Look Out Circulars issued by public sector banks or without subsisting criminal proceedings violate Article 21.

The High Court of Delhi heard a batch of eight writ petitions challenging the issuance and continuation of Look Out Circulars (LOCs).

The petitioners fell into three categories: (A) those facing LOCs issued at the behest of Public Sector Banks for loan defaults; (B) those under investigation by authorities like the SFIO, Income Tax Department, or MCA; and (C) those whose LOCs originated from specific judicial or statutory orders.

In several cases, petitioners had previously been granted permission to travel by courts and had consistently returned to India, showing no flight risk.

1. Whether the Chairman or CEOs of Public Sector Banks possess the legal authority to seek the issuance of an LOC.

2. Whether the "economic interest of India" clause in the 2021 Office Memorandum can be invoked for routine commercial defaults or business failures.

3. Whether the continuation of an LOC is justifiable when a subject has cooperated with investigations and demonstrated no risk of absconding.

Article 21 of the Constitution, establishing the right to travel abroad as a fundamental facet of personal liberty.

The principle from Maneka Gandhi v. Union of India, requiring procedures depriving liberty to be fair and non-arbitrary.

The mandate in Sumer Singh Salkan v. Asst. Director, that LOCs be coercive measures of last resort only for cognizable offences.

The decision in Viraj Chetan Shah v. Union of India, which struck down Clause 6(B)(xv) of the 2021 OM, thereby stripping Bank officials of the power to request LOCs.

International standards from the ICCPR (Article 12) regarding freedom of movement.

The court reasoned that an LOC is an extraordinary measure, not a routine recovery tool for banks.

Regarding Category A, the court applied the Viraj Chetan Shah precedent to hold that banks lack the statutory anchor to restrict travel.

For Category B, the court analyzed the "proportionality" of the restrictions; it found that where petitioners—such as Shivani Modi or Harmandeep Kandhari—had joined investigations and returned from multiple court-sanctioned foreign trips, the "flight risk" justification vanished.

The court held that "economic interest" must involve a grave threat to the national economy, and individual defaults do not meet this threshold.

For Category C, the court applied the principle of "institutional primacy," determining that if an LOC was born of a specific pending criminal case, the petitioner must first seek rescission from the court seized of that underlying matter.

These petitioners were permitted to travel subject to notifying the agencies 48 hours in advance.

For Category C (Amrit Dujari), the court declined to quash the LOC but granted liberty to approach the competent Trial Court for relief.

The Court reaffirmed that the burden of proof to sustain an LOC lies squarely on the State.