WHO CAN BE DECLARED AS AN INSOLVENT?

Any person, man or woman, who has attained majority, can be declared insolvent if the conditions laid down in the insolvency acts are fulfilled. Certain special cases are discussed below:

Minor: 

In India a minor is not personally responsible for his debts and is not capable of entering into contracts. Therefore a minor can’t be adjudicated an insolvent. If by error a minor is adjudicated an insolvent the order must be annulled cancelled.

Lunatic: 

A lunatic can be adjudged insolvent for debts incurred by him while he was sane. The other condition necessary for passing an order of adjudication must be satisfied there must be an act of insolvency. It must be noted that a lunatic can’t commit those acts of insolvency which insolvent conscious volition acts which involve intent. Thus a lunatic can’t stay away from his place of business with intent to defeat and delay his creditors.

Woman:
 In India a married or a unmarried woman does not suffer from any contractual incapacity. She can own property contract debts. Therefore she can be declared insolvent under appropriate circumstances.

Foreigner:
A foreigner can be adjudicated an insolvent if he commits an act of insolvency in India which resident here.

Joint Debtors:
When money is borrowed by two or more persons jointly, all of than can be declared insolvent on a single petition provided some act of insolvency is committed by each of them or jointly by all.

Partners:
Since every partner is responsible for all the debts of the firm, the creditors of a firm can file an insolvency petition against any partner or all the partners for any debt due and owed by the firm but it must be prove that the partner concerned has committed an act of insolvency. A minor partner can not be declared insolvent for a partnership debt.

Joint Hindu family:
A creditor of a joint Hindu family can present a petition for the adjudication of all the members of the family as insolvent provided the debt is one for which all the members are responsible and act of insolvency has been committed by all members jointly. Minor members will not be declared insolvent.

Deceased person:

A dead man can not be declared insolvent. His debts will be paid prorate in course of the administration of his estate.

Legal representative:
The legal representative of a deceased debtor can not be declared insolvent for a decree obtained against him as legal representative, because he is not personally responsible for such debts.

Companies:

A company can not be declared insolvent. In case of insolvent companies the proper procedure is winding up.

Convict:
A prisoner in the jail can not be declared insolvent.