Read Order: Mrs Poonam Paul v. Union of India & Others 

Monika Rahar

Chandigarh, June 7, 2022: While addressing a challenge to the Look Out Circular (LOC) issued against the petitioner by the Bureau of Immigration, Government of India at the instance of the Bank of India, the High Court of Punjab and Haryana High Court has held that a right to travel abroad cannot be deprived except by just, fair and reasonable procedure. 

The Bench of Justices M.S. Ramachandra Rao and Harminder Singh Madaan asserted that the quantum of the alleged default by the borrower by itself cannot be the basis for seeking issuance of an extreme process like a LOC for restricting the personal liberty of the petitioner to travel outside the country without something more. 

In this Writ Petition, the petitioner was challenging a Look Out Circular (LOC) issued against her by the Bureau of Immigration, Ministry of Home Affairs, Government of India (the third respondent) at the instance of the Bank of India (the second respondent). 

The petitioner (Director of a Company run by her husband and others) availed a loan from the second respondent- Bank for which the petitioner stood as a guarantor along with others. Due to a default committed by the fifth respondent in servicing the loan, a demand notice was issued to the Company and its guarantors including the petitioner under Section 13(2) of the SARFAESI Act, 2002. 

It was the petitioner’s case that she wanted to go to Australia to be with her pregnant-eldest daughter for her antenatal and postnatal care. She, however, received a caveat petition filed at the instance of the Bank mentioning that a Look-Out Circular (LOC) was issued against her, her family members and associate directors of the Company by the Airport Immigration authorities. 

She contended that the Company sent a letter to the second, third and the fifth Respondents specifically requesting copies of the Look Out Circular but the same was not given to her. The said LOC was issued at the instance of the second respondent. The petitioner contended that she had to apply for Visa formalities at the earliest and make travel arrangements to be in Australia at least sometime before the delivery of her daughter and she showed her intention to return from Australia at the end of August 2022. 

Thus, the petitioner filed this Writ Petition to quash the said LOC, and for a direction to the respondents to allow her to travel abroad (Australia) to visit her daughter. 

It was the case of the petitioner that before respondent- Bank requested for issuance of LOC against her and others, it should have at least informed the petitioner and the company of the same, and that the action of the first three respondents in not furnishing even a copy of the said LOC to her was illegal and arbitrary. 

In order to substantiate its case, the petitioner’s counsel relied upon the decisions in Maneka Gandhi vs. Union of India to contend that a citizen of the country had a constitutional right to go abroad; such a right cannot be prevented from being exercised without due process of law and without observing the principles of natural justice. Further, he placed reliance on the decision of the Supreme Court in State of West Bengal vs. A.B.K. Ltd. to contend that an un-communicated order, such as the impugned LOC, has no legal effect and would take legal effect only when the same is communicated to the affected party. 

Also, the Counsel argued that the petitioner was not an ‘accused’ in any criminal case evading the process of law; no criminal case was registered against her and there was no declaration issued either that she committed any fraud or that she was a willful defaulter by any competent authority as per the law. 

Lastly, the Counsel submitted that the mere quantum of alleged default of a loan by a citizen cannot be the basis for the extreme measure of restricting the personal liberty of a borrower/guarantor to travel inside or outside India.

After recording preliminary findings of fact, the Court made reference to Satwant Singh Sawhney vs. D.Ramarathnam, Asstt. Passport Officer, wherein it was held that the right to travel abroad falls within the scope of personal liberty enshrined under Article 21 of the Constitution of India and that no person can be deprived of his right to travel except according to the procedure established by law.  

Thus, in light of the above-stated ruling, the Court opined that a right to travel abroad cannot be deprived except by just, fair and reasonable procedure. 

Further, while referring to State of West Bengal vs. AB.K. Ltd (Supra), wherein the Apex Court held that there should be the communication of an order adverse to a citizen and only then it would come into effect, the Court held that without communicating the LOC to the petitioner, the respondents cannot seek to enforce it as it would not have any effect in law. 

On the conduct of the first three respondents, the Court was of the view that the respondents did not follow fair, just and reasonable procedure to deprive the petitioner of her fundamental right to travel abroad as they did not follow the principles of natural justice and did not even supply a copy of the LOC to petitioner inspite of her request to do so. 

Additionally, the Bench opined that when there was no FIR registered against the petitioner, no question of her being ‘accused’ of any non-cognizable offence arose and consequently, no LOC could have been issued by the third respondent to detain the petitioner. Thus, on the basis of the material placed on record, the Court was of the opinion that no exceptional case or any adverse effect on the economic interest of India was made out. 

Also, on the argument of the respondents that the petitioner leaving India, would cause a disturbance in the economy, the Court stated that the quantum of the alleged default by the borrower by itself cannot be the basis for seeking issuance of an extreme process like a LOC for restricting the personal liberty of the petitioner to travel outside the country without something more. 

Further, the Court added that the OM itself does not draw any line about the quantum of default by a borrower to a financial institution which would be considered detrimental to the sovereignty or integrity of India or to the economic interest of India and a quantum of default which would not fall in the said category. 

Thus, against this background, the Court opined that merely because the word ‘public’ is used in the exception clause in the OM, it did not elevate a mere default to an exceptional plane. It cannot be said that the departure of the petitioner from the country would adversely impact the economy of the ‘country as a whole’ and de-stabilize the ‘entire economy’ of the country. 

Thus, the Court held, 

“We are of the view that there has been non-application of mind by respondent No.3 while issuing LOC dt. 28.12.2021 against the petitioner, and mechanically it appears to have been issued without there being any material to show that the petitioner would fall in the category of a person against whom a LOC is permitted to be issued by the guidelines framed in that regard by respondent No.1.”

Therefore, the Court was of the opinion that the action of the second respondent-Bank in seeking issuance of a LOC to prevent the petitioner from leaving the country on the ground that she was a guarantor to the Company’s loan and there was more than Rs.100 crores owed to the second respondent, was arbitrary, illegal and violative of Article 21 of the Constitution of India.

Lastly, the Court held that the action of the third respondent in issuing the LOC against the petitioner in a mechanical way was also declared arbitrary, illegal, unreasonable and violative of Article 14 of the Constitution of India. 

Hence, the Writ Petition was allowed accordingly. 

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