Court quashes travel restrictions via Look-Out Circulars, upholds personal liberty

The court concluded that no grounds were established for issuing Look-Out Circulars (LOCs) against the petitioners. The LOCs were set aside, and the authorities were restrained from restricting the petitioners' travel. The court emphasized the significance of safeguarding personal liberty and the right to travel, criticizing the misuse of LOCs as a substitute for recovery actions. The order was stayed for two weeks to permit the Serious Fraud Investigation Office (SFIO) to contest the ruling.

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Issues Involved:
1. Legality and authority for issuance of Look-Out Circulars (LOCs).
2. Impact on petitioners' personal liberty and right to travel.
3. Allegations and ongoing investigations by SFIO and BoB.
4. Compliance with Office Memorandum and legal provisions.

Summary:

1. Legality and Authority for Issuance of LOCs:
The petitioners challenged the LOCs issued by Immigration Authorities based on requests from Bank of Baroda (BoB) and the Serious Fraud Investigation Office (SFIO). The petitioners argued that the LOCs were issued "de hors the law" and beyond the authority vested by the Office Memorandum dated February 22, 2021. They contended that no cognizable offence under IPC or other penal laws was cited, and the criteria for issuing LOCs were not met.

2. Impact on Petitioners' Personal Liberty and Right to Travel:
The petitioners argued that their personal liberty was wrongfully restrained, preventing them from carrying on business abroad. They emphasized that Article 21 of the Constitution guarantees the fundamental right to travel, which was being curtailed without any criminal offences disclosed against them.

3. Allegations and Ongoing Investigations by SFIO and BoB:
The SFIO cited ongoing investigations under the Insolvency and Bankruptcy Code, 2016, and alleged defrauding of creditors. However, the investigation had not yielded any concrete findings against the petitioners. The SFIO also relied on an interim order by the National Company Law Tribunal (NCLT) indicating prima facie fraud. BoB's request for LOCs was based on a forensic audit report alleging irregularities and a subsequent classification of the account as fraud, but no conclusive proof of illegality was provided.

4. Compliance with Office Memorandum and Legal Provisions:
The court examined the relevant provisions of the Companies Act, 2013, particularly Section 212, which outlines the investigation process by SFIO. The court noted that the investigation had not yet crossed the stage of Section 212(4), and thus, no cognizable offence could be established against the petitioners. The court also highlighted that the Office Memorandum of 2021 requires a cognizable offence under IPC or other penal laws for issuing LOCs, which was not met in this case. Additionally, the court found that the grounds for issuance of LOCs, such as detriment to the economic interest of India or public interest, were not fulfilled.

Conclusion:
The court concluded that no grounds were made out for issuing LOCs against the petitioners. The LOCs were set aside, and the respondent authorities were restrained from preventing the petitioners from traveling abroad. The court emphasized the importance of protecting personal liberty and the right to travel, and criticized the use of LOCs as an alternative to recovery proceedings. The order was stayed for a fortnight to allow SFIO to challenge the decision.

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