Delhi High Court Says Bank's Fear of Flight Cannot Sustain Look Out Circular Indefinitely

The Delhi High Court held that a bank's apprehension that a borrower may leave India or jeopardise recovery of its financial claim cannot, by itself, justify keeping a Look Out Circular in force indefinitely.

Background and issue

The Delhi High Court held that a bank's apprehension that a borrower may leave India or jeopardise recovery of its financial claim cannot, by itself, justify keeping a Look Out Circular in force indefinitely. The ruling places continuing restrictions on foreign travel within the framework of legality, necessity and proportionality rather than treating a lender's recovery concern as permanently decisive. A Look Out Circular can have serious consequences for personal liberty and movement, so its continuation requires a legally sufficient basis. The decision does not prevent authorities from using LOCs where statutory conditions are genuinely satisfied, but rejects perpetual restraint based only on speculative flight risk.

Legal significance

The legal effect is confined to the judgment, order or procedural development reported here. Allegations, party submissions and oral observations are not treated as established facts unless expressly decided.

What follows

The matter proceeds according to the operative directions, statutory process or further hearing identified above.

Source: Original report