The Delhi High Court has cancelled the Look Out Circular (LOC) issued against the petitioner, a former Independent and Non-Executive Director of Birla Aircon Infrastructure Private Limited (BAIPL), who had resigned from the Board in 2013. The Court laid down that after resorting to all remedies available in law, including proceedings under the RDDB Act, SARFAESI Act, and the Insolvency and Bankruptcy Code, a bank cannot open a Look Out Circular as an arm-twisting tactic to recover debt from a person who is otherwise unable to pay, particularly when there are no allegations that such person was engaged in any fraud, siphoning off, or defalcation of the loan amounts.
The mere fact that a person was associated with a defaulting company, even as a director, does not justify the issuance of an LOC to curtail his fundamental right to travel abroad under Article 21 of the Constitution, clarified the Court, while directing the Bureau of Immigration to immediately communicate the cancellation order, signalling strict judicial scrutiny of LOC-based travel restrictions imposed on directors and guarantors of defaulting companies.
A Single Judge Bench of Justice Jasmeet Singh observed that the right to travel abroad is a fundamental right guaranteed under Article 21 of the Constitution of India and cannot be taken away in an arbitrary or illegal manner. The Court noted with concern that banks are increasingly insisting on opening of Look Out Circulars merely as a measure to recover money without initiating any criminal proceedings, which the Court found impermissible.
The Court emphasised that an LOC is a major impediment for a person who wishes to travel abroad, and no person can be deprived of his right to go abroad except for very compelling reasons. The procedure for such deprivation cannot be arbitrary, unfair, or unreasonable, as recognised by the Supreme Court in Maneka Gandhi v. Union of India [(1978) 1 SCC 248]. The Court further observed that there were no allegations in the counter affidavit that the petitioner was engaged in any fraud, siphoning, or defalcation of the funds given as loan. It was also admitted by Respondent No. 2 that the petitioner was not a personal guarantor to the said loan.
The Court noted that the respondents had already initiated appropriate action, including SARFAESI proceedings, against BAIPL and all guarantors, and that merely because the petitioner was a non-executive director of a company which had been unable to pay its dues, an LOC could not be issued against him to curtail his right to travel.
Briefly, the petitioner, Tushar Dey, was a former Independent and Non-Executive Director of Birla Aircon Infrastructure Private Limited (BAIPL), having resigned from the Board on 3 July 2013. In May 2022, the petitioner learnt that his name had been included by Respondent No. 2 bank in a list of alleged wilful defaulters in relation to credit facilities extended to BAIPL, without any show cause notice, supporting material, or hearing being provided to him. Aggrieved by this, the petitioner filed writ, which is currently pending before the Delhi High Court.
On 4 June 2026, the petitioner was stopped by immigration authorities at the Indira Gandhi International Airport, New Delhi, while travelling abroad to visit his wife and daughter, and was informed that a Look Out Circular (LOC) had been issued against him at the behest of Respondent No. 2 bank. The petitioner was never informed about the LOC, no copy was provided to him, and no personal hearing was given before issuing it. According to the counter affidavit filed by Respondent No. 2, BAIPL had taken a loan of Rs. 19 Crores from the bank on 1 August 2011, the account was declared NPA on 31 March 2014, and the current outstanding stands at Rs. 7.20 crores.
The bank initially claimed that the petitioner was one of the personal guarantors, but later conceded through its counsel that this was an inadvertent error and that the petitioner was never a personal guarantor. The LOC was issued as a preventive measure under paragraph 8(b)(xv) of the Office Memorandum dated 12 October 2018 issued by the Ministry of Home Affairs.
