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TaxTMI 
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2026 (3) TMI 345
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....thin the period from 10.02.2026 to 30.03.2026 and petitioner No.2 seeks to travel to Indonesia, Thailand, Vietnam and Cambodia from 05.03.2026 to 30.03.2026 3. It is the case of the petitioners that the sole basis for issuance and continuation of the LOC(s) is their alleged association as Promoters/Directors of M/s Parabolic Drugs Ltd. ('PDL'), which had availed credit facilities from a consortium of banks, including Respondent Nos. 2 and 3. The accounts of PDL were declared as "fraud" by the said respondents on 03.05.2016 and 18.05.2018, pursuant to which complaints were filed before the Central Bureau of Investigation ('CBI'). 4. Consequent thereto, FIR No. RCBD1/2021/E/0010 dated 29.12.2021 came to be registered by the CBI under Sections 120-B, 406, 420, 467, 468 and 471 of the IPC, 1860 and Sections 13(2) read with 13(1)(d) of the Prevention of Corruption Act, 1988. An ECIR bearing No. CDZO-I/01/2022 dated 06.01.2022 was, thereafter, registered by the Enforcement Directorate ('ED'), and a prosecution complaint has since been filed. 5. The petitioner No. 1 seeks permission to travel abroad for the stated period in order to meet his daughters and ....
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.... The Supreme Court has held that while this freedom is not expressly enumerated under any articles, it nonetheless commands constitutional protection and may be restricted only by a procedure established by law that is just, fair, and reasonable. 12. Bearing the aforesaid in mind, it is pertinent to delineate the evolution of the guidelines governing the issuance of LOCs. As already noted by this Court recently in Anant Raj Kanoria V. Union of India & Anr,[W.P.(C) 3313/2023 dated 09.01.2026] the earliest instructions emanated from a letter issued by the Ministry of Home Affairs dated 05.09.1979, which authorised various agencies to monitor the arrival and departure of Indian citizens as well as foreigners. Thereafter, a more structured framework, confined to Indian citizens, was introduced by the Office Memorandum dated 27.12.2000. 13. However, in 2010, this Court in Vikram Sharma v. Union of India [2010 SCC OnLine Del 2475] and Sumer Singh Salkan v. Asst. Director [2010 SCC OnLine Del 2699] further elucidated the legal framework governing the issuance of LOC. In Sumer Singh Salkan, the Court held that recourse to issuance of LOC where the accused was deliberately evading arr....
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....y the person concerned. D. LOC is a coercive measure to make a person surrender to the investigating agency or Court of law. The subordinate courts' jurisdiction in affirming or cancelling LOC is commensurate with the jurisdiction of cancellation of NBWs or affirming NBWs. 14. Subsequently, the Ministry of Home Affairs issued a comprehensive Office Memorandum dated 27.10.2010, which confined the issuance of LOCs to cases involving cognizable offences under the IPC or other penal statutes, and restricted non-cognizable matters to intimation of travel movements only. 15. Subsequent amendments, including the Office Memorandum dated 05.12.2017, further limited the scope of LOCs in exceptional circumstances where the departure of a person was considered prejudicial to the sovereignty, security, integrity of India, bilateral relations, strategic or economic interests, or larger public interest, with further modifications effected by the memorandums dated 19.09.2018 and 12.10.2018. 16. It is pertinent to note that in the context of the aforenoted office memoranda, in Karti P. Chidambaram v. Bureau of Immigration [2018 SCC OnLine Mad 2229], the Madras High Court held ....
