Court quashes passport impoundment, grants right to legal counsel for petitioner's inquiries

The court allowed the writ petitions, quashing the orders impounding the petitioner's passport and directing the respondents to return the passport and withdraw the LOC. The petitioner was also granted the right to have legal counsel present during inquiries, ensuring compliance with principles of natural justice and protecting the petitioner's fundamental rights.

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Issues Involved:

1. Legality of the Look Out Circular (LOC) issued against the petitioner.
2. Right to legal counsel and auditor's assistance during personal hearings.
3. Legality of the impounding of the petitioner's passport.

Detailed Analysis:

1. Legality of the Look Out Circular (LOC) issued against the petitioner:

The petitioner, a Non-Resident Indian (NRI) and a promoter of various businesses in the UAE, was investigated for purchasing agricultural lands in India allegedly in violation of FEMA. The petitioner challenged the LOC issued without prior notice, asserting that he was not an absconding offender and was willing to cooperate with the investigation. The court referenced a previous case (E.V. Perumal Samy Reddy vs. State) where it was established that mere involvement in a criminal case does not strip a person of their fundamental rights, including the right to travel abroad. The court noted that the LOC should be issued only against specific categories of individuals, such as terrorists or absconding offenders, which did not apply to the petitioner. The court concluded that the LOC was issued without proper basis and in violation of the petitioner's fundamental rights.

2. Right to legal counsel and auditor's assistance during personal hearings:

The petitioner sought permission to have his legal counsel and auditor present during personal hearings. The court allowed this request, emphasizing the petitioner's right to legal representation during the inquiry process. This decision aligns with the principles of natural justice, ensuring that the petitioner can adequately defend himself during the investigation.

3. Legality of the impounding of the petitioner's passport:

The court examined the legality of impounding the petitioner's passport under Section 37 of FEMA and Section 131(3) of the Income Tax Act. The petitioner argued that impounding his passport without following the proper legal procedure was illegal. The court referenced the Supreme Court's decision in Suresh Nanda vs. CBI, which held that only the Passport Authority has the power to impound a passport under Section 10(3) of the Passports Act. The court concluded that the respondents did not follow the required legal procedure, making the impounding of the passport illegal. The court directed the respondents to return the petitioner's passport and cancel the LOC, subject to the petitioner complying with certain conditions, such as appearing for inquiries and cooperating with the investigation.

Conclusion:

The court allowed the writ petitions, quashing the orders impounding the petitioner's passport and directing the respondents to return the passport and withdraw the LOC. The petitioner was also granted the right to have legal counsel present during inquiries, ensuring compliance with principles of natural justice and protecting the petitioner's fundamental rights.

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