The Delhi High Court quashed a Look Out Circular (LOC) issued against a director of a borrower company after the Central Bureau of Investigation had completed its probe, filed charge sheets and suspended the LOC, holding that continued restriction on foreign travel cannot be justified solely by the pendency of criminal proceedings when there is no material showing a risk of absconding.
Background & Facts
The Dispute
The petitioner, Rajat Gupta, erstwhile Director of M/s Govardhan Industries Pvt. Ltd., filed the present writ petition seeking quashing of the Look Out Circular (LOC) issued against him at the instance of Respondent No. 2, Bank of Baroda, following a complaint lodged by the bank with the Central Bureau of Investigation (CBI) concerning loan accounts classified as Non-Performing Assets and subsequently declared as fraud.
Key Facts
- The Bank of Baroda lodged a complaint with the CBI regarding loan accounts of certain borrower entities, which had been classified as Non-Performing Assets and later declared as “Fraud”.
- Pursuant thereto, RC No. 220/2020/E0015 was registered against the petitioner and other accused persons.
- The CBI, after completing its investigation, filed four charge sheets bearing CC Nos. 19/23, 18/23, 20/23 & 1/23; cognizance has been taken by the learned Trial Court.
- The petitioner was admitted to bail by the Trial Court with a condition that he shall seek permission before travelling out of India.
- On 27.03.2026, the Trial Court granted permission for the petitioner to travel to Kazakhstan from 20.04.2026 to 03.05.2026.
- On the date of travel (20.04.2026), the petitioner was stopped by immigration officers at IGI Airport because an LOC had been issued against him by the Bank of Baroda.
- Thereafter, the petitioner approached the learned Trial Court, which stayed the LOC from 21.04.2026 to 03.05.2026; the petitioner travelled abroad and did not misuse the liberty.
- The petitioner is engaged in the business of ayurvedic medicines and requires travel to Kazakhstan to execute business plans.
- Despite multiple requests to the Bank of Baroda to withdraw or suspend the LOC, no action was taken.
- The LOC issued at the instance of the CBI has already been suspended as the investigation is complete and charge sheets have been filed.
- No material has been placed before this Court to demonstrate that the petitioner is likely to abscond.
Procedural History
- 27.03.2026: Order granting permission to travel to Kazakhstan (20.04.2026 - 03.05.2026).
- 20.04.2026: Petitioner stopped at IGI Airport due to LOC.
- 21.04.2026 - 03.05.2026: Learned Trial Court stayed the LOC.
- 30.09.2026: Date of the judgment.
- 14.01.2027: Date previously fixed (for an unspecified purpose) stands cancelled.
Relief Sought
The petitioner sought quashing of the LOC, a declaration that such quashing would not affect the criminal proceedings pending before the Trial Court, the conditions of bail, or the Trial Court’s power to regulate foreign travel, and that he would continue to abide by all bail conditions and directions imposed by the Trial Court.
The Legal Issue
The central question was whether the continued issuance and maintenance of a Look Out Circular is justified when the investigating agency has completed its investigation, filed charge sheets, suspended the LOC, and there is no material showing a risk of absconding by the petitioner.
Arguments Presented
For the Petitioner
The petitioner contended that an LOC is a coercive measure requiring strong justification; that the CBI’s investigation had concluded, charge sheets had been filed and the LOC already suspended; that there was no evidence of flight risk; that the Bank’s apprehension of financial loss could not sustain a perpetual restriction on personal liberty under Article 21 of the Constitution; and that the Trial Court’s supervision of bail conditions sufficed to ensure his presence.
For the Respondent
The respondent, through the Bank of Baroda, argued that the LOC was necessary to prevent the petitioner from fleeing the country to evade financial liability, emphasizing the bank’s claim and the seriousness of the alleged fraud, and that the LOC served as a precautionary measure despite the investigation’s completion.
The Court's Analysis
The Court emphasized that an LOC is a coercive measure under Article 21 and cannot be employed as a routine tool merely because a person is undergoing trial. It observed:
"There can be no doubt that an LOC is a coercive measure and cannot be resorted to as a matter of routine merely because the Petitioner is undergoing Trial."
Further, the Court noted that the investigation by the CBI had concluded, charge sheets had been filed, and the LOC issued at the instance of the CBI had already been suspended. The learned Trial Court had admitted the petitioner on bail with specific conditions, including prior permission for foreign travel, and was actively supervising compliance. The record showed that the petitioner had previously been granted travel permission which was never misused. The Bank’s apprehension of flight, absent any material showing a likelihood of absconding, was insufficient to justify the continuation of the LOC. Consequently, the Court held that no purpose would be served by keeping the LOC alive:
"Thus, in the opinion of this Court, no purpose would be served by keeping the LOC, issued at the instance of bank, alive."
The Court also clarified that quashing the LOC would not interfere with the ongoing criminal proceedings, the bail conditions, or the Trial Court’s authority to regulate foreign travel under law.
The Verdict
The Court quashed the Look Out Circular issued against the petitioner, vacated the stay of the LOC from 21 April 2026 to 3 May 2026, and cancelled the previously fixed date of 14 January 2027. The petitioner shall continue to abide by the bail conditions imposed by the learned Trial Court, including the requirement to seek permission before foreign travel, and the quashing does not affect the ongoing criminal proceedings or the Trial Court’s power to regulate travel.
What This Means For Similar Cases
LOC Cannot Be Routine
- An LOC must be justified by concrete circumstances showing a risk of absconding; mere pendency of trial is insufficient.
- Authorities must demonstrate specific material justifying the restriction on liberty before issuing or maintaining an LOC.
Investigation Completion Negates Flight Risk
- Once the investigating agency has completed its probe, filed charge sheets and suspended the LOC, the basis for continued restraint lapses.
- Courts should scrutinize whether the LOC remains necessary after investigation concludes and not rely on speculative fears.
Judicial Supervision Suffices
- When the Trial Court has admitted the accused on bail with conditions (including prior permission for foreign travel) and monitors compliance, the LOC becomes superfluous.
- Practitioners can rely on bail conditions to challenge LOCs without needing to prove absence of risk de novo.
