Look Out Circular Cannot Be Maintained Solely on Speculative Apprehensions After Completion of Investigation

The appellant, an Indian citizen and chemist residing in China, was an employee of Elder Pharmaceuticals Limited ("Elder") until 2009.

In 2019, the Ministry of Corporate Affairs directed the Serious Fraud Investigation Office (SFIO) to investigate Elder due to alleged financial irregularities.

A Look Out Circular (LOC) was issued against the appellant on February 7, 2025, on the request of the SFIO.

The appellant was prevented from traveling to Bangladesh from Kolkata on December 21, 2025, due to the LOC.

He appeared before the SFIO, gave statements, and claimed the investigation against Elder pertained to a period after his resignation.

Although the SFIO completed its investigation and submitted its report to the Central Government on May 6, 2025, no prosecution had been initiated against the appellant.

The appellant challenged the LOC in a writ petition, which was dismissed by a Single Judge on February 13, 2026, based on the apprehension that the appellant might not return to India to face future trial.

The court primarily applied the Office Memorandum dated February 22, 2021, issued by the Ministry of Home Affairs, which mandates that LOCs are generally for cognizable offences where an accused is evading arrest or trial.

Clause (L) of the Memorandum allows for LOCs in exceptional cases involving the "economic interest of India" or "larger public interest".

The court relied on the principles from Maneka Gandhi v. Union of India, establishing that the right to travel abroad is a fundamental right under Article 21 that can only be restricted by a just, fair, and reasonable procedure.

It further followed Sumer Singh Salkan vs. Asstt. Director, which restricted LOC recourse to cases of deliberate evasion.

The court followed Vishambhar Saran v. Bureau of Immigration, clarifying that "economic interest" must involve injury of a high degree that shakes the nation's financial stability.

The court found that the Single Judge’s refusal to quash the LOC was based on "surmise and conjecture" regarding the appellant’s future non-appearance rather than existing evidence of evasion.

The court noted that the investigation by the SFIO was already complete as of May 2025, yet no prosecution had been directed under Section 212(14) of the Companies Act, 2013.

The court reasoned that since no criminal proceeding was pending, the apprehension of the appellant fleeing trial was speculative and premature.

Regarding the "economic interest of India" exception, the court held that the respondents failed to show a direct nexus between the appellant’s actions and a threat to national financial stability, especially since the appellant was a former employee who had cooperated with the investigation by appearing for statements.

The court determined that the LOC failed the test of proportionality as less restrictive measures could ensure the appellant’s presence.

The High Court allowed the appeal, set aside the Single Judge’s order, and quashed the LOC.

The appellant was directed to file a notarized affidavit within one week undertaking to appear before the jurisdictional court if prosecution is instituted, disclosing his foreign and local contact details, and undertaking not to surrender his Indian passport for two years.

The court rejected the respondent's prayer for a stay on this judgment.