(1) Save as otherwise expressly provided in this Act and on and from the appointed day,—
(a) every debt outstanding against a debtor who is a marginal farmer or rural labourer, or who is a rural artisan whose income does not exceed rupees 2,400 per year, shall be deemed to be wholly discharged;
(b) every debt outstanding against a debtor who is a small farmer, or who is a rural artisan whose income exceeds rupees 2,400 per year but does not exceed rupees 4,800 per year, shall— Bom. V of 1879 Discharge or reduction of debt.
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(i) in a case where any amount equal to or exceeding twice the amount of the principal has already been paid by, or recovered from, such debtor before the appointed day, be deemed to be wholly discharged;
(ii) in any other case, be deemed to be reduced to one-half of the recognised debt:
Provided that the amount which remains to be paid by the debtor shall not exceed twice the amount of the principal.
Explanation 1.—For the purpose of this sub-section as well as sub-section (3) of section 8, " income per year " , in relation to a rural artisan, shall mean the average annual income of such artisan for the three years immediately preceding the appointed day.
Explanation 2.— For the purpose of clause (b), "recognised debt", in relation to any debtor, means the amount of the principal together with the amount of simple interest thereon at the rate of six per cent per annum or the rate stipulated between the parties, whichever is less, calculated as outstanding on the appointed day, after allowing deductions of all sums paid from time to time .towards the repayment of the principal or interest, as the case may be.
(2) Notwithstanding anything contained in the foregoing provisions, in no case shall a debtor be liable to pay to his creditor or creditors under subclause (ii) of clause (b) of sub-section (1), an amount exceeding rupees 1,400 in the aggregate :
Provided that where the amount payable by the debtor to more than one creditor is so reduced to rupees 1,400, the amount payable to each one of the creditors shall be determined on a pro rata basis, having regard to the amount or amounts of debts payable to each one of them, subject to the overall limit of rupees 1,400.