Look Out Circulars issued at the instance of Public Sector Banks are legally unsustainable and liable to be quashed.

The Petitioner was the former Managing Director of Lanco Infratech Limited (LITL) until 2004, after which he became a non-executive Director

In 2017, LITL entered Corporate Insolvency Resolution Process (CIRP) via the NCLT, and the Ministry of Corporate Affairs initiated an investigation

Despite these proceedings, no FIR, charge-sheet, or complaint was filed against the Petitioner, and the Serious Fraud Investigation Office (SFIO) closed its investigation regarding him

A Look Out Circular (LOC) remained in effect against the Petitioner solely based on requests from financial institutions

Consequently, the Petitioner approached the High Court to quash the LOC

Whether a Look Out Circular (LOC) issued solely at the instance of Public Sector Banks/financial institutions is legally sustainable

Whether the continued operation of an LOC is justified when no criminal proceedings are pending and the subject has cooperated with investigations

The court primarily applied the principles governing the issuance of LOCs as established in *Vineet Gupta v. Union of India* (2026 DHC 1616), which held that LOCs infringe upon the fundamental right to travel under Article 21 of the Constitution of India and must be exercised sparingly

The court emphasized that under Clause 6(L) of the Office Memorandum dated 22.02.2021, LOCs are generally restricted to cognizable offences or rare cases involving "national or systemic" economic interests

Critically, the rule establishes that LOCs issued at the behest of Chairmen or CEOs of Public Sector Banks do not withstand judicial review

The Court observed that the Petitioner had not been charged with any offence, no investigating agency required his presence, and the SFIO had specifically closed its file on him

Applying the *Vineet Gupta* precedent, the Court reasoned that since the sole basis for the LOC was the request of financial institutions (Public Sector Banks), it lacked the necessary statutory and legal backing to restrict the Petitioner’s fundamental right to personal liberty

The Court found that when a subject has cooperated and no further interrogation is required, maintaining an LOC is an "unreasonable and unjustified restriction" that fails the test of proportionality and fairness

The Court set aside and quashed the LOC against the Petitioner

It further ordered that any security deposited by the Petitioner be refunded upon due verification