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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
M.S. Ramachandra Rao, Harkesh Manuja, JJ.
Neha Bedi – Appellant
Versus
Indian Bank & Ors. – Respondents
CWP-13050 of 2022 (O&M)
Decided On : 28-09-2022
LOC - Challenge to LOC issuance - Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 - Section 13(2), Section 13(4) - The judgment discusses the issuance of Look Out Circular (LOC) against the petitioner by respondent No.1/Bank and the legality of such action under the SARFAESI Act, 2002. The court examines the legal provisions governing the issuance of LOCs, the threshold for denying the right to travel abroad, and the authority's power to seek LOCs in cases of loan defaults. The judgment emphasizes the fundamental right to travel abroad guaranteed by Article 21 of the Constitution of India and the limitations on seeking LOCs in the absence of cognizable offences.
Fact of the Case:
The petitioner challenges the Look Out Circular (LOC) issued against her by respondent No.1/Bank, alleging violation of her fundamental right to travel abroad guaranteed by Article 21 of the Constitution of India. The petitioner contends that the issuance of LOC is arbitrary and violative of the principle of natural justice.
Finding of the Court:
The court finds that the issuance of LOC against the petitioner is not justified as she is not alleged to have committed any cognizable offence. The court emphasizes the high threshold required to deny the right to travel abroad and holds that the petitioner's fundamental right to travel abroad has been violated by the issuance of LOC. The court sets aside the LOC issued against the petitioner and restrains officials from preventing her from travelling abroad.
Issues: The key issues include the legality of the issuance of LOC against the petitioner, the threshold for denying the right to travel abroad, and the authority's power to seek LOCs in cases of loan defaults.
Ratio Decidendi: The judgment establishes that the fundamental right to travel abroad under Article 21 of the Constitution of India requires a high threshold to be curtailed. It emphasizes that the issuance of LOCs should be limited to cases involving cognizable offences and individuals evading arrest or trial, as per the legal provisions and guidelines.
Final Decision: The Writ Petition is allowed, and the LOC issued against the petitioner is set aside. Respondent No.1 is directed to communicate the order to respondent No.3, and officials/employees of respondents No. 1 & 3 are restrained from preventing the petitioner from travelling abroad. No costs are awarded.
JUDGMENT
M.S. Ramachandra Rao, J. - In this Writ Petition, the petitioner is challenging LOC issued against her on 08.03.2022 by respondent No.3 pursuant to the request dt.04.03.2022 made by respondent No.1 for issuance of the same.
The background facts
2. The petitioner is a guarantor for the loan facilities availed by M/s Puneet Fashions Private Limited whose loan account was declared as an NPA and a notice dt.03.10.2012 was issued under Section 13(2) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 [for short 'the SARFAESI Act, 2002'] by the erstwhile Allahabad Bank, predecessor of respondent No.1/Bank, demanding 120,05,71,911.09 as on 31.08.2012 within 60 days. Since the said amount was not paid by the said company, notice dt.13.02.2013 was also issued under Section 13(4) of the SARFAESI Act, 2002 to the borrower, petitioner and other guarantors.
3. The petitioner is also proprietor of M/s Neha Export Inc, a proprietory concern. The said concern had availed loan facilities of 14 crore from the Allahabad Bank and the petitioner was also guarantor for the said loan. The said loan account became NPA and a notice dt.03.10.2012 was issued under Section 13(2) of the SARFAESI Act, 2002 to her asking her to clear the outstanding dues of 18,40,57,501/- as on 31.08.2012.
The contentions of the petitioner
4. According to the petitioner, she was to travel from Delhi to Vancouver in Canada on 31.05.2022 along with her minor children and she along with them had arrived at Indira Gandhi International Airport at New Delhi on 30.05.2022, but they were not allowed to board the flight to Vancouver. She was informed by the officials of respondent No.3 that she was being restrained from travelling outside the country on account of a communication (LOC) which has been sent by respondent No.1/Bank with immigration authorities. Petitioner alleges that the copy of the LOC issued by respondent No.3 or copy of request made by respondent No.1 to respondent No.3 to issue LOC was not furnished to her.
5. Petitioner states that though there was an order passed on 08.08.2013 by Debt Recovery Tribunal, Chandigarh in OA-306-2013 tilted as Allahabad Bank Vs. Puneet Fashions Private Limited restraining her and other defendants therein from travelling abroad and the same was renumbered as OA-1959-2017, the said OA-1959-2017 was disposed of on 23.01.2018; and so the order dt.08.08.2013 restraining her and other defendants from leaving India without permission stood vacated automatically and this was recorded in an order dt.24.02.2020 in MA-416-2019 in OA-1959-2017 by the DRT-III, Chandigarh. She contends that there is no other order passed by any other Court or tribunal in Country restraining the petitioner from travelling abroad. Petitioner alleges that restraining her from travelling abroad is a violation of her fundamental right of travelling abroad guarnteed by Art.21 of the Constitution of India and also violative of principle of natural justice.
The stand of respondent no.1 Bank
6. In the reply filed by the respondent No.1/Bank, reference is made to the defaults committed by the company M/s Puneet Fashions Private Limited and also M/s Neha Export Inc, the proprietory concern of the loan facilities granted to the said entities by the erstwhile Allahabad Bank, the declaration of the said loan accounts as NPA, and initiation of proceedings under the SARFAESI Act, 2002 mentioned above.
7. It is pleaded that the petitioner was declared as a Willful Defaulter on 31.12.2012 and a letter dt.01.01.2013 regarding such declaration as a Willful Defaulter was also issued to the petitioner.
8. It is alleged that if the petitioner was to emigrate abroad, then the process of recovering defaulted money would be stalled and delayed till the defaulter is extradited.
9. It is contended that the Union of India had issued instructions on 22.11.2018, empowering and permitting banks to seek LOCs even in those cases which were not c
The fundamental right to travel abroad under Article 21 of the Constitution of India requires a high threshold to be curtailed, and the issuance of Look Out Circulars (LOCs) should be limited to case....
The central legal point established in the judgment is the high threshold required to deny a person the right to travel abroad, the need for a fair and just procedure in issuing and extending Look Ou....
The central legal point established in the judgment is that the right to travel abroad, as guaranteed by Article 21 of the Constitution of India, cannot be curtailed unless a very high threshold is m....
The main legal point established is the requirement for procedural safeguards in the issuance of Look Out Circulars, ensuring compliance with principles of natural justice and a fair, just, and reaso....
The judgment establishes the principle that the right to travel abroad is protected under the Constitution of India and cannot be deprived without following fair, just, and reasonable procedures.
The court established that Lookout Circulars cannot be issued solely based on financial default; there must be evidence of criminal activity or a legitimate risk of flight.
The personal liberty and fundamental right of movement guaranteed by the Constitution cannot be curtailed at the behest of BOB when the conditions precedent for making such request for opening an LOC....
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