Right to Travel Abroad under Article 21 Cannot Be Restricted via Mechanical Issuance or Continuation of Look Out Circulars

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

Some LOCs were initiated by Public Sector Banks (e.g., Indian Bank) due to loan defaults, while others were issued by investigating agencies like the SFIO, Ministry of Corporate Affairs, and Income Tax Department following searches or statutory investigations.

In several instances, petitioners had previously obtained court permission to travel and had returned to India without default, yet the LOCs remained active despite the conclusion of investigations or lack of cognizable offences.

1. Whether the right to travel abroad is a fundamental right under Article 21 and what standards must be met to restrict it via an LOC.

2. Whether Public Sector Banks possess the legal authority to request LOCs following the quashing of Clause 6(B)(xv) of the 2021 Office Memorandum.

3. Whether the term "detrimental to economic interests" allows for LOCs in cases of routine commercial defaults or where no cognizable offence is established.

4. Whether a person should be relegated to the originating forum to seek rescission of an LOC when the writ court finds the LOC inherently unsustainable.

The court applied Article 21 of the Constitution, establishing that the right to travel abroad is an integral facet of personal liberty which can only be restricted by a fair, just, and reasonable procedure.

It relied on Maneka Gandhi v. Union of India regarding the "tripartite test" for restrictions on liberty and Satwant Singh Sawhney v. D. Ramarathnam.

The court followed Sumer Singh Salkan v. Asst. Director, which mandates that LOCs be issued only for cognizable offences where the accused is evading arrest.

It further applied the doctrine from Viraj Chetan Shah v. Union of India, which struck down the power of Bank CEOs to request LOCs, and Shalini Khanna v. Union of India, which restricted "economic interest" justifications to matters of national magnitude rather than individual defaults.

The court reasoned that an LOC is a "coercive measure of last resort" and not a routine tool for debt recovery.

Regarding Category A (Banks), the court found the LOCs illegal because the specific clause empowering Bank officials had been judicially quashed; thus, banks cannot bypass the judicial process for debt recovery using LOCs.

Regarding Category B (Investigating Agencies), the court noted that several petitioners had cooperated with investigations, were not named as accused in FIRs, or had demonstrated through prior travel that they were not "flight risks".

The court emphasized that "guilt is personal and not vicarious," meaning family members or past directors cannot be targeted without specific evidence of wrongdoing.

It held that the "economic interest of India" cannot be invoked for routine defaults.

For Category C, the court determined that where a criminal trial is active and the LOC was issued by a judicial order or a specific specialized tribunal, the Petitioner must first approach that forum.

The court granted these petitioners the right to travel abroad subject to informing the relevant agencies 48 hours in advance.

In W.P.(C) 7051/2024 (Category C), the court refrained from quashing the LOC and relegated the petitioner to the competent trial court/forum to seek relief, as the matter involved ongoing specific judicial oversight.

The Court concluded that the burden of proof for sustaining an LOC lies squarely on the State.