was prevented from boarding the flight as an LOC was issued against her, her family members and associate directors of the company..The petitioner informed the High Court that she was admitted to a postgraduate MBA Program at the Boston University Questrom School of Business, Massachusetts, USA with a 90 per cent scholarship. She apprehended that she would not be allowed to travel abroad to pursue her education.Therefore, she moved the Court contending that even a copy of the LOC was not provided to her. She sought quashing of the same as well as expunging of remarks that may have been entered in her passport.It was claimed that the respondents could not be allowed to hold her entire future to ransom and deprive her of her right to travel abroad to pursue her education. She said that her academic career would be ruined on account of the wrong action.It was contented that she was not accused in any criminal case where she was evading the process of law..However, the Bank told the Court that it had reason to believe that the directors and guarantors of the company may have reason to leave the country therefore the LOCs were opened against them.Reliance was placed on a notification issued by the Government of India in 2018 empowering Public Sector Banks to seek issuance of LOCs in case loan defaulters were trying to leave the country without paying huge debts.In fact, they said that that the need of the petitioner to pursue higher education abroad was more of a luxury than a necessity..The Ministry of Home Affairs, Bureau of Immigration and Foreign Regional Registration office told the Court that LOC Guidelines were a secret document, and could not be shared with accused or any unauthorised stakeholder.They stated that no accused or subject of an LOC could be provided an opportunity to be heard before issuance..After considering the arguments, the Bench considered the case of Maneka Gandhi v Union of India, where a 7-judge Bench of the Supreme Court in 1978 declared that no person could be deprived of their right to go abroad unless there was a law enabling the State to do so, and such law contained fair, reasonable and just procedure.The High Court remarked that such a right to travel abroad could not be deprived except by just, fair and reasonable procedure.In this light, the Court posed the question: “Did the respondent 1,3 and 4 follow fair, just and reasonable procedure to deprive the petitioner of her fundamental right to travel abroad?”“We do not think so,” the Bench ruled. .It was acknowledged that the authorities may not wish to issue a prior notice to the LOC subject as there would be a possibility that on receiving such notice, the subject may clandestinely leave the country.However, the Bench did not see an impediment to give a post-decisional opportunity to the petitioner by supplying the LOC and the reasons for issuing it, so that the subject could take legal recourse to challenge it..The Court went on to wonder how the petitioner was termed an “accused” when there was no criminal case initiated against her.“When there is admittedly not even an FIR registered against the petitioner, and there is no question of her being accused of any non-cognizable offence, no LOC could have been issued by respondent No.3 to detain the petitioner.”.Taking into account each of these factors, the Court said that no exceptional case or any adverse effect on the economic interest of India was made out by the respondents. The Bench said that to set in motion an extreme process like LOC that restricted personal liberty, “something more” was needed.“We are of the opinion that the quantum of the alleged default by the borrower by itself cannot be the basis for seeking issuance of an extreme process like an LOC for restricting the personal liberty of the petitioner to travel outside the country without something more.”.The Court also rejected the stand taken by the Bank that foreign education was a luxury and the petitioner ought to have pursued her higher studies in India only and not abroad.“In our opinion, is in poor taste and is perverse...The bright future of the petitioner cannot be jeopardized in this manner by the respondents.”.Therefore, the action of the Bank and the authorities was deemed arbitrary, illegal, unreasonable, violative of Articles 14 and 21 of the Constitution. The LOC was thus, set aside.Moreover, the petitioner was held to entitled to a compensation of ₹1 lakh to be paid by the Bank within four weeks since she suffered not only loss of reputation, but also monetary loss in terms of the ticket bought by her..The respondents were also directed to expunge any remarks, endorsements or entries that may have been entered in the records or the passport of the petitioner with respect to the LOC..Advocate Manish Jain appeared for the petitioner while the respondents were represented by Additional Solicitor General Satya Pal Jain, Advocates Shweta Nahata, Vinish Singla and Mayur Kanwar. .[Read Judgment]

Non-supply of LOC copy at airport violative of Article 21: Punjab & Haryana High Court awards ₹1 lakh compensation

Shagun Suryam

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