Court holds that continued travel restrictions via LOCs by banks are unjustified after CBI and ED file charge sheets; Trial Court's supervision of travel suffices to prevent flight risk.
In a significant judgment dated October 7, 2026, the Delhi High Court, presided over by Justice Amit Mahajan, quashed the Look Out Circulars (LOCs) issued at the behest of consortium banks against Sirajuddin Qureshi and others, directors and shareholders of Hind Agro Industries Limited, in a high-profile loan fraud and wilful default case. The judgment underscores that once the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) have completed their investigations and filed charge sheets, the continuation of LOCs issued by banks to restrict the travel of accused persons cannot be sustained as a matter of routine.
The petitioners had challenged their detention and travel restrictions imposed by LOCs issued by public sector banks including Bank of Baroda, Punjab National Bank, Central Bank of India, and Indian Bank following their borrower company's loan accounts being declared Non-Performing Assets (NPA) and subsequently classified as fraudulent. The banks, acting on these developments, had requested the issuance of LOCs to prevent the accused from fleeing the country.
The Court noted that LOCs are coercive measures and must be justified by strong reasons that warrant curtailment of fundamental rights such as the right to travel. Mere apprehension by banks that the accused might abscond or the existence of a financial claim does not suffice to continue LOCs indefinitely, especially when criminal investigations by CBI and ED have concluded and charge sheets have been filed.
Significantly, the Court observed that the trial court overseeing the criminal proceedings had been monitoring the petitioners' travel and had not imposed any restrictions on their foreign travel. The petitioners had been granted bail by the Special Court under the Prevention of Money Laundering Act (PMLA), with no travel restrictions, and had been permitted to travel abroad on several occasions without misuse of that liberty.
The Court therefore held that bank-originated LOCs had become redundant and unjustified, and proceeded to quash them. However, it clarified that LOCs issued by investigative agencies like the CBI would remain in place, subject to the trial court's authority. The petitioners were granted liberty to approach the trial court for relief regarding such LOCs, and the trial court was directed to expedite disposal of any such applications.
Importantly, the Court made it clear that quashing the bank-originated LOCs would not affect the ongoing criminal proceedings or the trial court's power to regulate or restrict the petitioners' travel in accordance with the law. The petitioners must comply with all directions and conditions imposed by the trial court.
This judgment thus strikes a balance between safeguarding the fundamental rights of the accused and ensuring that criminal proceedings continue without undue hindrance. It sends a strong message that banks cannot perpetually impose travel restrictions through LOCs once investigative agencies have taken over the case and filed charges.
Bottom Line:
Look Out Circulars issued at the instance of banks in a loan fraud/wilful default matter are liable to be quashed once CBI and ED have completed investigation and filed charge-sheets, and the petitioners' travel is under supervision of the Trial Court; mere apprehension that they may flee the country or the bank's financial claim cannot justify continuation of LOCs in perpetuity.
Statutory provision(s):
Indian Penal Code Sections 120B, 403, 415; Prevention of Corruption Act Section 13(2) read with 13(1)(d).
Sirajuddin Qureshi v. Union of India, (Delhi) : Law Finder Doc Id # 2993309
