Bombay High Court Permits Overseas Travel Despite Look Out Circulars, Imposes Stringent Compliance Conditions with Limited Impact on Existing LOCs

Court’s Decision

The Bombay High Court permitted the applicant to travel abroad between October 28, 2024, and December 25, 2024, while temporarily suspending Look Out Circulars (LOCs) issued by banks. The court imposed specific conditions to ensure the applicant’s compliance and return by December 26, 2024, and stipulated that failure to adhere to these conditions could result in further action.

Facts

The applicant had previously challenged the authority of creditors to issue LOCs against him in relation to multiple writ petitions. This matter was escalated to the Supreme Court and remains under consideration. The applicant sought permission to travel internationally for business purposes, noting that he had complied with similar orders in the past without issues.

Issues

1. Whether the applicant could be granted permission to travel abroad despite existing LOCs.
2. What conditions, if any, should be imposed to ensure the applicant’s return and compliance.

Petitioner’s Arguments

The applicant argued that his travel was essential for business purposes and that he had previously adhered to all travel conditions set by the court. He proposed to submit an itinerary, including details of his travel schedule, accommodation, and contact information, to assure compliance.

Respondent’s Arguments

The respondents, representing the banks, raised concerns over the applicant’s overseas travel, citing potential risk to recovery efforts. They argued that allowing travel could hinder ongoing financial proceedings linked to the LOCs.

Analysis of the Law

The court reviewed the legal basis for LOCs, considering the applicant’s previous compliance with travel orders. It weighed the necessity of balancing the applicant’s right to movement with the need to safeguard creditor interests. The court concluded that temporary suspension of the LOCs was permissible under strict conditions, as it did not affect the ongoing Supreme Court review of the broader issue of LOC authority.

Precedent Analysis

The court referenced its earlier ruling dated August 27, 2024, where a similar request by the applicant had been granted under comparable conditions, with no breach reported. The court also acknowledged that the Supreme Court is yet to provide a definitive judgment on LOC authority.

Court’s Reasoning

The court observed that, based on past compliance, the applicant showed no intent to evade proceedings. The court emphasized that its interim decision was limited to the applicant’s requested travel period and did not impact any LOCs issued by other authorities.

Conclusion

The court granted permission for the applicant to travel abroad until December 25, 2024, under strict conditions:

• Submission of an itinerary with travel and accommodation details.
• An undertaking not to seek further travel extensions before returning to India.
• Filing an affidavit post-travel detailing expenses and funding sources.
• Suspension of the LOCs against the applicant by the banks until December 26, 2024.

Implications

This order highlights the court’s approach to balancing individual rights with creditor concerns. By enforcing detailed compliance conditions, the court ensures that LOCs do not unjustly restrict movement while pending judicial review of LOC authority. This case underscores the judiciary’s interim measures to allow travel without compromising ongoing legal and financial proceedings.

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