Public Sector Banks Cannot Seek Curtailment Of Right To Travel Abroad Through Routine Use Of LOCs: Delhi High Court

The Court was hearing a batch of 33 writ petitions challenging the validity and continuation of LOCs issued at the instance of financial institutions, investigating agencies and government authorities. The petitions raised common questions concerning the legality of restrictions imposed upon the petitioners’ right to travel abroad.

A Bench of Justice Purushaindra Kumar Kaurav, while stating that “the right to travel abroad is an integral facet of the fundamental right to life and personal liberty under Article 21 of the Constitution, any restriction on this right must be founded on law, must follow a procedure that is just, fair, and reasonable, and must not violate any other fundamental right”, observed that “LOC is a coercive executive measure of last resort, … it is not a routine tool for law enforcement or debt recovery, … recourse to an LOC may be taken only in cases involving a cognizable offence under the IPC or other penal laws, where the accused is deliberately evading arrest or not appearing before the trial Court despite NBWs and other coercive measures, and there is a real and proximate likelihood of absconding”.

The Bench further held that “public sector banks, through their Chairman, Managing Directors, or Chief Executive Officers, do not possess legal authority to seek the opening of an LOC, … clause 6(B)(xv) of the 2021 OM (equivalent to Clause 8(b)(xv) of the 2010 OM), which conferred such power upon bank officials, stands quashed by decisions of both this Court and the Bombay High Court”.

Senior Advocates Manu Sharma, Siddharth Luthra, Siddharth Aggarwal, Sanjay Dewan, Arundhati Katju and Sachit Jolly, along with other Advocates, appeared in various petitions for the petitioners. CGSCs Radhika Bishwajit Dubey, Nishant Gautam, Ishkaran Singh Bhandari, Ripudamn Bhardwaj, Amit Tiwari, Jagdish Chandra Solanki, Neeraj Kumar, Premtosh K Mishra, Nidhi Ramam, Satya Ranjan Swain, Shashank Dixit, along with SPCs, Standing Counsels and other Advocates appeared for the respondents.

Background

The batch comprised 33 writ petitions challenging LOCs issued against various individuals, including directors, guarantors and promoters of companies whose loan accounts had been classified as NPAs or fraud accounts by banks, as well as persons against whom investigations by agencies such as the CBI, ED and SFIO were pending.

The Court noted that the oldest petition in the batch had remained pending for nearly three and a half years, during which numerous interim orders permitting foreign travel had been passed. Importantly, the Court recorded that in none of the cases had any petitioner absconded or attempted to flee from India after being granted permission to travel abroad.

The judgment undertook an extensive survey of constitutional jurisprudence, Office Memoranda issued by the Ministry of Home Affairs governing LOCs, and decisions of the Supreme Court and various High Courts on the subject.

The Court traced the constitutional foundations of the right to travel abroad through decisions including Satwant Singh Sawhney v. D. Ramarathnam (1967) and Maneka Gandhi v. Union of India (1978), reiterating that deprivation of such right must satisfy requirements of fairness, reasonableness and due process under Article 21.

The Court also examined the evolution of the LOC framework beginning from the Ministry of Home Affairs communication dated 05.09.1979 and subsequent Office Memoranda issued in 2000, 2010, 2017 and 2021.

Court’s Observation

The High Court observed that the constitutional position regarding the right to travel abroad stands firmly settled and forms an integral component of personal liberty under Article 21. Relying upon Maneka Gandhi v. Union of India (1978), the Court reiterated that any restriction upon such right must be founded on law and must satisfy the constitutional requirements of fairness, non-arbitrariness and reasonableness.

The Court held: “Any restriction on this right must be founded on law, must follow a procedure that is just, fair, and reasonable, and must not violate any other fundamental right.”

The Bench further clarified that executive instructions issued through Office Memoranda cannot themselves become substitutes for statutory authority where fundamental rights are sought to be curtailed. The Court then examined the nature and scope of LOCs and reiterated that LOCs constitute coercive executive measures directly affecting personal liberty.

The Bench observed: “an LOC is a coercive executive measure of last resort. It is not a routine tool for law enforcement or debt recovery.”

Referring to Sumer Singh Salkan v. Assistant Director (2010), the Court reiterated that LOCs can ordinarily be issued only in cases involving cognizable offences where the accused is deliberately evading arrest or judicial process and there exists a real likelihood of absconding.

The Court also discussed Karti P. Chidambaram v. Bureau of Immigration (2018), wherein it had earlier been held that LOCs cannot be issued mechanically and require tangible material demonstrating deliberate evasion or real apprehension of flight risk.

The Bench thereafter examined the constitutional validity of powers conferred upon public sector bank officials under Clause 6(B)(xv) of the 2021 Office Memorandum, enabling them to request issuance of LOCs.

Referring extensively to the Bombay High Court decision in Viraj Chetan Shah v. Union of India (2024), the Court noted that the power granted to Chairmen, Managing Directors and Chief Executive Officers of public sector banks to seek LOCs had already been held unconstitutional and arbitrary.

The Court observed: “public sector banks, through their Chairman, Managing Directors, or Chief Executive Officers, do not possess legal authority to seek the opening of an LOC.”

The Bench further held that routine loan defaults and inability to repay debts cannot justify curtailment of personal liberty in the absence of criminal proceedings. The Court observed: “mere inability to repay a debt, without there being a criminal case, cannot be a reason to deprive a citizen of the fundamental rights guaranteed under Article 21.”

The Court clarified that LOCs cannot be issued merely because an individual is a director, guarantor, shareholder or family member of a borrower company unless specific material demonstrates direct involvement in wrongdoing. The Bench observed: “Guilt is personal and not vicarious in civil or criminal liability.”

The Court also narrowly interpreted Clause 6(L) of the 2021 Office Memorandum permitting issuance of LOCs in matters affecting the “economic interests of India.” According to the Court, such power can only be invoked in “rare and compelling circumstances” involving clear threats to national or systemic economic interests and not in routine commercial defaults or ordinary business failures.

The Court further emphasised that authorities opening LOCs must independently apply their mind and cannot mechanically act upon requests of originating agencies. The Bench held: “There must be a speaking order, based on specific and credible inputs, justifying the necessity of the restraint.”

The Court additionally held that LOCs cannot continue indefinitely and require periodic review. The Bench observed that where the subject has cooperated with the investigation and has not evaded legal process, continued operation of an LOC becomes an unreasonable restriction upon personal liberty.

The Court further clarified that although writ courts remain duty-bound to subject LOCs to strict judicial scrutiny, affected persons may initially seek withdrawal or modification before the originating authority or the concerned trial court before invoking writ jurisdiction.

Finally, the Court reiterated that the burden of justifying legality, proportionality and necessity of an LOC squarely lies upon the originating agency, and courts cannot accept vague assertions relating to national security or economic interest without credible supporting material.

Conclusion

The High Court distilled ten governing legal principles regulating issuance, continuation and judicial review of Look Out Circulars, holding inter alia that LOCs are exceptional coercive measures, public sector banks lack authority to seek them, routine loan defaults cannot justify restrictions on travel, and executive instructions cannot curtail Article 21 rights without statutory backing.

The Court disposed of all pending petitions in light of the constitutional and legal principles laid down in the judgment, while separately examining the factual circumstances of each case.

Cause Title: Ritu Singal v. Bureau of Immigration & Ors. And Connected Matters (Neutral Citation: 2026:DHC:3806)

Click here to read/download Judgment