Ongoing Probe Can’t Stop Foreign Travel: HC

Soumyadip Mullick | MP  | 19 Jan 2026 | Kolkata: The Calcutta High Court has quashed a Look-Out Circular (LOC) issued against a former senior executive of an infrastructure construction company, ruling that an ongoing investigation, by itself, cannot be grounds to restrain a person from travelling abroad.

Justice Krishna Rao observed that the investigation being conducted by the Serious Fraud Investigation Office (SFIO) was still ongoing and that neither an interim report nor a final investigation report had been submitted to the Central Government, as required under the Companies Act.

The petitioner had previously been part of the management of a construction and infrastructure company that later entered insolvency proceedings. During the corporate insolvency resolution process, a forensic audit commissioned by the resolution professional found no fraud in the company’s transactions. Subsequently, the Ministry of Corporate Affairs ordered an SFIO investigation into the company’s affairs. The petitioner was issued summons under the Companies Act and cooperated with the investigation. He approached the High Court after discovering that an LOC had been issued against him, preventing him from travelling overseas.

The High Court noted that no criminal case under the Indian Penal Code (IPC) had been initiated against the petitioner, and that the authorities themselves stated that the matter only “appeared” to involve fraud under the Companies Act. The court examined the statutory framework governing SFIO investigations and observed that prosecution could only be considered after the investigation is completed and the final report is submitted.

Justice Rao held that the Companies Act clearly distinguishes between an interim report and a final investigation report, and that coercive measures such as restricting foreign travel cannot be justified when neither report has been submitted. The court also noted that the authorities had failed to explain the legal basis for issuing the LOC during an incomplete investigation.

Rejecting the argument that the size of the alleged financial exposure or public interest alone could justify an LOC, the court held that the mere quantum of alleged dues cannot be a reason to curtail personal liberty. It further recorded that no material had been placed on record to show that the petitioner was likely to flee the country or would not return if permitted to travel.