Bank of Baroda Vs Sahil Chugh & Ors. (Delhi High Court)
Delhi HC Dismisses Bank of Baroda’s LPAs: LOCs Can’t Be Sustained Against Wilful Defaulters Without Criminal Case
The Delhi High Court, by judgment dated 18-Dec-2025, dismissed a batch of Letters Patent Appeals filed by Bank of Baroda against orders of the learned Single Judge quashing Look Out Circulars (LOCs) issued against company Directors/partners who were declared wilful defaulters. The Division Bench held that mere default in repayment of bank dues, even if classified as wilful default and proceedings under SARFAESI Act and before DRT are pending, cannot justify curtailment of the fundamental right to travel under Article 21 of the Constitution in the absence of any criminal proceedings or material showing higher gravity and larger impact on the economy. The Court further ruled that the Office Memorandum dated 22-Nov-2018 issued by the Ministry of Finance is only advisory and not binding, since the Ministry of Home Affairs is the nodal authority governing the LOC regime. Relying on earlier Delhi HC rulings in Prateek Chitkara and Apurve Goel, and the Bombay HC decision in Viraj Chetan Shah, the Court reaffirmed that LOCs cannot be mechanically issued at the behest of banks and upheld the quashing of LOCs, dismissing all appeals at the admission stage.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
