Look Out Circulars Issued at the Instance of Public Sector Banks are Legally Unsustainable and Liable to be Quashed

The Petitioner, a Director and shareholder of Emmsons International Limited, stood as a guarantor for credit facilities availed by his company from a consortium of banks led by Bank of Baroda (Respondent No. 3) and Indian Bank (Respondent No. 2).

The Petitioner alleged that the respondent banks requested the Bureau of Immigration (Respondent No. 4) to open Look Out Circulars (LOCs) against him without prior communication or disclosure of reasons.

While recovery proceedings were pending in various forums, no criminal investigation, FIR, or charge sheet existed against the Petitioner.

Bank of Baroda clarified that it had not requested an LOC; however, an LOC remained active at the instance of Indian Bank.

1. Whether a Public Sector Bank (PSB) possesses the legal authority to request the issuance of a Look Out Circular (LOC) against an individual in the absence of a pending criminal investigation or national security threat.

2. Whether the impugned LOC issued at the instance of Indian Bank is liable to be quashed based on established judicial precedents.

The court primarily relied on the principles laid down in *Vineet Gupta v. Union of India* (2026:DHC:1616), which interpreted the Office Memorandum dated 22.02.2021.

This precedent established that an LOC is a coercive measure impacting the fundamental right to travel under Article 21 and must be used sparingly.

It further held that LOCs requested by the Chairman or CEOs of Public Sector Banks are legally unsustainable and cannot withstand judicial review unless the subject's departure poses a grave threat to the sovereignty or "economic interests" of India in a systemic sense, rather than just a debt recovery matter.

The Court observed that there were no pending criminal proceedings or FIRs against the Petitioner, only civil recovery disputes.

Applying the ratio from *Vineet Gupta*, the Court noted that the power to request LOCs under Clause 6(L) of the 2021 Office Memorandum is to be "narrowly construed" and reserved for "rare and compelling cases".

The Court reasoned that an LOC issued solely at the behest of a Public Sector Bank for debt recovery purposes lacks statutory backing and constitutes an arbitrary restriction on personal liberty.

Since the Petitioner undertook to cooperate with pending recovery cases, the Court found no justification for the continued operation of the LOC.

The High Court quashed the impugned LOC and directed Respondent No. 2 (Indian Bank) to communicate this withdrawal to the relevant authorities.

The Petitioner was further ordered to honor his undertaking to cooperate in all pending recovery proceedings.

The petition was disposed of accordingly.