19.08.2026 Court No. 12 Item No. 06 Sandip FMA 54 of 2024 With CAN 1 of 2023 Indian Bank Vs. Sri Sandeep Kabra & Ors. Mr. Shiv Mangal Singh, Ms. Anjali Mishra …for the Appellant. Mr. Rajashree Dutta, Mr. Avishek Guha, Ms. Mayuri Ghosh, Ms. Arunika Dutta Mr. Ankush Majumdar … for the respondent nos. 1 to 3. 1. The appeal arises out of a judgement and order dated September 5, 2023, passed in WPA 5778 of 2023. The Indian Bank/secured creditor is the appellant. The request for Look Out Circular (LOC) against the respondent nos.1 to 3 was originated by the bank on the ground that the writ petitioners/respondent nos.1 to 3 being wilful defaulters were likely to leave the country. The wilful default indicated an intention to misappropriate public money and non-payment of the loan affected the economic interest of the country. 2. Mr. Singh, learned advocate for the bank submits that, the decision of the bank declaring the respondent nos. 1 to 3 as wilful defaulters had not been interfered with either in the writ petition or in the appeal. The necessity to prevent foreign travels of the respondent nos. 1 to 3 is imperative, to protect the country’s economy. It is further submitted that, the LOC was issued by the Ministry of Home Affairs, Foreigners Division, Government of India under the Office Memoranda issued from time to time. The memoranda laid down guidelines to be followed while making a request for issuance of LOC. The parameters were satisfied. The allegations against the respondent nos. 1 to 3 warranted stringent measures due to the exceptional circumstances, and departure of the said respondents from India would be detrimental to the bilateral relations of India with other countries also and/or adversely affect the strategic and economic interest of India. 3. Under such circumstances, it is submitted that the learned Single Judge failed to appreciate that the exceptional situations under which the LOC had been issued were covered by the memoranda. The LOC was set aside only at the ground that the declaration of wilful default was merely a regulatory measure adopted by the Reserve Bank of India to notify stakeholders, creditors and public lending authorities about the antecedent of borrowers in the commercial sphere. 4. It is urged that His Lordship erred in holding that declaration of wilful default had a limited connotation. The finding that, economic activities of an individual was not akin to commission of a cognizable offence was not true purport and meaning of the memoranda. 2 5. Mr. Dutta, learned advocate for the writ petitioners submits that, the reason for issuance of the LOC was explicitly stated in the communication dated February 9, 2023, issued by the Assistant General Manager, Indian Bank. Classification of the respondents/writ petitioners as wilful defaulters could not have been a valid ground for issuance of the LOC. As such, the parameters under the office memorandum dated February 22, 2021, had not been satisfied. The LOC was rightly quashed and set aside by the learned single Judge. It is further submitted that, unless any cognizable offence has been committed by the persons against whom the LOC had been issued and they were required for trial, departure of such person cannot be prohibited. There are no flight risks in this case. 6. The facts urged by the bank in a nutshell are that, on the basis of the default in repayment of the loan amount extended by the bank, proceedings to declare the respondent Nos. 1 to 3 as wilful defaulters were held and the said respondents were declared to be wilful defaulters. As per the memorandum dated November 22, 2018, issued by the Deputy Director, BOII, Government of India, Ministry of Finance, the Heads of Pubic Sector Banks were empowered for issuance of LOC. 7. Under the memorandum of 2018, a specific request under Clause 2(c) for issuance of LOC was made, as the departure of such persons would be detrimental to the bilateral relations of India with other countries and the economic interest of India would suffer. 3 8. According to Mr. Singh, the quantum of money that was payable by the said respondents is not of much relevance. It is the intention and the concerted ploy on the part of these respondents in not repaying the bank, which led the bank to originate a request for LOC. They cheated the public authority by mis-utilisation and misappropriation of public money. Under such circumstances, in order to protect the economy of the country, the LOC was issued. 9. What falls for decision before us is whether the learned Single Judge was right in holding that declaration of the said respondents as wilful defaulters could not be a ground either under the office memorandum dated February 22, 2021 or the office memorandum of 2018, for issuance of LOC. Further consideration is, whether setting aside of the LOC was in accordance with law or not. 10. In the matter of Vishambhar Saran vs Bureau of Immigration & Ors. decided in WPA 6670 of 2022, a Single Bench of this High Court had analysed and discussed the policy behind issuance of LOC and its development, in the following paragraphs:- “29. The general objective for issuance of LOC is to control the arrival/departure of persons against whom criminal cases are pending or who are either avoiding judicial proceedings or evading arrest or not co-operating with the investigating agencies and there are specific inputs that such person(s), would flee the country. 