THE SECOND SCHEDULE: THE SECOND SCHEDULE

THE SECOND SCHEDULE (See section 48) PROOF OF DEBTS Proofs in ordinary cases 1. Time for lodging proof. Every creditor shall lodge the proof of his debt as soon as may be after the making of an order of adjudication. 2. Mode of lodging proof. A proof may be lodged by delivering or sending by post in a registered letter to the official assignee an affidavit verifying the debt. 3. Authority to make affidavit. The affidavit may be made by the creditor himself or by some person authorized by or on behalf of the creditor. If made by a person so authorized, it shall state his authority and means of knowledge. 4. Contents for affidavit. The affidavit shall contain or refer to a statement of account showing the particulars of the debt, and shall specify the vouchers, if any, by which the same can be substantiated. The official assignee may at any time call for the production of the vouchers. 5. Affidavit to state if creditor holds security. The affidavit shall state whether the creditor is or is not a secured creditor. 6. Cost of proving debts. A creditor shall bear the cost of proving his debt unless the Court otherwise specially orders. 7. Right to see and examine proof. Every creditor who has lodged a proof shall be entitled to see and examine the proofs of other creditors at all reasonable a times. 8. Deduction to be made from proof. A creditor in lodging his proofs shall deduct from his debt all trade discounts, but he shall not be compelled to deduct any discount, not exceeding five per centum on the net amount of his claim, which he may have agreed to allow for payment in cash. Proof by secured creditors 9. Proof where security realized. If a secured creditor realizes his security, he may prove for the balance due to him, after deducting the net amount realised. 10. Proof where security is surrendered. If a secured creditor surrenders his security to the official assignee for the general benefit of the creditors, he may prove for his whole debt. 11. Proof in other cases. If a secured creditor does not either realize or surrender his security, he shall, before ranking for dividend, state in his proof the particulars of his security, the date when it was given and the value at which he asseses it, and shall be entitled to receive a dividend only in respect of the balance due to him after deducting the value so assessed. 12. Valuation of security.—(1) Where a security is so valued the official assignee may at any time redeem it on payment to the creditor of the assessed value. (2) If the official assignee is dissatisfied with the value at which a security is assessed, he may require that the property comprised in any security so valued be offered for sale at such times and on such terms and conditions as may be agreed on between the creditor and the official, assignee or as in default of agreement the Court may direct. If the sale is by public auction, the creditor, or the official assignee on behalf of the estate, may bid or purchase : Provided that the creditor may at any time, by notice in writing, require the official assignee to elect whether he will or will not exercise his power of redeeming the security or requiring it to be realized, and if the official assignee does not, within six months after receiving the notice, signify in writing to the creditor his election to exercise the power, he shall not be entitled to exercise it ; and the equity of redemption, or any other interest in the property comprised in the security which is vested in the official assignee, shall vest in the creditor, and the amount of his debt shall be reduced by the amount at which the security has been valued. 13. Amendment of valuation. Where a creditor has so valued his security, he may at any time amend the valuation and proof on showing to the satisfaction of the official assignee, or the Court, that the valuation and proof were made bona fide on a mistaken estimate, or that the security has diminished or increased in value since its previous valuation; but every such amendment shall be made at the cost of the creditor, and upon such terms as the Court shall order, unless the official assignee shall allow the amendment without applicatio n to the Court. 14. Refund of excess received. Where a valuation has been amended in accordance with the foregoing rule, the creditor shall forthwith repay any surplus dividend which he has received in excess of that to which he would have been entitled on the amended valuation, or, as the case may be, shall be entitled to be paid out of any money for the time being available for dividend, any dividend or share of dividend which he has failed to receive by reason of the inaccuracy of the original valuation, before that money is made applicable to the payment of any future dividend, but he shall not be entitled to disturb the distribution of any dividend dec1ared before the date of the amendment. 15. Amendment where security subsequently realized. If a creditor after having valued his security subsequently realizes it, or if it is realized under the provisions of rule 12, the net amount realized shall be substituted for the amount of any valuation previously made by the creditor and shall be treated in all respects as an amended valuation made by the creditor. 16. Exclusion from sharing in dividend. If a secured creditor does not comply with the foregoing rules, he shall be excluded from all share in any dividend. 