The Scheme of insolvency laws can be divided into two heads, namely, Personal Insolvency and Corporate Insolvency. Personal Insolvency deals with individuals and partnership firms regulated by Provisional Insolvency Act, 1920 and Presidency Towns Insolvency Act, 1908. Corporate Insolvency is governed under the Companies Act, 1956. All these laws relating to Insolvency provide a collection of legal and administrative instruments and institutional structures followed by rehabilitative, distributive and penal objectives. The Presidency Insolvency Act, 1920 is applicable to Calcutta, Bombay and Madras and the Provisional Towns Insolvency Act, 1908 is applicable to the rest of the country. In law, Insolvency is a proceeding in pursuance of which the court takes possession of the property of a debtor who is unable to pay his debts or discharge his liabilities and distributes it equally among his creditors. The Official assignee appointed by the Government under the Presidency Insolvency Act takes charge of the property of the debtor, realizes it and distributes it equally amongst the creditors. The proceeding for Insolvency may be initiated by any of the creditors or the debtor himself.