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.... the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point in time. 18. The validity of the said Office Memorandum dated 22.02.2021, along with earlier amendments issued by the Ministry of Home Affairs governing the issuance of LOCs, fell for consideration before the Bombay High Court in a batch of petitions, the lead matter being Viraj Chetan Shah v. Union of India and Ors. [2024 SCC ONLINEBOM 1195]. The principal challenge was to the constitutional validity of amendments which enabled the Chairmen, Managing Directors, and Chief Executive Officers of public sector banks to seek issuance of LOCs against defaulting borrowers, thereby restraining their right to travel abroad. 19. The petitioners, therein, contended that such executive instructions permitted a serious curtailment of personal liberty without any statutory backing or prescribed procedure, in violation of Articles 14 and 21 of the Constitution of India. It was urged that the right to travel abroad is an integr....
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.... civil and pending before the DRT, the Court quashed the LOC as arbitrary and disproportionate. The relevant extract of the aforesaid decision is extracted as under :- 21. It is well settled that merely because the Office Memorandum permits the issuance of a lookout circular in exceptional circumstances, even when an individual is not involved in any offence under the IPC or any other penal law, the said power should be used in exceptional circumstances and not as a matter of routine. 22. This Court in Apurve Goel v. Bureau of Immigration, W.P.(C) 5674/2023, has held as under :- "22. The Look Out Circulars cannot be opened merely on the request of the banks. There has to be some application of mind by the authority concerned opening the Look Out Circular since the opening of Look Out Circular results in restraining a person's right to travel abroad. The authority opening the Look Out Circular must satisfy itself that the departure of a person against whom Look Out Circular has been opened would be detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relationship with any country or to the ec....
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.... 26. The issuance of lookout circular cannot be resorted to in every case of bank loan defaults or credit facilities availed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts." 22. One of the respondents therein, i.e, Bank of Baroda, challenged the aforenoted decision of the Single Judge before the Division Bench in Bank of Baroda v. Sahil Chugh. [2025 SCC OnLine Del 9282] The Division Bench, while dismissing the appeal, has held as under :- "12. Having heard the learned counsel for the parties and minutely examining the records, we find no reason to interfere or interdict the impugned judgment passed by the learned Single Judge. 13. So far as the OM dated 22.11.2018 issued by the Ministry of Finance is concerned, it is apparent that the Nodal Ministry which has the authority and jurisdiction to issue policies and guidelines in respect of the regime surrounding issuance of LOCs, is th....
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.... for opening an LOC, was quashed. The very right, authority and jurisdiction of the Principal Officers of the Public Sector Banks to make a request for issuance of LOC having been divested, the question of relying on the OM issued by the Ministry of Finance etc., would be rendered meaningless. Thus, the contention predicated on the said OM is unpersuasive. 17. Learned counsel for the appellant bank had also contended that the right to freedom to movement or travel, though a fundamental right yet, is neither unfettered nor unrestricted, and therefore the appellant bank has every right to seek issuance of LOCs against persons or institutions which have been declared as wilful defaulters. The argument, no doubt, appears to be attractive, however, lacks substance. Undoubtedly, the right to freedom to travel may not be an unrestricted or unfettered right, however, the restrictions or fetters pitched against such fundamental rights have to pass the test of judicial review. Keeping in view the aforesaid judgments as also the ratio laid down by the Division Bench of the Bombay High Court in Viraj Chetan (supra), quashing the very power and jurisdiction of the banks to seek issuanc....
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....FAESI Act and under the IBC. This Court is of the opinion that after resorting to all the remedies available in law, the Bank cannot open a Lookout Circular as an arm-twisting tactic to recover debt from a person who is otherwise unable to pay more so when there are no allegations that he was engaged in any fraud or in any siphoning off or defalcation of the amounts given as loan. 26. Lookout Circular is a major impediment for a person who wants to travel abroad. There is plethora of judgments which states that no person can be deprived of his right to go abroad other than for very compelling reasons. In Maneka Gandhi v. Union of India, (1978) 1 SCC 248, the Apex Court has held as under :- "5. ... Thus, no person can be deprived of his right to go abroad unless there is a law made by the State prescribing the procedure for so depriving him and the deprivation is effected strictly in accordance with such procedure. It was for this reason, in order to comply with the requirement of Article 21, that Parliament enacted the Passports Act, 1967 for regulating the right to go abroad. It is clear from the provisions of the Passports Act, 1967 that it lays down the circums....
