Court holds indefinite LOCs unjustified where petitioners fully cooperated, imposing travel disclosure conditions instead of travel ban
In a significant judgment delivered on September 28, 2026, the Delhi High Court, presided by Justice Amit Mahajan, quashed the Look Out Circulars (LOCs) issued against Deep Kumar Rastogi and Gagan Deep Rastogi by the Directorate of Enforcement (ED) in connection with a protracted Prevention of Money Laundering Act (PMLA) investigation. The case arose from a complaint filed by the Serious Fraud Investigation Office (SFIO) relating to alleged financial irregularities under the Companies Act, 1956.
The petitioners had been subjected to LOCs that restricted their freedom to travel abroad, which they challenged before the Court on grounds that they had consistently cooperated with the investigation over more than six years and that the LOCs were imposed arbitrarily without material justification.
The Court noted that both petitioners had appeared before the ED multiple times, complied with summons, furnished documents, and cooperated fully. There was no evidence that they evaded investigation, absconded, or obstructed proceedings. The senior petitioner, aged about 77 and suffering from liver cancer, required medical treatment abroad, and the younger petitioner, a Singapore resident, frequently traveled between India and Singapore for business and family reasons.
Importantly, the Court observed that the investigation had been pending for over six years, and no fresh material warranted the continuation of coercive travel restrictions. It emphasized that an LOC is a coercive measure meant to prevent flight risk and evasion of investigation, and cannot be routinely extended merely due to the pendency of investigation.
The Court quashed the LOCs but imposed reasonable conditions to balance the investigation's interests with the petitioners' rights. These included mandatory disclosure of detailed travel itineraries and contact information before traveling abroad or entering India, prompt intimation of return or departure dates, provision of valid email addresses for service of summons, and continued cooperation with the investigation.
The judgment underscores that investigative agencies must exercise restraint in imposing travel restrictions and respect fundamental rights unless substantive grounds justify such measures. This ruling provides important clarity on the limited scope of LOCs under PMLA investigations and safeguards the right to travel against indefinite coercive constraints.
Bottom Line:
Prevention of Money Laundering Act - Look Out Circular - Mere pendency of investigation for long period cannot justify indefinite continuation of LOC - Where petitioners consistently cooperated with investigation, complied with summons and there was no material showing evasion, absconding or obstruction of investigation, continued operation of LOCs held unwarranted and quashed subject to conditions regarding travel itinerary, contact details and cooperation.
Statutory provision(s):
Prevention of Money Laundering Act, 2002; Companies Act, 1956
Deep Kumar Rastogi v. Directorate of Enforcement, (Delhi) : Law Finder Doc Id # 2990515
