Report No. 26
7. Insolvency jurisdiction of High Courts in Presidency Towns.-In the Presidency-towns of Bombay, Calcutta and Madras, insolvency jurisdiction is at present exercised by the High Court on its original side. An important question which arises for consideration is whether, in view of the consolidation of the two Acts, insolvency jurisdiction of the High Court in the Presidency-towns should be retained. The main argument in favour of retention of the jurisdiction is, that trade and commerce in these towns is much more developed than in the mofussil and that it is, therefore, desirable that administration of insolvency law in the Presidency-towns should be entrusted to the highest judicial authority. The arguments against the retention of the jurisdiction of the High Court in the Presidency-towns are the following:-
(i) the distinction in the administration of insolvency law between the Presidency-towns and the mofussil, even if justified in the past on account of the difference between commercial conditions, can no longer be maintained in view of the general progress in commerce and industry all over the country;
(ii) except in respect of a few matters, there is no material difference in the substantive law as enacted in the two Acts;
(iii) a substantial part of the original jurisdiction of the High Court in the Presidency-towns has already been transferred to the City Civil Court.
8. In an earlier report1, the Law Commission has made the following observations on the subject:-
"It is to be noticed that the insolvency jurisdiction in the Presidency-towns has been conferred exclusively upon the High Court. As entrustment of this jurisdiction to the High Court is necessary in the interests of the better administration of the insolvency law, we are of the opinion that such exclusive jurisdiction should continue even though the two Acts are consolidated into one".
We respectfully agree with this view. The High Courts in Bombay, Madras and Calcutta have been exercising insolvency jurisdiction for over a century. Public opinion in these towns is in favour of the retention of the jurisdiction of the High Court. When a person is adjudged an insolvent the adjudication affects his status and reputation. It is, therefore, important that such adjudication should be made by the highest Court in large commercial towns like Bombay, Calcutta and Madras. It is true, that apart from Bombay, Calcutta and Madras there are many other towns which from a commercial point of view are no less important than the former Presidency-towns, e.g., Delhi, Ahmedabad, Amritsar, Kanpur, Patna, Asansol, Nagpur, Hyderabad, Bangalore, etc. As however, in relation to these towns the High Courts do not exercise original jurisdiction, it would not be practicable to confer insolvency jurisdiction on these High Courts2 in relation to these towns.
1. 14th Report, Vol. I.
2. See App I, clause 97.