The Bombay high court strikes a blow for liberty

Every once in a way, we hear of an individual being stopped at the airport, just as they are about to board an international flight. We hear that the airport authorities recognised the individual through a “look-out circular” that had been issued by the government and were thus able to prevent him from leaving the country (perhaps never to return). While all this has the elements of a thriller, there is also a problem. Look-out circulars, or LOCs, are issued through an opaque process, under doubtful legal authority, and the individual concerned doesn’t even know about their existence — or has a chance to challenge them — until they are stopped at the airport.

In this context, the Bombay high court’s judgment — authored by justices Gautam Patel (now retired) and Madhav Jamdar — on April 23 marks an important judicial pushback against what we can call LOC impunity. While the judgment itself was concerned with a narrow issue – that is, the validity of LOCs issued at the behest of public sector banks, against defaulting borrowers – the court’s reasoning has potentially broader implications.

First, the court held that since the LOCs were issued pursuant to an Office Memorandum (OM) of the Union government, those OMs must be made publicly available. Indeed, the court, in its judgment, extracted the OMs on the basis of which LOCs were issued, going back to 1979. As OMs had never been made public before, this is significant in its own right.

Second, the court expressly held that a right to be heard before the making of an administrative decision that affected one’s fundamental rights was an integral part of the guarantee of procedural justice under Article 21 of the Constitution. The impact of this holding goes beyond LOCs issued only at the behest of public sector banks, as secrecy has long been a feature of all LOCs.

Third, the court noted that the right to travel abroad is a guaranteed fundamental right under Article 21 of the Constitution. This being the case, this right could be restricted only by a validly enacted law, passed by Parliament. It is an established position that mere executive orders, or instructions, cannot be the basis of infringing on a fundamental right. In this context, one interesting feature of the judgment is that the State itself denied that the OMs had any legal force, or that the LOCs were passed under the OMs; rather, it noted that the OMs were purely internal instructions or guidelines to the departments on the modalities of issuing LOCs. This, however, left the LOCs in something of a limbo, with the source of their authority unclear. The State also argued — and the court accepted — that the Passports Act was not the basis on which the LOCs were passed. This being the case, then, to the extent that LOCs aim to curtail the fundamental right to travel, they cannot be based solely on executive orders. This finding of the court, as well, impacts all LOCs, and not just LOCs issued by public sector banks.

Fourth, and specific to the LOCs before it, the court noted that no explanation had been provided as to why only public sector banks had the power to initiate the process for an LOC against defaulters, and not all banks. The court, therefore, struck down the relevant part of the OM on the basis that it was irrational and violated the guarantee of equality before the law (Article 14). While this part of the court’s reasoning is limited to the case, its holding that under-inclusion is a ground for striking down State action under Article 14 (that is, excluding certain categories from the scope of a law without any rational basis) also has wider implications.

And, finally, the absence of an oversight mechanism, internal guidelines, natural justice, and a rational connection between the goal (addressing defaults) and the means (preventing travel outside India) was fatal to the specific LOCs in question. A large part of the court’s analysis here applies directly to LOCs across the board, and not just to the public sector bank LOCs. Importantly, the court refused to accept the government’s assertion that the “larger public interest” justified the issuing of the LOCs, noting that “… fundamental rights are not meant to protect the majority …the argument of a ‘wider public interest’ is simply contrary to settled law …we need look no further than the decision cited by Ms Mistry in NK Bajpai.” Public interest, thus, could not substitute for the constitutional guarantee of the procedure established by law.

Thus, through its reasoning, the Bombay high court has laid the foundations for a deeper challenge to the opaque and arbitrary practice of issuing LOCs. It will be interesting to see whether— and how — future courts build upon this foundation.

Gautam Bhatia is a Delhi-based advocate. The views expressed are personal