Delhi High Court quashes banks’ Lookout Circulars against Hind Agro directors, saying fear of flight alone cannot justify keeping them in force indefinitely.

The petitioners, directors and shareholders of Hind Agro Industries Ltd., challenged Lookout Circulars (LOCs) issued against them, including at the instance of the banks that had lent to the company

After the petition was initially disposed of with liberty to approach the Trial Court, it was restored and confined to the challenge to the LOC issued at the behest of Bank of Baroda

By the time the matter was considered, the CBI and the Enforcement Directorate had completed their investigations and filed charge-sheets

The petitioners were on bail without restrictions on foreign travel in the ED proceedings, and the Trial Court monitored their travel; they also stated that they had travelled abroad on prior occasions without misusing that liberty

Whether the bank-issued LOCs could remain in force after the CBI and ED had completed their investigations and filed charge-sheets, where the Trial Court monitored the petitioners’ travel

Whether the LOCs issued at the CBI’s instance should also be quashed in the writ petition, or whether the petitioners should seek relief from the Trial Court

An LOC is a coercive measure and cannot be issued or continued routinely; its operation must be justified by circumstances warranting a restraint on travel

A bank’s apprehension that a person may leave the country, or concern about recovery of its financial claim, cannot alone justify continuation of an LOC in perpetuity

The Court did not identify or apply a specific statutory provision as the basis for its decision. It referred to Sumer Singh Salkan v. Assistant Director & Ors., 2010 SCC OnLine Del 2699, in the procedural history concerning recourse to the Trial Court, but did not rely on it as the basis for quashing the bank-issued LOCs

The Court considered that the CBI and ED investigations were complete and charge-sheets had been filed, while the Trial Court was seized of the criminal proceedings and could supervise the petitioners’ travel

It also noted the petitioners’ bail order, their prior foreign travel without alleged misuse, and the suspension of LOCs on earlier occasions subject to conditions

In those circumstances, the banks’ concerns about flight risk or recovery did not, by themselves, justify continuing the bank-issued LOCs

The Court treated LOCs issued at the CBI’s instance separately, leaving the petitioners to seek relief from the Trial Court

It granted the petitioners liberty to apply to the Trial Court concerning the CBI-issued LOCs and directed that any such application be considered expeditiously in accordance with law

The quashing did not affect the pending criminal proceedings or the Trial Court’s power to regulate or restrict the petitioners’ travel; the petitioners remained bound by any conditions imposed by that Court