However, the court termed her not being allowed to visit London as inappropriate, saying the government has to draw a line to distinguish between "nationalism and jingoism".
Pillai, who was on January 11 offloaded from a flight to London at the IGI airport in New Delhi, had sought permission again to visit the British capital to make a presentation before British MPs on alleged human rights violation at Mahan in Madhya Pradesh.
During the hearing, Additional Solicitor General Sanjay Jain, appearing for the Centre, informed Justice Rajiv Sakhdher that a Look Out Circular issued on Pillai was in national interest and on the advice of Intelligence Bureau.
The court expressed concern over Pillai not being allowed to visit London and government has to draw a line between "nationalism and jingoism".
The court said the government decision of the government is not appropriate as there are many people, who indulged in various anti-national activities, but were travelling abroad.
However, the ASG said Pillai's visit to London was "a serious threat to the nation and the speech she is going to make there is against the nation. The travel tickets financed in her name were from an organisation which is on the watch list of the Ministry of Home Affairs."
ASG while submitting a set of secret documents in the court said the government was stopping her only for this trip as it has specific inputs from Intelligence Bureau.
Meanwhile, the court directed the government to file counter affidavit in regard to their allegation mentioned in the report produced by Foreigner Regional Registration Officer in a sealed cover by February 10.
The court has now fixed the matter for further hearing on February 18.
The court earlier had issued notices to the Ministry and IB on the activist's demand for compensation of Rs one crore.
She has contended that disallowing her from travelling to London was "completely unlawful and malafide and without any authority of law" and demanded quashing of the alleged 'Look Out Circular' against her.
She has also sought expunging of the endorsements made on her passport when she was taken off from the flight by the immigration officials.
Senior advocate Indira Jaising, appearing for Pillai, had earlier submitted in the court that the concerned authorities be asked to remove her name from any database containing names of individuals barred from leaving the country.
The counsel had said an enquiry should be ordered into the "illegal, wrongful and malafide conduct" of the officials and sought that the wrongdoers be punished if found guilty.
"The Petitioner has been arbitrarily and without authority of law prevented from exercising her fundamental right to travel out of India, which is an integral facet of personal liberty guaranteed under Article 21, without following the procedure established by law," the Greenpeace activist's petition has said.
"Her fundamental freedom to express herself as well as to practice her profession protected under Article 19(1) of the Constitution have been subject to unreasonable restrictions, which is patently illegal and arbitrary," it said.
Jaising had submitted that Pillai does not have any criminal conviction against her, nor has there been any order impounding or revoking her passport by the concerned Passport Authority.
"She (Pillai) is not evading any trial or arrest under any law, for which a lookout circular is to be issued. She is the victim of the system," the counsel had said.
37-year-old Pillai in her petition has said that she has challenged her "offloading" and the 'Look Out Circular' issued on her, which had resulted in the stamping of "offload" on her passport by the immigration officials.
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