Calcutta HC officers held guilty of dereliction of duty

Justice Sanjib Banerjee held four officers -- the present Registrar Insolvency and Official Assignee and the previous Registrar Insolvency and Official Assignee guilty of dereliction of duty.

Banks had found that the number of insolvency claims by individuals and companies who had taken loans had suddenly risen manifold raising their suspicion.

Some private banks, including ICICI Bank, Standard Chartered Bank, HDFC Bank and Royal Bank of Scotland, filed a petition in January this year seeking an order for investigation into the sudden rise in insolvency cases.

While the number was just eight in 2001, 29 in 2004 and 43 in 2007, it suddenly rose to 202 in 2008 and 1018 in 2009, petitioners' counsel Paritosh Sinha said. The banks moved the Calcutta High Court since the insolvency department headed by the Registrar of Insolvency is a part of it and as such an investigation by it was prayed for.

One of the banks also filed a police complaint alleging fraud and cheating by a large section of applicants who had applied for insolvency and also against some agents who were allegedly working as touts to facilitate granting of insolvency to such persons.

Till now, the Registrar Insolvency passed orders on insolvency applications by individuals or companies after investigation into their application by the official assignee.

Justice Banerjee directed that the order passed, be kept with the service file of the four officers and steps be taken by the disciplinary authority in accordance with the law.
The court also directed the state to investigate and to conclude it within 45 days and place the report before the judge hearing insolvency matters at that time.

With Justice Banerjee's order, around 1,500 such insolvency orders, involving more than Rs 60 crore passed during the period have been set aside. Observing that the Insolvency Rules needed substantial amendment, Justice Banerjee directed that the matter be placed before the Chief Justice of the high court. He ordered that for one year, adjudication of the insolvency proceedings would be taken by the judge taking Interlocutory Matters.