MAT/674/2026 of SERIOUS FRAUD INVESTIGATION OFFICE Vs SUNIL KUMAR AGARWAL AND ORS on 30 September 2026

1. The appeal arises out of a judgment and order dated January 15, 2026 passed in WPA 12186 of 2025. The writ petitioner/respondent no.1 was holding a managerial post in a Company which was engaged in construction. The company failed to repay the dues of the Bank. The State Bank of India filed an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 before the National Company Law Tribunal, Cuttack Bench and the Company was admitted in Corporate Insolvency Resolution Process (CIRP) on 30th November, 2021. At the instance of the Resolution Professional, a Transaction Audit Report was prepared by a Forensic Auditor. Sometime in December, 2024, Anil Agarwal one of the Directors, was stopped by the Immigration Authority when he was embarking on a travel to Nepal. He was informed that a Look-Out Circular (LOC) was issued in his name. Subsequently, the writ petitioner was also informed that an LOC had been initiated in his name. The serious Fraud Investigation Office (SFIO) was investigating into the affairs of the Company under Section 217 of the Companies Act, 2013. The issuance of the LOC, was challenged by filing the writ petition.

2. The learned Single Judge directed the SFIO to file a report disclosing all the facts leading to the issuance of the LOC. A report was filed in a sealed cover. The LOC was issued as per the direction of the Ministry of Corporate Affairs.

3. The first contention of the writ petitioner was that the LOC had lapsed after a period of one year. The order of the Ministry of Corporate Affairs for initiation of LOC was issued on July 19, 2022. There was neither any recommendation for renewal nor was the situation reviewed. The further contention of the writ petitioner was that, recourse to LOC could only be taken in the event of commission of any cognizable offence under the Indian Penal Code and the accused either evaded arrest or failed to appear before the jurisdictional court in connection with the proceeding. In exceptional circumstances, when a person indulged in activities which adversely affected the economic interest of India or its bilateral trade relations, LOC could also be issued.

4. The learned Single Judge held that, only on the basis of an investigation, liberty of a person to travel abroad, which was an integral part of Article 21 of the Constitution of India, could not be curtailed. Reference was made to various decisions of this Court in this regard.

5. It is contended on behalf of the appellant that, the outstanding claim against the Company towards credit facilities availed of from banks, was more than Rs.3,800 crores. The secured creditors had already filed their claim before the National Company Law Tribunal. The investigation revealed involvement of the writ petitioner in acts of manipulations and syphoning off of funds. According to the appellant, the commission of offence was covered under Section 447 of the Companies Act, 2013 and the offence was cognizable in nature. The offence, if proved, would lead to punishment by imprisonment for 10 years and the writ petitioner would also be liable to pay fine. Thus, the LOC should continue.

6. Mr. Trivedi, learned ASGI submits that the order impugned was passed at a stage when the investigation was going on, but there was no decision for initiation of prosecution. Today, the scenario has changed, as the Central Government has directed that prosecution should be instituted. Under such circumstances, the order impugned should be set aside.

7. Admittedly, as per the direction of the Ministry of Corporate Affairs dated July 19, 2022, a Look-Out Circular was issued against the writ petitioner. The Office Memorandum dated February 22, 2021 lays down the guidelines for issuance of LOCs. The relevant portions of the guidelines are quoted below:- “6. (H) Recourse to LOC is to be taken in cognizable offences under IPC or other penal laws. The details in column IV in the enclosed Proforma regarding 'reason for opening LOC' must invariably be provided without which the subject of an LOC will be not be arrested/detained. (I) In cases where there is no cognizable offence under IPC and other penal laws, the LOC subject cannot be detained/arrested or prevented from leaving the country. The Originating Agency can only request that they be informed about the arrival/departure of the subject in such cases. (L) In exceptional cases, LOCs can be issued even in such cases, as may not be covered by the guidelines above, whereby departure of a person from India may be declined at the request of any of the authorities mentioned in clause (B) above, if it appears to such authority based on inputs received that the departure of such person is detrimental to the sovereignty or security of integrity of India or that the same is detrimental to the bilateral relations with any country or to the strategic and/or economic interests of India or if such person is allowed to leave, he may potentially indulge in an act of terrorism or offences against the State and/or that such departure ought not be permitted in the larger public interest at any given point in time.”

8. As on date, the investigation is over, and the appellant is yet to lodge the prosecution. The appreciation of the law in the judgment impugned before us, is correct. According to the appellants, the situation was covered by Clause 6(L). referred to above, which provides that in exceptional cases, LOCs could be issued, and the departure of a person from India may be declined, if it appears to such authority, based on inputs received that, the departure of such person would be detrimental to the sovereignty or security of India or to the bilateral relations of the country or the strategic and/or economic interests of India. It is well-settled that, only because money was due to the secured creditors, that could not be a ground for origination of a LOC, irrespective of the quantum of default. Moreover, the secured creditor also approached the NCLT. For an act to be detrimental to the economic interest of India, the same has to be of higher degree. There is no input as yet that there is a flight risk and the writ petitioner should be restricted to remain within the country.

9. The appellant is at liberty to proceed in accordance with law on the basis of the instructions received from the Central Government.

10. In the event, a person facing any criminal proceeding before any court either avoids summons if any, or fails to appear before the court, if directed, LOC can always be issued. At this stage, it is premature for us to hold that the direction of the Central Government upon the SFIO to initiate prosecution, is reason enough to prohibit travel of the writ petitioner. The situation will change, in the event cognizance is taken by the competent Criminal Court and the writ petitioner does not attend the Court, or does not comply with directions passed by court. Only on apprehension and speculation, the LOC cannot be permitted to continue.

11. Under such circumstances, we do not deem it fit to interfere with the judgment impugned before us, but we make it clear that the writ petitioner will cooperate with any kind of proceeding before a court of law.

12. If at any stage, cognizance is taken, the movement of the writ petitioner will be subject to any order that may be passed by the competent criminal court.

13. With these observations, the appeal and the connected application are disposed of.

14. However, there shall be no order as to costs.

15. Urgent Photostat certified copy of this order, if applied for, be supplied to the parties on usual undertaking.

(Shampa Sarkar, J.)

(Arjun Ray Mukherjee, J.)