A senior police official said Lieutenant Governor Tejinder Khanna issued the ban order under Section 13 of Cinematography Act to maintain communal harmony.
Section 13 gives power to the Lieutenant-Governor to suspend the exhibition of a film if he feels that it could cause breach of peace.
Last night, the Punjab government put a ban on the film to "maintain communal harmony" in the state.
"Sadda Haq" (Our right), according to actor-producer Kuljinder Sidhu, is based on the dark days of militancy in Punjab and is an attempt to portray what prompted young men in the state to tread the path of terrorism.
The film has faced criticism that it seeks to glorify the Khalistani movement and militant leaders like Jarnail Singh Bhindranwale.
Sidhu's brother was killed in an encounter with security forces in Punjab in 1992.
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