Look Out Circulars cannot be used as debt-recovery measures absent criminality or exceptional economic harm.

A Look Out Circular cannot be used as a routine debt-recovery tool against a guarantor merely because a borrower company defaulted. The Delhi HC held that the right to travel abroad is part of personal liberty under Article 21 and may be restricted only in accordance with law for compelling reasons. Although Office Memoranda allow Look Out Circulars in exceptional cases, including where departure may harm India's economic interests, that power requires facts showing criminality or comparable gravity. As the bank had already pursued civil and recovery remedies and there were no allegations of fraud, siphoning off, or defalcation, the Look Out Circular was held unsustainable and quashed.

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Issues: Whether a Look Out Circular issued at the request of a bank, solely because the borrower company defaulted on repayment and the petitioner stood as guarantor, could be sustained in the absence of any criminal proceedings or allegations of fraud, siphoning off, or defalcation.

Analysis: The right to travel abroad is part of personal liberty under Article 21 of the Constitution of India and can be curtailed only in accordance with law and for compelling reasons. The Office Memoranda governing Look Out Circulars permit recourse to such circulars in exceptional cases, including where departure may be detrimental to the economic interests of India, but that power cannot be used as a routine debt-recovery device. The bank had already invoked civil and recovery remedies under the SARFAESI Act, the Recovery of Debts and Bankruptcy Act, and the Insolvency and Bankruptcy Code. In the absence of any criminal case or allegation that the petitioner was responsible for fraud, siphoning off, or defalcation, issuance of the Look Out Circular was treated as an impermissible coercive measure to secure repayment of dues.

Conclusion: The Look Out Circular was not sustainable and was quashed.

Ratio Decidendi: A Look Out Circular cannot be issued or continued merely to aid recovery of a bank debt unless the facts disclose exceptional circumstances showing a real detriment to India's economic interests, supported by criminality or comparable gravity; otherwise, it impermissibly curtails the right to personal liberty and travel.

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