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

In brief

The question

Whether Look Out Circulars issued at the request of the Chairman or Chief Executive Officers of Public Sector Banks are legally sustainable

The court held

The Court held that the LOCs issued at the instance of the banks were unsustainable in law and formally set them aside

It also directed

With respect to the CBI’s LOC, the Court disposed of the petition by granting Petitioner No. 2 liberty to approach the concerned jurisdictional/trial court for cancellation or modification of the LOC based on the change of circumstances

All pending applications were disposed of accordingly

01Facts

The Petitioners challenged Look Out Circulars (LOCs) issued against them at the instance of several Public Sector Banks and the Central Bureau of Investigation (CBI)

p. 1

The CBI filed a reply indicating that a charge-sheet had been filed only against Petitioner No. 2, and no LOC had been opened against Petitioner No. 1

¶ 3

The Petitioners claimed full cooperation with the CBI investigation

¶ 3

02Issues

i.Whether Look Out Circulars issued at the request of the Chairman or Chief Executive Officers of Public Sector Banks are legally sustainable

¶ 2

ii.Whether the High Court should exercise its writ jurisdiction to quash an LOC issued by an investigating agency like the CBI when alternative remedies are available

¶ 3-4

03Law Applied

The Court relied on the guiding principles established in *Vineet Gupta v. Union of India & Ors.* (WP (C) 7850/2025) which held that LOCs issued at the instance of Public Sector Banks cannot be sustained under judicial review

¶ 1(iv), 2

It further applied the precedent from *Sumer Singh Salkan v. Asstt. Director & Ors.* (2010 SCC OnLine Del 2699), which stipulates that a person aggrieved by an LOC must first join the investigation, surrender before the jurisdictional court, or approach the originating authority for withdrawal before seeking extraordinary remedies

¶ 1(vi), 3

The court also referenced Clause 6 (L) of the Office Memorandum dated 22.02.2021 regarding the narrow construction of exceptional powers to restrict travel

¶ 1(iii)

04Reasoning

The Court applied the *Vineet Gupta* ruling to determine that the LOCs originated by the banks lacked the necessary legal scrutiny and were, therefore, unsustainable and liable to be set aside

¶ 2

Regarding the LOC issued by the CBI, the Court reasoned that since the charge-sheet had already been filed against Petitioner No. 2 and Petitioner No. 1 was not subject to an LOC, the appropriate procedure was for the aggrieved party to approach the trial court

¶ 3-4

The Court emphasized that the writ court is not the exclusive mechanism for redressal, especially when an individual can demonstrate a change in circumstances or cooperation with the investigation to the jurisdictional court or the originating agency

¶ 1(vi), 4