Court Rules LOC Violates Fundamental Right to Travel and Lacks Legal Justification
In a significant ruling, the Calcutta High Court has quashed the Look Out Circular (LOC) issued against Debanjan Hazra, a former employee of Elder Pharmaceuticals Ltd., emphasizing that the measure lacked sufficient grounds and violated Article 21 of the Constitution, which guarantees the fundamental right to personal liberty, including the right to travel abroad.
The judgment, delivered by a division bench comprising Justices Shampa Sarkar and Ajay Kumar Gupta, overturned the decision of a single judge who had earlier refused to quash the LOC. The LOC was issued on the request of the Serious Fraud Investigation Office (SFIO) amid allegations linking Hazra to fraudulent activities at Elder Pharmaceuticals. Despite an exhaustive investigation, no prosecution was initiated against Hazra, who had left Elder Pharmaceuticals in 2009 and settled in China.
During the appeal, Hazra contended that the LOC was unjustified, as the investigation had concluded without resulting in any pending proceedings or charges against him. He argued that the LOC had improperly restricted his personal liberty and separated him from his family in China. The appellant also highlighted his cooperation with the investigation, refuting claims of non-compliance.
The court underscored the importance of adhering to the guidelines for issuing LOCs, noting that such measures must be based on cogent material, not mere conjecture. It ruled that speculative apprehensions of Hazra potentially evading trial were insufficient grounds for continuing the LOC, especially in the absence of any pending legal proceedings.
In its judgment, the court referred to previous cases, including the landmark Maneka Gandhi case, which affirmed the right to travel abroad as an integral part of personal liberty under Article 21. The court emphasized that restrictions on this right must be just, fair, and reasonable, meeting the test of proportionality.
The bench concluded that the LOC against Hazra was arbitrary and disproportionate, failing to meet the criteria necessary for its issuance. It directed that the LOC be quashed, subject to Hazra submitting a notarized affidavit guaranteeing his availability for any future proceedings, and ensuring full cooperation with investigative authorities.
The court's decision is a reaffirmation of the constitutional protections surrounding personal liberty and the right to travel, setting a precedent for the careful scrutiny of LOCs to prevent unjust curtailment of individual freedoms.
Bottom line:-
Look Out Circular (LOC) issued against an individual must meet the guidelines and principles of proportionality. The absence of pending proceedings or demonstrable conduct indicating evasion cannot justify the continuation of the LOC.
Statutory provision(s): Companies Act, 2013 Sections 212, 447; Article 21 of the Constitution of India
Debanjan Hazra v. Serious Fraud Investigation Office, (Calcutta)(DB) : Law Finder Doc id # 2891167
