Insolvency scam: HC seeks report from police

The Calcutta High Court today directed the Kolkata Police to complete probe into the insolvency scam within 45 days and file a report. Delivering the order Justice Sanjib Banerjee today said that those persons declared as insolvent from April 1,2008 would not be treated as insolvent and the police would have to complete the probe against them.

Early this year,few private banks apprised the Calcutta High Court that there was a sharp rise in insolvency cases and as a result the banks were losing large amount of money — around Rs 100 crore. Different persons took the loans from banks either for business or any other purpose. After that they filed application in the insolvency department of the Calcutta High Court to declare them as insolvent.

When a person is declared as insolvent,the bank cannot file any case against him to recover the loan amount. Apparently the department had declared them as insolvent after maintaining some procedure.

Advocate Paritosh Sinha,counsel of the private banks said that around 1,200 people were declared as insolvents according to the concerned department of the Calcutta High Court since April 1,2008. Sinha said that a section of advocates and officials of the insolvency department of the Calcutta High Court ran a racket to declare the affluent persons as insolvent so that they don’t have to repay the bank loans.