Bankruptcy Act in India

The Provincial Insolvency Act of 1920 created rules regarding insolvency and bankruptcy in India.

The Provincial Insolvency Act of India was passed in 1920 and sets forth rules as to how to determine insolvency. The act was similar to and based upon the Presidency Towns Insolvency Act of 1909.

Function

The act gives full power to the courts in India to decide all questions regarding insolvency and bankruptcy, pursuant to Section 4 of the act. The court may make a complete distribution of property as it sees fit for each case.

Features

If a debtor in India transfers all of his property to a third person for benefit of creditors or to delay creditors, this person is considered insolvent, pursuant to Section 6 of the Act. The person may also petition to be adjudicated insolvent.

Protections

An insolvent individual in India may apply to the court for a protection order against arrest or detention, according to Section 31 of the act. The protection order may apply to all or specific debts which the court sees fit.

References

• Valkilbabu: Provincial Insolvency Act, 1920, Part 2
• Vakilbabu: Provincial Insolvency Act, 1920, Part 3
• Valkibabu: Provincial Insolvency Act, 1920, Part 5