Mere Pendency of Investigation Cannot Justify a Look Out Circular: Delhi High Court Quashes LOCs

“Look Out Circular Is a Coercive Measure to Secure Presence of an Accused Who Is Evasive; Not a Substitute for Judicial Process” —  In a significant judgment Delhi High Court, while allowing two writ petitions filed under Article 226 of the Constitution, ruled that the issuance and continuation of Look Out Circulars (LOCs) against senior executives of Indian Potash Limited (IPL) and IFFCO, amid pending CBI and ED investigations, violated the fundamental right to travel under Article 21. The Court held that "mere seriousness of allegations or pendency of investigation" does not justify the continued restraint on the petitioners' liberty, especially in absence of non-cooperation or flight risk.

Justice Neena Bansal Krishna quashed the LOCs issued against P.S. Gahlaut, Managing Director of IPL, and Dr. U.S. Awasthi, MD of IFFCO, observing that no conditions laid down in law for sustaining such coercive measures were met.

“No Non-Bailable Warrants, No Evasion, No Non-Cooperation — LOC Cannot Be Sustained”

At the core of the petition was the challenge to LOCs issued at the behest of CBI and ED following the registration of FIR (RC No. 221/2021/E0009) and ECIR (No. DLZP-I/43/2021) concerning alleged financial irregularities in fertilizer imports from 2007 to 2014. While serious allegations of subsidy fraud and money laundering were made by the investigating agencies, the Court found that the LOCs were not supported by the legal preconditions under law.

Referring to the landmark judgment in Sumer Singh Salkan v. Assistant Director, the Court reiterated that LOCs are meant for situations where the accused is deliberately evading arrest, absconding, or likely to flee from justice. Justice Bansal Krishna stressed:

“None of the grounds as stated in Sumer Singh Salkan for continuing the LOC exist. The Petitioners have consistently joined investigation and have not been evading the legal process. There are no NBWs or other coercive orders against them.” [Para 49]

The Court further observed that:

“LOC is a coercive measure to make a person surrender to the investigating agency or court of law. It cannot be a mechanical restraint without statutory backing.” [Para 44]

“Right to Travel Abroad is a Fundamental Right under Article 21”

Emphasizing the constitutional protection of personal liberty, the Court invoked the celebrated ratio in Maneka Gandhi v. Union of India (1978) 1 SCC 248, holding that any restriction on the right to travel must pass the test of fairness, reasonableness, and proportionality.

Justice Krishna held:

“In the absence of flight risk or evidence of evasion, indefinite restraint on travel violates constitutional safeguards guaranteed under Article 21.” [Para 49]

The Court also noted that the petitioners had traveled abroad multiple times in the past with court permissions and always returned, disproving the investigating agencies' apprehensions. The Court found no basis for continuing the LOCs, especially when no NBWs had been issued, and no material had been placed on record to demonstrate any attempt to abscond.

Public Interest Cannot Override Liberty Without Legal Justification

Interestingly, both CBI and ED argued that the alleged financial frauds had grave economic and national security implications, citing the routing of illegal commissions through international channels and involvement of foreign-based co-accused. The Enforcement Directorate submitted that assets worth ₹27.79 crores had already been provisionally attached, and prosecution complaints had been filed.

However, the Court maintained a clear boundary between ongoing investigations and the constitutional rights of the accused, observing:

“Public interest does not warrant mechanical curtailment of liberty when the investigation is not prejudiced.” [Para 48]

Moreover, the Court took note of the petitioners’ contributions to India’s fertilizer procurement, especially amid global shortages, stating:

“The Petitioners’ professional expertise is crucial for safeguarding national interest in fertilizer procurement. This cannot be ignored merely due to pendency of a long-standing investigation.” [Para 12]

Safeguards Imposed While Allowing Travel Abroad

While quashing the LOCs, the Court struck a balance between the petitioners’ liberty and the needs of the investigation, imposing procedural safeguards. The petitioners were directed to:

“Keep the Trial Court informed about their place of residence and contact details, and furnish foreign travel details including itinerary and place of stay prior to departure.” [Para 50]

The Court also noted that virtual participation in international meetings was not a viable substitute for direct negotiations crucial to fertilizer imports, especially with entities based in Jordan, Russia, Morocco, and other key supplying countries.

This ruling from the Delhi High Court has added to the judicial scrutiny of Look Out Circulars as coercive instruments, underscoring that such measures cannot be sustained without adherence to due process and statutory guidelines. The judgment reinforces that seriousness of allegations alone cannot justify suppression of personal liberty, and investigative expedience must not override constitutional values.

The High Court’s decision also reaffirms that Article 21 protects the right to travel abroad, and any encroachment on this right must be demonstrably necessary and proportionate. With this judgment, the Court has sent a strong message on judicial oversight of executive measures that affect civil liberties in economic offence investigations.

Date of Decision: January 13, 2026