A Bank Manager’s Letter Is Not ‘Law’: Madras High Court Refuses Bank’s Review in Look Out Circular Case

Case at a Glance

After the Madras High Court directed removal of a Look Out Circular against a guarantor whose company’s debt had been resolved under the IBC, Bank of Baroda sought a review. The Court dismissed it, holding that review is not an appeal in disguise, that no suppression was shown, and that a restriction on the right to travel abroad must be imposed by law, which a bank manager’s letter to the Bureau of Immigration is not.

The writ petitioner was a promoter director of M/s GVR Infra Projects, which borrowed from Vijaya Bank (later merged into Bank of Baroda) and defaulted. The bank initiated insolvency proceedings (C.P. No. 941 of 2018); the NCLT approved a resolution plan, which was implemented, and the principal debt was satisfied. A Look Out Circular nevertheless remained against the petitioner as a guarantor.

In his writ petition, the High Court directed removal of the LOC so that he could live normally (the review prayer refers to an order of 24 August 2026). The bank sought review, arguing that he remained liable as a guarantor, that the resolution professional had advised banks to start bankruptcy proceedings against him which he had suppressed, and that a 2024 Supreme Court order required persons in his position to seek permission before travelling abroad.

The Key Question Before the Court

Can a bank keep a borrower or guarantor from travelling abroad merely by writing to the immigration authorities, and was there any ground to review the order removing the LOC?

Review Limits, Suppression and the Meaning of ‘Law’

The Court held that the bank’s points were neither raised at the original hearing nor new discoveries, and relying on Parison Devi v. Sitri Devi it said that “review is not an appeal in disguise.” On suppression, it found that the April 2026 email of the resolution professional showed no further action had been taken, so nothing material was concealed. It also noted that no CBI or police complaint alleging fraud had been filed. The 2024 Supreme Court order was held to apply only to the petitioners in that case and not to be a general direction under Article 141.

On the merits, the Court relied on Maneka Gandhi v. Union of India for the right to travel abroad and held that any restriction must be “law”, which implies legislation; a bank manager’s letter to the Bureau of Immigration cannot qualify. It observed that a citizen does not forfeit constitutional rights by taking a loan, and that keeping a guarantor from earning abroad while demanding repayment creates a vicious circle that “has to be broken.”

What the Court Actually Held

• There was no error apparent on the face of the record; review is not a route to re-argue the case.
• No suppression of material facts was shown.
• The 2024 Supreme Court order was specific to its petitioners and not a general direction.
• A bank’s letter cannot restrict the Article 21 right to travel; the review petition was dismissed without costs.

Why This Judgment Matters

• It strengthens the position of guarantors facing LOCs after the corporate debt has been resolved.
• It treats the right to travel abroad as one that only law can restrict.
• It reminds banks that review jurisdiction cannot be used to raise points not argued earlier.

What Should Advocates Take Away From the Judgment?

For Borrowers and Guarantors

• Show the status of IBC or recovery proceedings and the absence of any fraud complaint.
• Rely on Maneka Gandhi and the requirement that restrictions be imposed by law.

For Banks

• Raise every ground, including pending bankruptcy steps, at the original hearing.
• Be ready to show material facts, not merely a request letter, to justify an LOC.

Key Takeaways

Frequently Asked Questions

A review of the order directing removal of the Look Out Circular against the guarantor.

The grounds were not new or overlooked, no suppression was shown, and the Supreme Court order relied on was specific to that case.

The Court held that a restriction on the right to travel must be imposed by law; a bank manager’s letter to the Bureau of Immigration is not law.

Conclusion