30. The first comprehensive policy was framed and found its release in the office memorandum dated October 27, 2010. The authorities who could issue LOC, the ingredients necessary for issuance of LOCs, the agencies who could make 4 a request for issuance of LOCs and the various parameters required to be fulfilled before such request could be made, was provided therein. 31. Paragraph 8 (a) and (b) of the office memorandum dated October 27, 2010 are quoted below:- “a) The request for opening an LOC would be made by the originating agency to Deputy Director, Bureau of Immigration (BoI), East Block VIII, R.K. Puram, New Delhi – 66 (Telefax: 011-2619244) in the Proforma enclosed. b) The request for opening of LOC must invariably be issued with the approval of an officer not below the rank of i. Deputy Secretary to the Government of India; or ii. Joint Secretary in the State Government; or iii. District Magistrate of the District concerned; or iv. Superintendent of Police (SP) of the District concerned; or v. SP in CBI or an officer of equivalent level working in CBI; or vi. Zonal Director in Narcotics Control Bureau (NCB) or an officer of equivalent level (including Assistant Director (Ops.) in Headquartrs of NCB); or vii. Deputy Commissioner or an officer of equivalent level in the Directorate of Revenue Intelligence or Central Board of Direct Taxes or Central Board of Excise and Customs; or viii. Assistant Director of IB/BoI; or ix. Deputy secretary of R&AW; or x. An officer not below the level of Superintendent of Police in National Investigation Agency; or xi. Assistant Director of Enforcement Directorate; or xii. Protector of Emigrants in the office of the Protectorate of Emigrant or an officer not below the rank of Deputy Secretary of the Government of India; or xiii. Designated officer of Interpol.” Sub-paragraph (b) of paragraph 8 did not include the heads of public sector banks at the relevant point of time. 32. The policy also provided that LOCs could be issued on the direction of a Court in India. Sub-paragraph (c) provided the parameters and the details to be filled up including the reasons in Colum IV of the Proforma enclosed to such policy. Column IV is quoted below:- 5 “REASON FOR OPENING OF LOC: a. CRIMINAL CASE: i) FIR NO. ii) DATE (specify full details) iii) SECTION OF LAW (Where applicable): iv) POLICE STATION: v) DISTRICT: vi) STATE: b. WANTED BY ANY OTHER COURT/JUDICIAL AUTHORITY: i) NAME OF THE COURT: ii) ORDER BY WHICH SUBJECT IS WANTED: c. LOC RETENTION DATE: (As per MHA guidelines. LOC will remain valid for at most one year)” 33. Sub-paragraph (g) and (h) of the same laid down the conditions under which opening of LOCs could be made. The same are set out below:- “g. Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed Proforma regarding ‘reason for opening LOC’ must invariably be provided without which the subject of an LOC will not be arrested/detained. h. In case where there is no cognizable offence under IPC or other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The originating agency can only request that they be informed about the arrival/departure of the subject in such cases.” 34. A combined reading of sub-paragraph (g) and (h) of the said 2010 policy indicates that recourse to LOCs could be taken when the subject was guilty of commission of a cognizable offence under the Indian Penal Code or other penal laws. The details in Column IV of the Proforma enclosed regarding the reasons for opening of LOC were to be provided without which the subject of an LOC could neither be arrested nor detained. If there were no allegations of commission of any cognizable offence, the LOC subject could not be detained or prevented from leaving the country. In such cases, the originating agency could only request that they be informed about the arrival/departure of the subject in such cases. 35. In a general sense, the policy of 2010 restricted the reasons for opening an LOC to cases of pending criminal investigation or proceedings relating to commission of any cognizable offence under the Indian Penal Code or other penal laws. Sub-paragraph (j) of Office Memorandum of 2010 made an exception to 6 such parameters. The same is set out herein below:- “j. In exceptional cases, LOCs can be issued without complete parameters and/or case against CI suspects, terrorists, anti-national elements, etc. in larger national interest.” In cases where no criminal investigation with regard to commission of any cognizable offence was pending, a request for LOC could be made if the subject of the LOC was either a CI Suspect or a terrorist or an anti-national. 