Bank Of Baroda vs Union Of India & Ors.

TEJAS KARIA, J. (ORAL)

The present intra court Appeal has been filed by the Appellant assailing the Judgment dated 18.11.2025 (“Impugned Judgment”) passed by the learned Single Judge in W.P.(C) No. 17293/2024 (“Writ Petition”).

The Writ Petition was instituted by Respondent No. 5 seeking the following reliefs:

The brief facts leading to filing of the present Appeal are as under:

Due to certain alleged financial irregularities and diversion of funds sanctioned as loans by a consortium of banks to the borrower company being M/s Santosh Overseas Limited-Respondent No. 6, an FIR bearing No. RC 219 2020 E0005 was lodged by the consortium’s lead bank, i.e., IDBI Bank, with Respondent No. 4-CBI on behalf of the consortium lenders, which was registered on 26.06.2020.

The Appellant and Respondent No. 3 claim that Respondent No. 5, being the personal guarantor in respect of credit facilities extended to Respondent No. 6, is jointly and severally liable for the repayment of the outstanding dues.

Due to apprehension that the guarantors of Respondent No. 6 may flee to foreign jurisdiction to avoid repayment of the outstanding dues, the Appellant and Respondent No. 3, vide letters dated 29.07.2020 and 15.01.2020, requested Respondent No. 2 to issue Look Out Circulars (“LOCs”) against the directors and guarantors of Respondent No. 6, including Respondent No. 5.

Aggrieved by the LOCs opened against Respondent No. 5, the Writ Petition was instituted by Respondent No. 5. Vide order dated 17.09.2025 passed by the learned Single Judge in the Writ Petition, Respondent No. 4-CBI was directed to file an affidavit specifically disclosing:

Complying with the aforesaid directions issued by this Court, Respondent No. 4-CBI filed an affidavit dated 15.10.2025, the relevant portion of which is as under:

After considering the contentions advanced by the parties, the learned Single Judge allowed the Writ Petition and quashed the LOCs. Aggrieved thereby, the present Appeal was filed by the Appellant.

Learned Counsel for the Appellant submitted that the learned Single Judge failed to consider that the LOCs were opened strictly in accordance 25016/31/2010-Imm dated 27.10.2010, corresponding to Clause 6(B)(xv) of the consolidated Office Memorandum of 2021 issued by the Ministry of Home Affairs, whereby the Chairmen, Managing Directors and Chief Executive Officers of Public Sector Banks were empowered to request the opening of Look Out Circulars.

It was further submitted by learned Counsel for the Appellant that, in the Impugned Judgment, the learned Single Judge primarily relied upon the judgment passed by the High Court of Judicature at Bombay in Viraj Chetan Shah v. Union of India, 2024 SCC OnLine Bom 1195, without considering that the said decision is under challenge before the Hon’ble Supreme Court in SLP (C) Nos. 17194-17230/2024.

Upon an oral query from the Court as to whether any interim order had been passed by the Hon’ble Supreme Court staying the operation of the decision in Viraj Chetan Shah (supra), learned Counsel for the Appellant submitted that no such direction had been issued by the Supreme Court in the interim.

The learned Single Judge while placing reliance upon the decision in Viraj Chetan Shah (supra) quashed the LOCs issued against Respondent No. 5 by observing that in absence of any criminal case, FIR, or chargesheet, the LOCs could not have been issued at the request of banks. Further, the learned Single Judge observed that similar LOCs against other guarantors of Respondent No. 6 had already been quashed by this Court in connected matters. The learned Single Judge also relied on prior decisions holding that vague references to “economic interests of India” or “larger public interest” cannot justify restricting a person’s movement. However, the LOC was quashed subject to Respondent No. 5 filing an undertaking to cooperate with any investigation and provide relevant documents, if required.

We do not find any infirmity with the reasoning of the learned Single Judge for allowing the Writ Petition as this Bench has in Bank of Baroda v. Surender Kumar Bansal, 2026 SCC OnLine Del 4574, held that the power to issue an LOC is an exceptional coercive measure that directly impinges upon an individual’s fundamental right to travel. Accordingly, it was further held that such power must be exercised with due care and caution, and only in exceptional circumstances. Therefore, in the absence of compelling reasons, no person may be deprived of the right to travel abroad.

Considering that no criminal case is pending against Respondent No. 5 as rightly observed by the learned Single Judge based on the confirmation in the affidavit dated 15.10.2025 filed by Respondent No. 4-CBI and that the LOCs issued qua the other guarantors Respondent No. 6 have already been quashed by this Court, we are of the view that the learned Single Judge has rightly allowed the Writ Petition.

Furthermore, in the Impugned Judgment, the quashing of the LOCs was made subject to Respondent No. 5 furnishing an undertaking by way of affidavit, affirming that Respondent No. 5 shall continue to cooperate in any investigation and shall provide all material/documents sought by the investigating agencies, to the extent such material/documents are within his power and possession. It is, therefore, evident that adequate safeguards have been put in place in the event Respondent No. 5 intends to travel abroad by issuing the aforesaid direction by the learned Single Judge in the Impugned Judgment.

In view of the discussion above, we do not find any good ground to interfere with the Impugned Judgment passed by the learned Single Judge. Accordingly, the present Appeal stands dismissed. Pending application(s), if any, stand disposed of. There shall be no order as to costs.