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....ed for business and the Fundamental Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts. " 25. Moreover, in Anastasiia Pivtsaeva & Anr. v. Union of India & Ors. [2024 SCC OnLine Del 5170], this Court held that mere association or a familial relationship with an accused, absent any concrete material showing direct involvement or complicity in the alleged offence, cannot justify adverse action such as denial of security clearance or the continuation of coercive measures. 26. A comprehensive discussion of the law with respect to LOC has also been undertaken by the Court in Puja Chadha v. Directorate of Enforcement. [2025:DHC:8787] The Court, while relying on the decisions in the cases of Prashant Bothra v. Bureau of Immigration [2023 SCC OnLine Cal 2643] Dhruv Tewari v. Directorate of Enforcement [2022 SCC OnLine Del 1893] Sumer Singh Salkan, Brij Bhushan Kathuria v. Union of India [2021 SCC OnLine Del 2587] and Anastasiia Pivtsaeva, held that....
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....stances? B. What procedure is required to be followed by the investigating agency opening a Look-out-circular? C. What is the remedy available to the person against whom such Lookout-Circular has been opened? D. What is the role of the concerned Court when such a case is brought it and under what circumstances, the subordinate courts can intervene? The questions are answered as under: A. Recourse to LOC can be taken by investigating agency in cognizable offences under IPC or other penal laws, where the accused was deliberately evading arrest or not appearing in the trial court despite NBWs and other coercive measures and there was likelihood of the accused leaving the country to evade trial/arrest. B. The Investigating Officer shall make a written request for LOC to the officer as notified by the circular of Ministry of Home Affairs, giving details & reasons for seeking LOC. The competent officer alone shall give directions for opening LOC by passing an order in this respect. C. The person against whom LOC is issued must join investigation by appearing I.O. or should surrender the court concerned or should satisfy the c....
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....rehension of default cannot be a basis for opening an indefinite LOC against him, thereby restricting the movement of a citizen who has a right to travel abroad which is acknowledged to be a fundamental right under Article 21 of the Constitution of India, as observed in the landmark judgments of Maneka Gandhi v. Union of India and Satwant Singh Sawhney v. D. Ramarathnam, Assistant Passport Officer. xxx 12. The above makes it clear that only in exceptional cases can a LOC be issued without fulfilling the parameters. This is because a person's right to travel freely is an expression of their fundamental right to personal liberty enshrined under Article 21 of the Constitution. Therefore, such a right can only be restricted under strict parameters and in accordance with the procedure established by law." 45. Reference is also apposite to Hulas Rahul Gupta v. Bureau of Immigration (supra), wherein the Court has observed as under - 18. The abovementioned guidelines show that the ordinary recourse to open LOCs is to be taken in cognizable offence under IPC and other penal laws. However, in exceptional circumstances, LOCs can be opened in such cases ....
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....aw nor exhibited any intent to obstruct the investigation. The Court further observed that repeated invocation of the writ jurisdiction for interim reliefs in such matters places an avoidable burden on judicial time, which could otherwise be devoted to cases involving substantive rights and pressing questions of law. 28. On the conspectus of the aforenoted decisions and memorandum, it is seen that the following guiding principles emerge governing the issuance, continuance, and judicial review of LOC: (i) LOC constitutes a coercive executive measure having a substantial impact on the fundamental right to travel, which forms an integral facet of the right to life and personal liberty guaranteed under Article 21 of the Constitution of India. Consequently, the power to issue an LOC must be exercised sparingly, strictly in accordance with law, and only upon satisfaction of the conditions prescribed under the governing Office Memoranda; (ii) An LOC may be issued only in cases involving a cognizable offence under the relevant statutes, where specific, tangible material demonstrates that the person concerned is deliberately evading arrest or judicial process, or that t....