36. By the amendment in 2017, persons whose actions were detrimental to bilateral relations of India with other countries or detrimental to the strategic and economic interest of the country and were likely to flee the country as per intelligence inputs, were included as subjects of LOCs. Sub-paragraph (j) was substituted. The amendment as notified by office memorandum dated December 5, 2017. The same reads as follows:- “In exceptional cases, LOCs can be issued even in such cases, as would not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (b) of the above-referred OM, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or the strategic and/or economic interest of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point in time. Instead of: ‘In exceptional cases LOCs can be issued without complete parameters and/or case details against CI suspects, terrorists, anti- national elements, etc in larger national interest.’ ” 37. The object of such amendment was to prevent persons guilty of offences which were harmful to bilateral relations of India with other countries or detrimental to the strategic and economic interest of the country, from fleeing the country. 38. In the opinion of the Court, the interpretation of the expression ‘bilateral relations between two countries’ would mean 7 the conduct of political, economic or cultural relations between two sovereign states. ‘Strategic and economic interests of the country’ would mean relationship between two countries which would be mutually beneficial and the expression ‘economic interest’ would include in its ambit, growth, development, industrialization, investments, business activities, the strength of the currency, the position of the sensex etc. The expression ‘economic interest’ in the 2017 amendment cannot be given a narrow interpretation to mean individual banking relationship between the borrower and the bank and non payment of the borrowed sum. The expression should be read in the context of bilateral relations and strategic interest of India. 40. The office memorandum dated October 4, 2018, inter alia, stated as follows:- “(a) Issuance of LOCs in respect of Indian citizens and foreigners is governed by Instructions contained in the Ministry of Home Affairs (MHA)'s OM dated 27.10.2010, as amended by MHA's OM dated 05.12.2017. (b) Paragraph 8 (b) of MHA's OM dated 27.10.2010 lists those authorities of minimum rank, with whose approval the request for opening of LOC must be issued. The list does not include officers of banks at present. (c) As per the amended Paragraph 8(j) (amended through MHA's OM dated 05.12.2017), ‘In exceptional cases, LOCs can be issued even in such cases, as would not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (b) of the above-referred OM, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulged in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point in time.’ (d) It is, therefore, clear that the guidelines enable LOCs against persons who are fraudsters/persons who wish to take loans, willfully default/launder money and then escape to foreign jurisdictions, since such actions would not be in the economic interests of India, or in the larger public interest. 8 2 Therefore, as suggested by CBI, MHA is requested to kindly amend the OM dated 27.10.2010 and include in the list of authorities under Paragraph 8(b) another category, as follows: ‘(xiv) Chairman (State Bank of India)/Managing Directors and Chief Executive Officers (MD & CEOs) of all other Public Sector Banks’." 41. The Chairman/Managing Directors/Chief Executive of all Public Sector Banks were included in the list of originating agencies, by office memorandum dated October 12, 2018 issued by the Director (Immigration) under clause-(xv) of sub-paragraph 8(b). The Chairman/Managing Directors/Chief Executive Officers of the banks on receipt of specific inputs that the departure of a person would be detrimental to the sovereignty or security or integrity of India or detrimental to the bilateral relations of India with any country or harmful to the strategic and/or economic interest of India, could request for opening a LOC. 42. This Court has already observed earlier that the expression ‘economic interest’ cannot be read in isolation but must be read into the context in which it has been used in the policy of 2010 as amended. It cannot be given a narrow interpretation to mean and include the conduct of business between the bank and a defaulter. In the absence of any input that such borrower was likely to flee India and such departure would disrupt or adversely affect the economy of the country or jeopardize the bilateral business relationship and/or the strategic relationship of India with other countries, such request could not be made. Sub-paragraph (j) of paragraph 8 had to be satisfied. 43. The consolidated guidelines for issuance of LOC in respect of Indian citizens and foreigners found its final expression in office memorandum dated February 22, 2021. The guidelines of 2010 which were modified in 2018 were reviewed. Paragraph 6 sub-paragraphs H to L provide the general circumstances under which opening of LOC could be requested by the originating agency which include the Chairman/Managing Director/Chief Executive Officer of all public sector banks. For convenience sub-paragraph H, I, and J are quoted below:- “(H). Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed 9 Proforma regarding ‘reason for opening LOC’ must invariably be provided without which the subject of an LOC will not be arrested/detained. (I). In cases where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The originating agency can only request that they be informed about the arrival/departure of the subject in such cases. (J) The LOC opened shall remain in force until and unless a deletion request is received by BoI from the Originator itself. No LOC shall be deleted automatically. Originating Agency must keep reviewing the LOCs opened at its behest on quarterly and annual basis and submit the proposals to delete the LOC, if any, immediately after such a review. The BOI should contact the LOC Originators through normal channels as well as through the online portal. In all cases where the person against whom LOC has been opened is no longer wanted by the Originating Agency or by Competent Court, the LOC deletion request must be conveyed to BoI immediately so that liberty of the individual is not jeopardized.” 44. Thus, analysing the policy which existed from 2010 and which were amended from time to time and ultimately found its expression in the memorandum dated February 22, 2021, this court is of the view that only in exceptional cases LOCs could be issued even if the parameters quoted hereinabove were not covered. Sub-paragraph (L) of the 2021 policy lays down the exceptions. The same is quoted below:- “(L) In exceptional cases, LOCs can be issued even in such cases, as may not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (B) above, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security or integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point of time.” 10 45. The bank had to establish that the departure of the petitioner on the basis of intelligence reports would be detrimental to the sovereignty, security and integrity of India, detrimental to the bilateral relation of India with any other country or detrimental to the economic interest of India. Although clause (d) in the office memorandum dated October 4, 2018 issued by DFS, Ministry of Finance, Government of India provided that those persons who were fraudsters or had taken loans, wilfully defaulted in repayment of the same or laundered money and then tried to escape to a foreign jurisdiction should be included in the category of subjects whose departure would be harmful to the economic interest of India, the policy of 2021 did not make a separate category under the exception clause for such persons who were either fraudsters or wilful defaulters and had laundered money and were trying to escape to foreign jurisdiction. Sub-paragraph (L) of paragraph 6 of the policy of 2021 is a verbatim reproduction of sub-paragraph (j) of paragraph 8 of the amended policy of 2010. In the opinion of the court, persons who had taken loan from public sector banks and had laundered money and whose actions had caused disruption to the economic stability, shares and stock market or had affected the current economic growth of the country, would come within the exception clause.” 11. Having considered the background with regard to the reasons and the policy behind issuance of LOCs, we find that, this case is not covered by the memoranda . The only reason cited by the bank seeking issuance of the LOC, was declaration of the account of the company and the writ petitioners as wilful defaulters. The relevant portion is quoted below :- “Dear Sir, This has reference to your letter dated 08/02/2023 received by us on 09/02/2023. In this regard, we wish to inform that based on the classification of account M/s Ceebuild 11 Company Private Limited and you as Wilful Defaulter, Lookout Circular has been issued by Bureau of Immigration on the request of our Bank.” 12. The request for LOC is to be made in a particular proforma. The information against each column and sub- head are required to be filled up. We do not find from the said proforma that, any separate column had been provided, requiring the details of wilful default i.e., date of NPA, quantum of loan, failure to repay the loan etc. Clause 11 of the said proforma requires the details of the criminal case pending against the persons against whom the LOC is sought to be issued. Thus, reading the various parameters, on the basis of which LOC can be issued harmoniously, we hold that mere declaration of wilful default itself, cannot be a ground for origination of the LOC against the defaulting borrowers. The offence has to be graver. The economic offence has to be such that, the departure of the persons prior to recovery of the money through due process of law, would destabilise the economy of the country. Issuance of LOC cannot be a recovery mechanism for the defaulted amount. The actions of the persons against whom the LOCs are issued, should reflect that, they are involved in a crime, are either evading arrest or trial and that their departure would cripple the Indian economy. Injury to the economic interest of India should be evident. Commission of the alleged offence of default must be of a high degree so as to shake the growth, cause instability, 12 affect business transactions and bilateral trade relations with other countries. A possibility of change in the market conditions, i.e. in the investments stock markets should be demonstrably available. There is no evidence before us which would show that the nature of the allegations in this case, necessitated issuance of the LOC. Moreover, the memoranda discussed hereinabove indicate that the bank should have some information from the intelligence or other investigating agencies that, the departure of these persons would be detrimental to the economic interest of India. Admittedly, no investigation is pending against the writ petitioners. 