The Calcutta HC ruled that unsuccessful efforts at recovering dues under IBC cannot lead to criminal prosecution, highlighting the distinction between civil and criminal proceedings.
Calcutta High Court Decision on IBC and Criminal Proceedings
The Calcutta High Court has quashed an FIR that aimed to prosecute individuals for unsuccessful recovery actions previously attempted under the Insolvency and Bankruptcy Code (IBC), ruling that such civil matters cannot lead to criminal charges.
The court pointed out that legal provisions require the presence of specific criminal ingredients, which were absent in this case. Criminal proceedings cannot be used as a means of circumventing the established civil recovery process under IBC.
This ruling is significant for legal professionals dealing with insolvency and recovery issues, as it firmly establishes the principle that failed civil recovery attempts cannot morph into criminal claims without sufficient grounds. Counsel must be mindful of this distinction in their future litigations involving IBC procedures.
Citations
- XYZ v. State of West Bengal (2026) Cal HC
