Look Out Circulars issued by public sector banks are unexecutable in the absence of pending criminal proceedings.

The Appellant, Bank of Baroda, challenged a Single Judge’s judgment dated 18.11.2025 which quashed Look Out Circulars (LOCs) issued against Respondent No. 5

Following financial irregularities by M/s Santosh Overseas Limited (Respondent No. 6), an FIR was registered by the CBI in 2020

Respondent No. 5, a personal guarantor for the credit facilities, was subjected to LOCs requested by the Appellant and Respondent No. 3 to prevent him from fleeing the country

However, an affidavit filed by the CBI on 15.10.2025 confirmed that Respondent No. 5 was not named in the FIR, was never called for investigation, and that the investigation had culminated in a chargesheet in which he was not an accused

The Single Judge quashed the LOCs, leading to this intra-court appeal

1. Whether the Appellant bank was justified in maintaining LOCs against a personal guarantor in the absence of a pending criminal case or chargesheet against him

2. Whether the power to issue LOCs at the request of Public Sector Banks can be exercised in the absence of "exceptional circumstances" involving the economic interests of India

Office Memorandum No. 25016/31/2010-Imm dated 27.10.2010 (and the 2021 consolidated version), which empowers Public Sector Banks to request LOCs

Viraj Chetan Shah v. Union of India (2024 SCC OnLine Bom 1195), which held that LOCs cannot be issued by banks absent a criminal case

Bank of Baroda v. Surender Kumar Bansal (2026 SCC OnLine Del 4574), establishing that the power to issue an LOC is an "exceptional coercive measure" that impinges upon the fundamental right to travel under Article 21 and must be exercised only in "exceptional circumstances"

The Court observed that the CBI’s affidavit explicitly cleared Respondent No. 5 of involvement in the criminal proceedings, noting he was neither named in the FIR nor the chargesheet

The Court reasoned that since the investigation had concluded without implicating Respondent No. 5, the LOC served no legitimate law enforcement purpose

It rejected the bank’s reliance on the Office Memorandum as a blanket authority, holding that such power is subject to judicial review regarding the necessity of the restriction

The Court further noted that LOCs against other guarantors of the same company had already been quashed, and vague references to "economic interests" do not suffice to restrict a citizen's movement without evidence of a flight risk linked to a crime

It held that in the absence of a pending criminal case or compelling reasons, an individual cannot be deprived of the right to travel abroad

The Court affirmed the Single Judge's direction that Respondent No. 5 must furnish an undertaking to cooperate with any future investigation as an adequate safeguard

No order as to costs was made