Displaced Persons (Debts Adjustment) Act,1951
Act No : 70
Section :
Scaling down of debts.
32. Scaling down of debts. (1) Where, on the application of a displaced debtor under section 5 or sub-section (2) of section 11, the Tribunal has determined the amount due in respect of each debt in accordance with the provisions of this Act, it shall proceed to determine the paying capacity of the debtor. (2) If the paying capacity of the debtor is equal to or exceeds the aggregate sum of all the debts so determined (exclusive of any debt in respect of which the creditor has elected to retain the security in accordance with the provisions of section 16), the Tribunal shall pass a decree for the aggregate sum so determined, specifying the amount due to each creditor and shall allow repayment thereof in instalments, in accordance with the provisions contained in section 33, unless for reasons to be recorded it directs otherwise. (3) If the paying capacity of the debtor is less than the aggregate sum referred to in sub-section (2), the Tribunal shall divide the decree into two parts and provide in the first part thereof (hereinafter referred to as the first part of the decree) that the sum equivalent to the paying capacity shall, subject to the provisions contained in section 33, be realised from the assets of the debtor in India, and provide in the 80 second part thereof (hereinafter referred to as the second part of the decree) that the balance shall be realised, subject to the provisions contained in sub-section (6), from any compensation which the debtor may receive: Provided that if no such compensation is received, the balance shall be irrecoverable. (4) A creditor who has elected to retain his security under section 16 shall have no right to realise any money due to him from the assets of the debtor in India, but nothing in this sub-section shall affect any of the rights given to him by section 16. (5) A creditor shall have the right at any time at least six months before the receipt by the debtor of compensation to apply that the whole or the balance of the first part of the decree, in so far as any debt due to him is concerned, may be added to the second part of the decree, and thereupon he shall have no right to realise any money from the assets of the debtor in India. (6) For the purposes of this Act, the amount payable from the compensation for the satisfaction of the second part of the decree shall be that amount as bears to the aggregate amount of all the debts in the second part of the decree [including therein any sum added to it under sub-section (5) and the sum determined in favour of the secured creditor in the manner specified in the proviso to clause (a) of sub-section (3) of section 16] as the compensation in respect of the property of the debtor payable to him under the Displaced Persons (Claims) Act, 1950 (44 of 1950) bears to the verified claim; and the balance of the compensation, if any, shall be refunded to the displaced debtor. (7) Every instalment paid by the displaced debtor in respect of the first part of the decree and any sum payable from the compensation in accordance with sub-section (6) shall be distributed rateably amongst the decree-holders, if more persons than one are entitled thereto: Provided that the secured creditor who has not elected to be treated as an unsecured creditor under section 16 shall be entitled to a prior charge on the amount payable from the compensation. (8) Where a displaced person receives compensation by way of exchange of property, then, subject to the prior charge, if any, of a creditor under section 16, the aggregate sum payable in respect of the second part of the decree shall be a second charge upon the property received by way of exchange, but the amount of the second charge shall be that amount as bears to the total sum the same proportion as the value of the property received by way of exchange bears to the 81 value of the original property verified and valued under the Displaced Persons (Claims) Act, 1950 (44 of 1950). (9) Where a displaced person makes a default in the payment of any instalment fixed in respect of the first part of the decree or does not pay the amount determined in accordance with sub-section (4) of section 16 or sub-section (8) of this section for which the first or the second charge may have been created upon the property received by way of exchange, the creditor may apply for the execution of the decree by the attachment and sale of the attachable assets of the judgment-debtor or by the sale of the property obtained by way of exchange upon which the charge has been created, as the case may be, and the amount realised by such execution shall be distributed rateably among the decree-holders: Provided that nothing contained in this sub-section shall affect the rights of any charge-holders. (10) For the purposes of this Act, where the compensation is paid in cash, the amount which shall be available for purposes of satisfaction of the debts in the second part of the decree shall in no case exceed seventy-five per cent. of the amount of such compensation; and where it is by way of exchange or property, the extent of the property which shall be available for the said purposes shall in no case exceed seventy-five per cent. in value of such property. Explanation.-In this section the expression "paying capacity" means the aggregate of the market value of all the attachable assets in India of the displaced debtor plus the income which is likely to accrue to him for the next three years succeeding, excluding from the computation of such income a sum calculated at the rate of two hundred and fifty rupees a month.
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