While observing that a Look Out Circular (LOC) cannot be resorted to as a matter of routine merely because a person is undergoing Trial and its issuance must be justified by circumstances warranting restraint upon the right to travel, the Delhi High Court has quashed some LOCs issued at the instance of the Banks.

The High Court was considering a petition directing the Respondents to quash all documents/ instructions/ letters/ circulars/ notifications/ office memoranda/ orders for declaration of fraud/ monitoring return leading up to opening of Lookout Circular against the Petitioners on the basis of which he was detained in the year 2021 and travel restraining authority had been exercised against him.

The Single Bench of Justice Amit Mahajan held, “There can be no doubt that an LOC is a coercive measure and cannot be resorted to as a matter of routine merely because the Petitioners are undergoing Trial. Its issuance and continued operation must be justified by circumstances warranting such restraint upon the right to travel.”

Advocate S.A. Saud represented the Petitioner while Special Public Prosecutor Ripu Daman Bhardwaj represented the Respondent.

Factual Background

The petitions were filed by the shareholders and directors of the Petitioner company Hind Agro Industries Limited (Borrower), which had availed credit/loan facilities from the Respondents/Public Sector Banks i.e. Bank of Baroda (erstwhile Dena Bank), Punjab National Bank, Central Bank of India and Indian Bank. During 2015-16, the Accounts of the Borrower, with the Lender Banks, were declared as Non-Performing Asset. Eventually, during 2018-19 the Accounts of the Borrower, with the lender banks, were declared “fraud” by the Bank of Baroda, Punjab National Bank, Indian Bank and Central Bank of India and the proceedings of willful default were commenced.

Pursuant thereto, an FIR under Section 120-B read with Section 420 of the Indian Penal Code, 1860, Section 13(2) read with Section 13(1)(d) of the Prevention of Corruption Act, 1988, was registered on the basis of a complaint received from Shri K M Sahay, Chief Manager, Punjab National Bank (Lead Bank) filed on behalf of the consortium of banks consisting of Punjab National Bank, Dena Bank/Bank of Baroda, Central Bank of India and Indian Bank.

As recorded in the orders passed, the Lookout Circulars were issued against the Petitioners at the behest of the Respondent Bank, Directorate of Enforcement (ED) and CBI. The Court had permitted the Petitioners to withdraw the petition with liberty to approach the Trial Court. The Petitioners challenged the Lookout Circulars issued against them at the behest of the Banks. After completion of the investigation, a charge sheet was filed by the ED.

Reasoning

The Bench was of the view that once the CBI and ED, who are seized of the investigation, had completed the investigations and filed the chargesheets, no purpose would have been served by keeping the LOC issued against the Petitioners at the instance of the bank alive. The Bench noted that the Trial Court was seized of the matter and the travel of the Petitioners was being monitored by the Trial Court and their foreign travel was also be subject to the supervision of the said Court.

The Bench took note of the petitioners’ submission that during the pendency of the petitions, they were permitted to travel abroad on multiple occasions and the LOCs were also suspended on multiple occasions subject to certain conditions. “In the above context, the apprehension expressed by the Bank that the Petitioners may flee the country or financial claim of the Bank cannot be the sole reason to warrant continuation of an LOC in perpetuity”, the Bench stated.

Dealing with the LOCs issued at the instance of CBI, the Bench noted that the matters were pending before the Trial Court. “Liberty is granted to the Petitioners to file appropriate application(s) before the learned Trial Court in regard to LOCs issued at the instance of CBI”, it ordered.

The Bench thus quashed the LOCs issued against the Petitioners at the instance of the Banks. “It is clarified that the quashing of the LOCs shall not, in any manner, affect the criminal proceedings pending before the learned Trial Court or the power of the learned Trial Court to regulate or restrict the Petitioners travel, in accordance with law”, it held.

Cause Title: Sirajuddin Qureshi & Ors. v. Union of India & Ors. (Neutral Citation: 2026:DHC:8939)

Appearance

Petitioner: Advocates S.A. Saud, Mohd. Parvez Dabas, Uzmi Jameel Husain, Mohd. Shahib

Respondent: Special Public Prosecutor Ripu Daman Bhardwaj, Advocates Amit Kumar Rana, Rajiv Kapoor, Additional Public Prosecutor Ritesh Kumar Bahri, Advocates Divya Yadav, Lalit Luthra, Standing Counsel Santosh Kumar Rout

Click here to read/download Order


Delhi High CourtJustice Amit Mahajan

Tulip Kanth

Assistant Editor

Tulip Kanth is an Assistant Editor at Verdictum having over 5 years of experience in the field of legal journalism and editing. She extensively covers judgments of the Supreme Court, High Courts as well as Tribunals. She has previously worked with a legal publishing website where she oversaw the work of other editors and has also created updates on notifications of different Government Ministries. She holds an English Honours Degree from SGTB Khalsa College, Delhi University and has completed her LLB course with specialisation in Corporate Law from Amity University.