Justice A K Chawla was informed by the government that the order impounding his passport was passed by the passport authority as per law.
The External Affairs Ministry in its affidavit said that section 10(3)(c) of the Passport Act specifically provides that the authority, if it deems fit, can impound the passport.
The ministry was responding to the court notice issued on the plea by Pramod Mittal, who is steel tycoon Lakshmi Mittal's younger brother.
Defending the order, government standing counsel Ajay Digpaul said Pramod Mittal had "concealed the facts that criminal cases are pending against him. In addition to that, he has defaulted on a large sum to the State Trading Corporation of India Ltd (STC)".
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In March this year, the CBI had registered a case of cheating and corruption against Mittal and former top officials of the STC for allegedly causing a loss of Rs 2,112 crore to the public sector undertaking. The case was registered on the basis of a complaint from the PSU.
He had sought a stay and quashing of a May 16 show cause notice issued to him on why his passport should not be impounded. Since he did not respond to it, the authority passed the order on August 8 impounding his passport.
Opposing the plea, the Centre said that the amount which has been defaulted by the petitioner's company is public money and the act of the competent authorities of impounding the passport fell within the purview of section 10 of the Passport Act, 1967.