13. In the matter of Debanjan Hazra vs The Serious Fraud Investigation Office & Ors. decided in MAT 474 of 2026, this court had discussed what was meant by economic interest and what was the consequence of an LOC on the liberty of an individual. The relevant paragraph are quoted below:- “20. In Vishambhar Saran (supra) the issue of economic interest has been discussed as follows: - “50. BOB requested the Bureau of Immigration to issue LOC. It is not on record whether such LOC has been issued or not. The Bureau of Immigration, Ministry of Home Affairs (Foreigners Division) and all the other members of the consortium of banks, apart from PNB were impleaded as respondents in this proceeding. None of these respondents have come up before the Court in support of the request of BOB. They have not contested the proceedings. Clause 3.1 of the SOP (Annexure P2, Page no. 26 of Writ petition) states that the responsibility for requesting issuance of LOC in respect of a defaulter would be on the leader of the consortium of banks or on the holder of the biggest share or exposure amongst them. In this case, the LOC originated by the lead bank, having the highest exposure has been quashed 13 by a Co-ordinate Bench for the reasons which have already been quoted hereinabove. Default of the borrower cannot be read into the expression “detrimental to the economic interest of the country”. In order to cause injury to the economic interest of the democracy of India, the commission of alleged offence of default must be of high degree so as to shake the growth, financial stability, business transactions, bilateral trade relations, investments, stock markets etc. There is no evidence that on account of the default committed by the Visa Power Limited, the economy of India had been shaken. The bank has not provided any contemporaneous material against the petitioner which would satisfy the exceptions clause. The bank is also silent as to whether any input had been received from any agency that the petitioner was likely to flee the country and his departure would disrupt the economy. 51. Admittedly, in the facts of this case, no investigation is pending before any authority. It is also not a case where the bank had come to a conclusion on the basis of inputs received from an intelligence agency or any other agency that the petitioner was trying to leave India in order to evade the consequences of the legal actions that may be taken against him, both under the civil and the criminal laws.” 21. The legal position governing LOCs is no longer res integra. In Sumer Singh Salkan (Supra), it has been held that recourse to an LOC is permissible only where the person is deliberately evading arrest, or he is not appearing before the authorities despite coercive processes, or he is likely to leave the country to evade trial. The issuance of an LOC must therefore be predicated upon cogent and tangible material, and not on mere conjecture. * * * * * * 27. The contention of the respondents that the LOC is justified keeping in view the “economic interest of India” also does not withstand judicial scrutiny. While economic offences are undoubtedly grave, the mere reference to such interest, cannot be a substitute for specific and individual satisfaction regarding the necessity of restraining a particular individual from travelling abroad. The materials on record do not disclose any clear or direct role attributable to the appellant that would warrant such a drastic restriction, particularly when the LOC against the promoter of Elder as we have been informed 14 by Mr. Tiwari, in the course of this proceeding does not continue.” 14. Based on the aforesaid discussions and the facts, we are of the view that the learned Single Judge rightly held that the LOC in the present case was not sustainable and the same was rightly set aside. All restrictions on the personal liberty of a citizen must meet the test of proportionality. 15. In Menoka Gandhi vs. Union of India, reported in (1978) 1 SCC 248, the Hon’ble Apex Court unequivocally held that right to travel abroad was an integral facet of personal liberty under Article 21, and any restriction thereon must satisfy the test of being just, fair and reasonable. The impugned LOC prevented the respondent Nos. 1 to 3 from travelling abroad with their family and as such constituted a serious invasion of their rights. 16. Under such circumstances, we are not inclined to interfere with the order of His Lordship. 17. Accordingly, the appeal and the application stand dismissed. 18. We direct the Bureau of Investigation to act on the basis of this order and inform all stakeholders. 19. Urgent photostat certified copy of the order, if applied for, be given to the parties, upon usual undertakings. (Shampa Sarkar, J.) (Arjun Ray Mukherjee, J.) 15