Madras High Court Warns Against Indefinite Use Of LOC | Foreign National Not Named As Accused Can’t Be Held Back Without Timeline For Probe
Safiya Malik
The High Court of Judicature at Madras Single Bench of Justice D. Bharatha Chakravarthy disposed of a writ petition seeking withdrawal of a Look Out Circular (LOC) issued by the Central Bureau of Investigation against a foreign national in connection with an ongoing bank fraud case. The Court declined to quash the LOC but ordered that the investigation be completed within one year. The Court further permitted the petitioner to travel to Malaysia under specific conditions and directed suspension of the LOC during the permitted period of travel.
The petitioner, a citizen of Seychelles, filed a writ petition under Article 226 of the Constitution of India seeking a direction to the Central Bureau of Investigation to withdraw the Look Out Circular issued against him in connection with C.C. No. 554 of 2023 pending before the Additional Chief Metropolitan Magistrate, Egmore, Chennai. The LOC was issued during the investigation of a bank fraud involving M/s. Axcel Sunshine Limited and related entities.
The petitioner served as a director of M/s. Broadcourt Investments Limited, a company incorporated in the British Virgin Islands, along with another individual named C. Sivasankaran. The CBI alleged that M/s. Axcel Sunshine Limited borrowed over ₹500 crores and siphoned the funds, transferring a substantial portion to M/s. Broadcourt Investments Limited, where the petitioner held a directorial role.
Following the investigation, a final report was filed on 24 December 2022. Although the petitioner was not named as an accused in the charge sheet, a LOC was issued against him upon his return to India. The petitioner contended that despite not being an accused, he continued to be restrained in India without cause, infringing his right to life and personal liberty under Article 21 of the Constitution.
The petitioner had previously approached the Court on three occasions—through W.P. Nos. 15517 of 2023, 28915 of 2023, and 24906 of 2024—and was granted permission to travel to Malaysia each time. He complied with all the conditions and returned on schedule. However, the LOC remained in effect, prompting the current petition seeking its quashing.
The petitioner submitted that he had always cooperated with the authorities, appeared for inquiries when summoned, and had not violated any terms of the earlier permissions. He argued that the continuation of the LOC served no purpose and subjected him to indefinite restrictions, despite not being named as an accused.
In response, the first respondent—the CBI—contended that the matter involved significant financial implications, with alleged fraud exceeding ₹500 crores and transactions spanning multiple jurisdictions. The CBI argued that although the petitioner was not yet formally arraigned as an accused, the investigation was ongoing under Section 173(8) of the Criminal Procedure Code and there was a reasonable likelihood of his implication.
The CBI further pointed to the absence of an extradition treaty between India and Seychelles and maintained that if the petitioner were permitted to travel without constraints, it would be impossible to secure his presence in India should the need arise. The agency cited the seriousness of the economic offence and the petitioner’s foreign nationality as grounds to maintain the LOC.
The Bureau of Immigration submitted through counsel that its role was limited to implementing the LOCs issued by competent authorities and that it had no jurisdiction to determine the validity or continuation of such circulars.
The Court recorded, “As rightly contended by the learned Senior Counsel appearing on behalf of the first respondent, the normal principle that once the accused is brought to books and is facing the law enforcement agency and attending Court, the Lookout Circular thereafter need not be continued... cannot be applied directly to this case.”
It stated, “The petitioner is a citizen of Seychelles, which lacks an extradition treaty with India.” The Court further noted, “The counter-affidavit filed expresses a reasonable apprehension that the petitioner would be a flight risk if permitted to travel without any conditions.”
Referring to the financial magnitude and complexity of the case, the Court observed, “The case involves an investigation into a serious offense involving hundreds of crores of rupees and has significant implications for the country's banking system.”
While recognising these factors, the Court also stated, “The investigation cannot remain indefinitely pending, and it shall not extend beyond a reasonable period, so as to infringe upon the petitioner’s right to life under Article 21 of the Constitution of India.”
The Court recorded, “It is pertinent to note that even in 2023, the following was recorded... that the amount of USD 67 Million have been transferred by the main accused to the account of M/s. Broadcourt Investment Ltd (A2) in violation of the Banking Norms.” It noted, “There is likelihood of the petitioner being implicated as an accused in this case.”
The Court stated, “The petitioner cannot be required to stay in India indefinitely without even being named as an accused in the criminal case.” It held, “Considering the nature of the pleadings made by the learned Senior Counsel for the first respondent, the Central Bureau of Investigation, I believe that the investigation should be completed within one year from today.”
It further directed, “Upon completion, if no case is established against the petitioner, the first respondent shall revoke the Lookout Circular. If any offence is made out and the petitioner is added as an accused, he must face the trial during which there would be justification to keep the circular pending.”
The Court directed that the investigation be completed within one year from the date of the judgment. If no case is established against the petitioner upon completion of the investigation, the Central Bureau of Investigation shall revoke the Look Out Circular. However, if an offence is made out and the petitioner is added as an accused, he will be required to face trial, and continuation of the LOC will be justified.
Pending completion of the investigation, the Court permitted the petitioner to travel to Malaysia to attend his brother’s wedding, scheduled for 27 June 2025. The petitioner is permitted to travel on or after 17 June 2025 and must return to India on or before 10 July 2025. His travel is subject to the following conditions:
The petitioner shall submit a fresh schedule of his travel plan to the trial court and the CBI. He shall reside only at the address specified in his affidavit in Malaysia and not change his residence without prior intimation to the CBI. He shall not leave Malaysia during his stay. On arrival, the petitioner shall surrender his passport to the Indian High Commission in Malaysia and retrieve it only before returning to India. Proof of surrender shall be communicated to the CBI.
The petitioner shall execute a personal bond for ₹10 lakhs and produce two sureties for ₹10 lakhs each before the Additional Chief Metropolitan Magistrate Court, Chennai. One of the sureties must be a relative. The sureties shall file affidavits undertaking that the petitioner will return by the scheduled date. One surety must hold a valid Indian passport and must have travelled abroad at least twice, and shall deposit a copy of the passport with the CBI.
The Court ordered that the LOC issued against the petitioner be suspended for the duration of the travel period specified in the judgment.
Advocates Representing the Parties
For the Petitioners: A. Ashwin Kumar, Advocate
For the Respondents: K. Srinivasan, Senior Counsel for CBI cases; C.V. Shyam Sunder, Senior Central Government Standing Counsel
Case Title: Karthik Parthiban v. The Superintendent of Police, Central Bureau of Investigation and Others
Neutral Citation: 2025:MHC:1292
Case Number: W.P. No. 13960 of 2025
Bench: Justice D. Bharatha Chakravarthy
[Read/Download order]