17. Limit of receipt. Subject to the provisions of rule 12, a creditor shall in no case receive more than sixteen annas in the rupee and interest as provided by this Act. Taking accounts of property mortgaged, and of the sale thereof 18. Inquiry into mortgage, etc. Upon application by any person claiming to be a mort- gagee of any part of the insolvent’s real or leasehold estate and whether such mortgage is by deed or otherwise, and whether the same is of a legal or equitable nature, or upon application by the official assignee with the consent of such person claiming to be a mortgagee as aforesaid, the Court shall proceed to inquire whether such person is such mortgagee, and for what consideration and under what circumstances’ and if it is found that such person is such mortgagee, and if no sufficient objection appears to the title of such person to the sum claimed by him under such mortgage, the Court shall direct such accounts and inquiries to be taken as may be necessary for ascertaining the principal, interest and costs due upon such mortgage, and of the rents and profits, or dividends, interest or other proceeds received by such person, or by any other person by his order or for his use in case he has been in possession of the property over which the mortgage extends, or any part thereof, and the Court, if satisfied that there ought to be a sale, shall direct notice to be given in such newspapers as the Court thinks fit, when and where, and by whom and in what way, the said premises or property, or the interest therein so mortgaged, are to be sold, and that such sale be made accordingly, and that the Official assignee (unless it is otherwise ordered) shall have the conduct of such sale; but it shall not be imperative on any such mortgagee to make such application. At any such sale the mortgagee may bid and purchase. 19. Conveyance. All proper parties shall join in the conveyance to the purchaser, as the Court directs. 20. Proceeds of sale. The monies to arise from such sale shall be applied, in the first place, in payment of the costs, charges and expenses of and occasioned by the application to the Court, and of such sale and the commission (if any) of the official assignee, and in the next place in payment and satisfaction, so far as the same extend, of what shall be found due to such mortgagee, for principal, interest and costs, and the surplus of the sale monies (if any) shall then be paid to the official assignee. But if the monies to arise from such sale are insufficient to pay and satisfy what is so found due to such mortgagee, then he shall be entitled to prove as a creditor for such deficiency, and receive dividends thereon rateably with the other creditors but so as not to disturb any dividend then already declared. 21. Proceedings on inquiry. For the better taking of such inquiries and accounts, and making a title to the purchaser, all parties may be examined by the Court upon interrogatories or otherwise as the Court thinks fit, and shall produce before the Court upon oath all deeds, papers, books and writings in their respective custody or power relating to the estate or effects of the insolvent as the Court directs. Periodical payments 22. Periodical payments. When any rent or other payment falls due at stated periods, and the order of adjudication is made at any time other than one of those periods, the person entitled to the rent or payment may prove for a proportionate part thereof up to the date of the order as if the rent or payment grew due from day to day. Interest 23. Interest.— (1) On any debt or sum certain whereon interest is not reserved or agreed for, and which is overdue when the debtor is adjudged an insolvent, and which is provable under this Act, the creditor may prove for interest at a rate not exceeding six per centum per annum– (a) if the debt or sum is payable by virtue of a written instrument at a certain time, from the time when such debt or sum was payable to the date of such adjudication ; or (b) if the debt or sum is payable otherwise, from the time when a demand in writing has been made giving the debtor notice that interest will be claimed from the date of the demand until the time of payment to the date of such adjudication. (2) Where a debt which has been proved in insolvency includes interest or any pecuniary consideration in lieu of interest, the interest or consideration shall, for the purposes of dividend, be calculated at a rate not exceeding six per centum per annum, without prejudice to the right of a creditor to receive out of the debtor’s estate any higher rate of interest to w hich he may be entitled after all the debts proved have been paid in full. Debt payable at a future times 24. Debt payable in future. A creditor may prove for a debt not payable when the debtor is adjudged an insolvent as if it were payable presently, and may receive dividends equally with the other creditors, deducting therefrom only a rebate of interest at the rate of six per centum per annum, computed from the declaration of a dividend to the time when the debt would have become payable, according to the terms on which it was contracted. Admission or rejection of proofs 25. Admission or rejection of proof. The official assignee shall examine every proof and the grounds of the debt, and in writing admit or reject it in whole or in part, or require further evidence in support of it. If he rejects a proof, he shall state in writing to the creditor the grounds of the rejection. 26. Court may expunge proof improperly received. If the official assignee thinks that a proof has been improperly admitted the Court may, on the application of the official assignee, after notice to the creditor who made the proof, expunge the proof or reduce its amount. 27. Power for Court to expunge or reduce proof. The Court may also expunge or reduce a proof upon the application of a creditor if the official assignee declines to interfere in the matter, or in the case of a composition or scheme upon the application of the insolvent. THE THIRD SCHEDULE.—[Enactments Repealed.] Rep. by the Repealing and Amending Act, 1914 (X of 1914), s. 3 and Second Schedule. Date: 11-09-2024

Effective date: 1909-01-01

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