Insolvency
CHAPTER-1 : INTRODUCTION TO INSOLVENCY LAW
1.1:INSOLVENT DEFINED:
The term “insolvent” has not been defined by the Acts on the subject, the term refers to a person who cannot or does not pay his debts in full or has committed an “act of insolvency” and has been adjudged as insolvent by an Insolvency Court.
According to popular usage an insolvent is one who is unable to pay his debts. But no man can be called “insolvent” unless a competent court declare him an insolvent.
In short, therefore, “insolvent” means a person against whom an “order of adjudication” has been passed.
The term “insolvent” and “insolvency” as used in Indian Law are synonymous with the terms “bankrupt” and “bankruptcy” of English Law.
1.2:OBJECTS OF INSOLVENCY LAWS:
Prior to the enactment of insolvency legislation, a debtor who was unable to pay debts was regarded as sort of criminal or offender and was, in almost every case, sent to jail. No distinction was drawn between honest an unfortunate debtors on the one hand and dishonest debtors on the other.
Insolvency laws were passed to relieve the honest debtor, who surrenders for distribution amongst his creditors the property which he owns at the time of bankruptcy, from the weight of oppressive indebtness and permit him to start afresh in life free from the pressure and discouragement of pre-exixting debts consequent upon business misfortunes.
Insolvency legislation has two fold objective: i. Protection of debtors: To free an honest and unfortunate debtor from his debts when he has made a full surrender of his property for distribution among his creditors. As a result, he can make a fresh start as soon as he discharged by the court. ii. Safeguarding interests of creditors: To safeguard, as far as possible, the interest of creditors by compelling the insolvent to give up all his property to their use, without any fraudulent concealment. As a result, the same be distributed among the creditors in the most expeditious, the
1.1:INSOLVENT DEFINED:
The term “insolvent” has not been defined by the Acts on the subject, the term refers to a person who cannot or does not pay his debts in full or has committed an “act of insolvency” and has been adjudged as insolvent by an Insolvency Court.
According to popular usage an insolvent is one who is unable to pay his debts. But no man can be called “insolvent” unless a competent court declare him an insolvent.
In short, therefore, “insolvent” means a person against whom an “order of adjudication” has been passed.
The term “insolvent” and “insolvency” as used in Indian Law are synonymous with the terms “bankrupt” and “bankruptcy” of English Law.
1.2:OBJECTS OF INSOLVENCY LAWS:
Prior to the enactment of insolvency legislation, a debtor who was unable to pay debts was regarded as sort of criminal or offender and was, in almost every case, sent to jail. No distinction was drawn between honest an unfortunate debtors on the one hand and dishonest debtors on the other.
Insolvency laws were passed to relieve the honest debtor, who surrenders for distribution amongst his creditors the property which he owns at the time of bankruptcy, from the weight of oppressive indebtness and permit him to start afresh in life free from the pressure and discouragement of pre-exixting debts consequent upon business misfortunes.
Insolvency legislation has two fold objective: i. Protection of debtors: To free an honest and unfortunate debtor from his debts when he has made a full surrender of his property for distribution among his creditors. As a result, he can make a fresh start as soon as he discharged by the court. ii. Safeguarding interests of creditors: To safeguard, as far as possible, the interest of creditors by compelling the insolvent to give up all his property to their use, without any fraudulent concealment. As a result, the same be distributed among the creditors in the most expeditious, the