2026 (3) TMI 443 - HC - Companies Law

Look Out Circulars: quashed where necessity and proportionality fail, subject to cooperation and conditional safeguards.

Look Out Circulars impinging on the fundamental right to travel were assessed against principles of necessity, proportionality and fairness; where no FIR ... Look Out Circular and Article 21 - right to travel - Necessity and proportionality of LOC - Burden on originating agency to justify LOC - Judicial review of LOC - integral part of personal liberty under Article 21 of the Constitution of India. Look Out Circular and Article 21 - Necessity and proportionality of LOC - Continuation of the Look Out Circular against the petitioner in the absence of an FIR and where the petitioner has cooperated with the investigation. - HELD THAT: - The Court applied the principle that an LOC is a coercive executive measure affecting the fundamental right to travel under Article 21 and must satisfy tests of necessity, proportionality, fairness and due process. Having regard to the facts - no FIR on record, the petitioner's cooperation, his family ties in India, prior court-granted permissions to travel on multiple occasions, and the withdrawal of the initial complainant's complaint - the Court found no demonstrable requirement for continued restraint by way of an LOC. Reliance was placed on the guiding principles reiterated in Vineet Gupta [2026 (3) TMI 345 - DELHI HIGH COURT] which require strict scrutiny of issuance and continuance of LOCs and place the burden on originating agencies to justify such restraint. In the circumstances, continuation of the LOC was held to be arbitrary and unjustified. The Look Out Circular issued against the petitioner is set aside subject to liberty to the respondent to reopen it if circumstances warrant. Judicial review of LOC - Burden on originating agency to justify LOC - Conditions on which the Court would lift the LOC and the obligations imposed on the petitioner when the LOC is vacated. - HELD THAT: - While quashing the LOC the Court imposed conditions to ensure continued cooperation and to balance investigatory interests with personal liberty. The petitioner was directed to file an undertaking to cooperate and appear when required, to produce material documents in his power, to furnish travel itinerary and local contact details in advance, and to accept advance notice for appearances. The Court also recognised the authority of the Investigating Officer or Court to restrain travel or direct reissuance of an LOC if reservations arise, thereby preserving the originating agency's ability to act if fresh exigencies emerge. The LOC is vacated on the petitioner complying with specified conditions (undertaking to cooperate, production of documents, advance furnishing of itinerary and contact details), and the Investigating Officer/Court may restrain travel or reissue an LOC if justified. Final Conclusion: The writ petition is disposed of by quashing the Look Out Circular against the petitioner on the grounds that its continuance was not justified; the vacation of the LOC is subject to specified conditions of cooperation and advance notice, and the respondents retain the liberty to revive the LOC if circumstances so warrant. Issues: Whether the Look Out Circular (LOC) issued against the petitioner is arbitrary or unjustified and liable to be quashed, and if so, on what conditions the LOC should be set aside.Analysis: The Court examined the law governing LOCs as articulated in Vineet Gupta v. Union of India and other precedents which treat LOCs as a coercive executive measure impinging on the fundamental right to travel under Article 21 of the Constitution of India. The factors considered include absence of a criminal FIR, absence of demonstrable necessity or proximate likelihood of absconding, cooperation of the subject with investigations, family and other ties to the country, and the need for necessity, proportionality, fairness, and due process before continuation of an LOC. On facts, there is no FIR against the petitioner; the petitioner holds tax residence abroad but has extensive family ties in India; the petitioner has previously been permitted to travel by the Court on multiple occasions and has travelled; the original complaint was withdrawn by the complainant; and the petitioner has undertaken to cooperate and appear as required. Balancing the State's interest and the petitioner's fundamental rights, and applying the principles of necessity and proportionality, the Court concluded that continuation of the LOC was not justified but that conditional relief was appropriate to safeguard any legitimate investigative requirement. The Court therefore set aside the LOC while reserving the respondents' right to reopen or reissue protective measures if circumstances so warrant, and imposed conditions requiring an affidavit undertaking cooperation, production of documents, furnishing of travel itinerary and contact details, advance notice for appearances, and a mechanism for the Investigating Officer or Court to direct restraint or reissue an LOC if reservations remain.Conclusion: The Look Out Circular issued against the petitioner is quashed and set aside subject to conditions requiring the petitioner to cooperate with investigations and comply with procedural requirements; liberty is reserved to the respondents to reopen or reissue an LOC if justified.