Seeking Advice on Insolvency Filing and Criminal Case Risks from Banks

Question

Seeking Advice on Insolvency Filing and Criminal Case Risks from Banks

30-Dec-2025 (In Recovery Law)

Hi, I need some legal advice. My father has a total debt of about 40 lakh rupees, including 12 lakh in personal loans and the rest on credit cards. One bank in Kolkata has already filed a criminal case for about 2.5 lakh of that debt, and there's a bailable warrant. We’re planning to file for insolvency because my father's income is only about 29000 rupees a month, and we can’t repay this debt. My question is: if we file for insolvency, can the bank still file a new criminal case against him?

Answers (1)

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Advocate Hemalatha Narayanan LawRato · Accepted Answer · 2025-12-31T12:37:08+05:30

Answer #1

Filing for insolvency does not give immunity from criminal proceedings. Insolvency proceedings are civil in nature and deal only with repayment and distribution of assets. If the bank has already filed a criminal case, that case will continue independently. Even after filing insolvency, the bank can file fresh criminal complaints only if there is a criminal ingredient such as cheating, fraud, dishonest intention at the time of taking the loan, or misuse of funds. Mere inability to repay loans or default due to financial hardship cannot be treated as a criminal offence. If the case is only for recovery or pressure tactics, it can be contested. The existing bailable warrant must be addressed separately through court proceedings.

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Adv. Hemalatha Narayanan Adv. Hemalatha Narayanan

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