2021 (10) TMI 637 - HC - Indian Laws

Court Quashes Look Out Circular, Emphasizes Fundamental Rights

Manoj Pushkar Toshniwal @ Manoj Toshniwal Versus Union of India & Ors.

The court quashed the Look Out Circular (LOC) against the petitioner, citing lack of specific grounds and procedural lapses. The cancellation of interim ... Cancellation of granted Interim Bail - the conditions of interim bail was fulfilled or not - non-appearance of petitioner on assigned date - jurisdiction to adjudicate the matter placed - issuance of Look Out Circular - HELD THAT:- Without giving notice to the petitioner, interim order should not have been cancelled to issue warrant of arrest on the prayer of the respondent nos.3 and 4 merely on the ground of non-appearance made on behalf of the petitioner on the assigned date. It is made hereby clear that the petitioner has a fundamental right of movement and right to life as enshrined in Article 19(1)(b) of the Constitution of India. Therefore, he has a right to travel beyond the territory of India as held by the Hon’ble Supreme Court in Maneka Gandhi vs. Union of India [1978 (1) TMI 161 - SUPREME COURT] and in case of Satwant Singh Sawhney Vs. D. Ramarathnam Assistant [1967 (4) TMI 196 - SUPREME COURT] wherein it has been held by majority decision of the Hon’ble Apex Court that ‘the expression personal liberty which occurs in Art. 21 of the Constitution includes the right to travel abroad and that no person can be deprived of that right except according to procedure established by law. The mere prescription of some kind of procedure cannot even meet the mandate of Article 21. The procedure prescribed by law has to be fair, just and reasonable, not fanciful, oppressive or arbitrary. The Look Out Circular against the passport issued at the instance of the respondent nos. 3 and 4 dated 12.3.2021 is hereby quashed, however, the petitioner in usual course would cooperate the respondent authorities if so required through video conferencing as the petitioner is non-est at the present in the respondent company no. 6 and if the respondent authority nos. 3 and 4 have any further investigation to be made, they are at liberty to seek assistance of Resolution Professional because the respondent no. 6 company is controlled by them - Application allowed. Issues Involved:1. Legality of the Look Out Circular (LOC) issued against the petitioner.2. Compliance with bail conditions and subsequent cancellation of interim bail.3. Jurisdiction and procedural fairness in issuing the LOC and arrest warrant.4. Petitioner's cooperation with the investigation and relevance of summons under the Insolvency and Bankruptcy Code (IBC).5. Petitioner's fundamental rights under Article 19(1)(b) and Article 21 of the Constitution of India.Detailed Analysis:1. Legality of the Look Out Circular (LOC) issued against the petitioner:The petitioner was apprehended at Kolkata Airport based on an LOC issued by the respondent authorities. The LOC was challenged on grounds that it lacked a specific case and was issued without proper justification. The court referenced the case of Sumer Singh Salkan vs. Assistant Directors and Ors., which outlines the conditions under which an LOC can be issued, emphasizing that it should be for cognizable offenses where the accused is evading arrest or trial. The court found that the LOC against the petitioner did not meet these criteria, as there was no specific registered case or substantial accusation against him. Furthermore, the court noted that the petitioner's cooperation in the investigation under Section 70 of the CGST Act was evident, and thus, the LOC was deemed unjustified and was quashed.2. Compliance with bail conditions and subsequent cancellation of interim bail:The petitioner was granted interim bail by the Learned A.C.J.M. Barrackpore, with the condition to appear before the investigating authority. However, the interim bail was later canceled due to alleged non-compliance with this condition. The court observed that the cancellation was done without proper notice to the petitioner and on a date that was not assigned for hearing. The court found this procedurally unfair and unjustified, especially since the petitioner had already cooperated with the investigation and there was no substantial case against him.3. Jurisdiction and procedural fairness in issuing the LOC and arrest warrant:The court scrutinized the jurisdiction and procedural aspects of issuing the LOC and the subsequent arrest warrant. It was highlighted that the LOC and the arrest warrant were issued without sufficient grounds and proper procedural adherence. The court emphasized that the issuance of such coercive measures must be backed by substantial evidence and proper legal procedure, which was lacking in this case. The court also pointed out the need for legislative regulation on the issuance of LOCs to prevent arbitrary actions by executive authorities.4. Petitioner's cooperation with the investigation and relevance of summons under the Insolvency and Bankruptcy Code (IBC):The petitioner argued that the company he was associated with was under liquidation and managed by a Resolution Professional as per the IBC provisions. Consequently, the petitioner claimed that the documents and information sought by the respondent authorities were not in his possession but with the Resolution Professional. The court acknowledged this and noted that the respondent authorities should have directed their inquiries to the Resolution Professional, who was in control of the company's operations. The petitioner's cooperation with the investigation was evident from his responses to the summons, and thus, further coercive measures were deemed unnecessary.5. Petitioner's fundamental rights under Article 19(1)(b) and Article 21 of the Constitution of India:The court underscored the petitioner's fundamental rights to freedom of movement and personal liberty under Articles 19(1)(b) and 21 of the Constitution. Citing landmark judgments, including Maneka Gandhi vs. Union of India, the court reiterated that any restriction on these rights must be fair, just, and reasonable. The arbitrary issuance of the LOC and the subsequent arrest warrant without substantial grounds violated these fundamental rights. The court emphasized that the petitioner has the right to travel abroad and should not be deprived of this right without due process of law.Conclusion:The court quashed the LOC issued against the petitioner, recognizing the procedural lapses and lack of substantial grounds for its issuance. The cancellation of interim bail and the issuance of an arrest warrant were also deemed unjustified due to procedural unfairness. The court upheld the petitioner's fundamental rights and directed the respondent authorities to seek assistance from the Resolution Professional for any further investigation. The writ application was allowed, emphasizing the need for legislative regulation on the issuance of LOCs to prevent arbitrary executive actions.