Case Note & Summary
The petitioner, a Non-Resident Indian businessman based in Hong Kong and managing director of a company dealing in diamonds, held an Indian passport valid until 2028. On 10 September 2020, while attempting to board a flight from New Delhi to Hong Kong with his family, he was prevented from travelling by immigration authorities. His passport was stamped 'cancelled without prejudice' and he was detained at the airport. The following day, he was served a summons from the Serious Fraud Investigation Office (SFIO), the respondent No.3, directing him to appear in Mumbai. The petitioner had invested in convertible warrants of M/s. Gitanjali Gems Limited, a company connected to Mehul Choksi, who was under investigation for massive bank fraud. The petitioner claimed he was a bona fide investor who purchased warrants with his own funds through banking channels, converted them into shares, and sold them before the fraud came to light, making a small profit. He maintained he had no connection with Choksi’s fraudulent activities. The SFIO was investigating Gitanjali Gems and other companies under Sections 210 and 212 of the Companies Act, 2013, and had issued a Look-Out Circular (LOC) against the petitioner on the suspicion that he might evade the investigation. The petitioner challenged the LOC and the stamping of his passport by filing a writ petition before the Bombay High Court, seeking quashing of the LOC, a declaration that the actions were arbitrary and illegal, permission to travel abroad, and costs. The legal issues framed were whether the LOC was validly issued in accordance with the applicable guidelines and whether the restriction on the petitioner’s right to travel abroad and the stamping of his passport violated his fundamental rights under Articles 14, 19, and 21 of the Constitution of India. The petitioner argued that he had cooperated fully with the investigation, had deep roots in India with parents and immovable properties, was never named as an accused in any case, and that the LOC was a coercive measure not warranted by the circumstances. The respondents contended that the petitioner had taken loans from Mehul Choksi, sold his shares just before Choksi fled, failed to provide key documents of his overseas entities, and was a flight risk due to his foreign connections. The Court, after examining the LOC guidelines in the Office Memorandums dated 5.12.1979 and 27.10.2010, held that LOCs cannot be issued arbitrarily and are not punitive measures. The guidelines require specific grounds such as the person being an accused in a cognizable offence, evading arrest, or posing a threat to sovereignty. The petitioner was not an accused and had not evaded any process. His cooperation was evident from his appearances and document submissions. The last summons was in September 2020, and no further communication occurred after February 2021, indicating that his presence was no longer required for investigation. The Court found that the SFIO had not established non-cooperation with specific instances, and the mere fact that the petitioner knew Mehul Choksi or had invested in the company did not justify the LOC. The action of stamping the passport as 'cancelled without prejudice' was held to be without any authority of law, as the Passports Act, 1967 prescribes a detailed procedure for cancellation under Section 10(3), which was not followed. Such stamping effectively cancelled the passport in violation of Article 21. The Court concluded that the LOC and the stamp were arbitrary, illegal, and violative of Articles 14, 19(1)(a) and 21. Accordingly, the petition was allowed. The LOC was quashed, the stamping action declared illegal, the respondents directed to permit the petitioner to travel abroad, and costs of Rs. 1,00,000 were awarded to the petitioner.
Headnote
A) Constitutional Law - Right to Travel Abroad - Fundamental Right under Article 21 - Constitution of India, Article 21 - Person not accused of any offence prevented from travelling abroad due to Look-Out Circular - Court held that right to travel abroad is a part of personal liberty under Article 21 and any restriction must be just, fair and reasonable - Held that procedure established by law must be strictly followed and failure to do so violates Article 21 (Paras 22-24). B) Immigration Law - Look-Out Circulars (LOCs) - Guidelines for Issuance - Office Memorandum dated 5.12.1979 and 27.10.2010 - Petitioner not an accused, not evading arrest, and co-operated with investigation - Court held LOC cannot be issued merely because person is acquainted with an accused or under investigation; non-cooperation must be established with specific instances - Held that in absence of material showing non-cooperation or flight risk, LOC was issued arbitrarily and without justification (Paras 25-28). C) Constitutional Law - Personal Liberty - Passport Stamping as Cancelled Without Prejudice - Constitution of India, Article 21 - Immigration Officer stamped passport without any authority of law or procedure - Court held such action is extra-legal and violates Article 21, being an arbitrary restriction on personal liberty - Held that stamping of passport in such manner is illegal and without authority (Paras 29-30). D) Passports Act - Cancellation of Passport - Conditions under Section 10(3) - Passports Act, 1967, Sections 10(3)(c), 10(3)(e) - Stamp of 'cancelled without prejudice' effectively cancels passport without following the procedure under the Act - Court held that such action cannot be sustained as it bypasses the statutory safeguards - Held that no circumstances existed to invoke Section 10(3) and action was illegal (Paras 31-32). E) Criminal Procedure - Investigation - Summoning of Witness - Companies Act, 2013, Section 217 - Petitioner appeared on multiple dates and provided documents; no summons after September 2020 - Court held that prolonged pendency of LOC without any requirement of presence indicates no genuine need for his detention - Held that the LOC was no longer necessary for investigation and violated petitioner's rights (Paras 26-28).
Issue of Consideration
Whether the Look-Out Circular issued against the petitioner was valid and whether the restriction on his right to travel abroad violated his fundamental rights under Articles 14, 19, and 21 of the Constitution of India, and whether the stamping of the passport as 'cancelled without prejudice' was legal and within authority.
Final Decision
The writ petition is allowed. The Look-Out Circular issued against the petitioner is quashed and set aside. The action of the Respondent No.2 in stamping the passport as 'cancelled without prejudice' is declared illegal, arbitrary, and without authority of law. The respondents are directed to permit the petitioner to travel abroad and to remove all impediments from his travel. The petitioner is awarded costs of Rs. 1,00,000.
Law Points
- Right to travel abroad is a fundamental right under Article 21
- LOC guidelines must be strictly followed
- LOC cannot be issued merely because a person is acquainted with an accused or under investigation
- non-cooperation must be established with evidence
- stamping passport without authority violates Article 21
- LOC cannot be used as a punitive measure
- personal liberty cannot be restricted arbitrarily
- conditions under Section 10(3) of Passports Act not met
- guidelines of OM dated 5.12.1979 and 27.10.2010 apply
- mere suspicion of flight risk insufficient without material
