(1) All suits, appeals, applications for execution and proceedings other than revisional in respect of any debt pending in any civil or revenue court shall, if they involve the questions whether the person from whom such debt is due is a debtor and whether the total amount of debts due from him on the date of the application is less than Rs. 5,000 be transferred to the Board.
(2) When an application for adjustment of debts made to a Board under section 11 or a statement submitted to a Board under section 21 includes a debt in respect of which a suit, appeal, application for execution or proceeding other than revisional is pending before a civil or revenue court, the Board shall give notice thereof to such other court. On receipt of such notice, such other court shall transfer the Preliminary issues.
Transfer of pending suits, appeals, applications and proceedings to the Board.
[Act No. XII of 1952] 15 suit, appeal, application or proceeding, as the case may be, to the Board.
(3) When any suit, appeal, application or proceeding is transferred to the Board under sub-section (1) or sub-section (2), the Board shall proceed as if an application under section 11 had been made to it.
(4) If the Board, to which any suit, appeal, application or proceeding is transferred under sub-section (1) or subsection (2), decides the preliminary issue mentioned in clause (a) of sub-section (1) of section 24 in the negative or that mentioned in clause (b) of the said sub-section (1) in the negative, it shall retransfer the suit, appeal, application or proceeding to the court from which it had been transferred to itself after the disposal and subject to the result of the appeal where an appeal is filed, and after the expiry of the period prescribed for an appeal where no appeal is filed.
(5) When any suit, appeal, application or proceeding is retransferred to the court under sub-section (4), the said court shall proceed with the same.
26. If the Board finds that the person making an application under section 11 or the person against whom an application is made under the said section 11 to be a person-
(a) who is a debtor, and
(b) the total amount of debts due from whom on the date of the application is not less than Rs. 5,000 the Board shall proceed to take accounts in the manner hereinafter provided.
27. In an application for the settlement of debts if the amount of the creditor’s claim is disputed the Board shall, when taking accounts, examine both the creditor and the Taking of accounts.
Examination of creditor and debtor.
16 [Act No. XII of 1952] debtor as witnesses, unless for reasons to be recorded the Board deems it unnecessary so to do.
28. Notwithstanding any agreement between the parties or the persons (if any) through whom they claim, as to allowing compound interest or setting of the profits of mortgaged property without an account in lieu of interest, or otherwise determining the manner of taking the account, and notwithstanding any statement or settlement of account, or any contract purporting to close previous dealings and create a new obligation, the Board shall enquire into the history and merits of the case and take account between the parties from the commencement of the transactions subsisting between the parties and the persons (if any) through whom they claim, out of which the claim has arisen and determine the amount due to each of the creditors at the date of the application made under section 11, according to the following rules, namely:-
(1)(a) Separate accounts of principal and interest shall be taken.
(b) In the account of principal there shall be debited to the debtor only such amount whether paid in cash or kind as may from time to time have been actually received by him or on his account from the creditor.
(c) In the accounts of principal and interest there shall also be debited the amount, if any, respectively due for principal (including costs) and interest under any decree or order passed by a competent court in respect of any debt:
Provided that if such decree or order does not specify the amount of principal and interest separately or does not contain any material for determining the same two-third and one-third of the amount awarded by such decree or order shall for purposes of this clause, be deemed to be the Mode of taking accounts.
[Act No. XII of 1952] 17 amount awarded on account of principal (including costs) and interest, respectively.
(2) In the case of transactions which commenced before the 1st January 1934 the Board shall take the account up to the date of the institution of the application and in the account of interest there shall be debited to the debtor, simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 12 per cent per annum whichever is the lowest. The amount found due in respect of principal as well as in respect of interest shall, each separately, be reduced to such extent not exceeding 40 percent as to the Board, having regard to all the circumstances of the case, appears fair and reasonable, notwithstanding that a decree or order of a civil court was passed in respect of any such amount or portion thereof.
The amounts so reduced shall be taken to represent the amounts due in respect of principal and interest on the date of the institution of the application.
(3) In the case of transactions which commenced on or after the 1st January 1934 but before the 1st January 1943 in the account of interest there shall be debited to the debtor, simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties, or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 9 per cent per annum, whichever is the lowest. The amount found due on the date of the institution of the application in respect of principal as well as interest shall each separately be reduced to such extent not exceeding 30 per cent as to the Board, having regard to all the circumstances of the case appears fair and reasonable, notwithstanding that a decree or order of a civil court was passed in respect of any such amount or portion thereof. The amounts so reduced shall be taken to represent 18 [Act No. XII of 1952] the amounts due in respect of principal and interest on the date of the institution of the application.
(4) In the case of transactions which commenced on or after the 1st January 1943, in the account of interest there shall be debited to the debtor simple interest on the balance of principal for the time being outstanding at the rate agreed upon between the parties, or at the rate allowed under any decree passed between the parties, or at a rate not exceeding 6 per cent per annum whichever is the lowest.
(5) All money paid by or on account of the debtor to the creditor or on his account and all profits, services or other advantages of every description received by the creditor in the course of the transactions (estimated, if necessary, at such money value as the Board in its discretion may determine) shall be credited first in the account of interest, and when any payment is more than sufficient to discharge the balance of interest due at the rate specified in sub-sections (2), (3) or (4) as the case may be the residue of such payment shall be credited to the debtor in the account of principal.
(6) The accounts of principal and interest shall be made up to the date of the institution of the application, and the aggregate of the balance. if any, appearing due on both such accounts against the debtor on that date shall be deemed to be the amount due at that date except when the balance appearing due on the interest account exceeds that appearing on the principal account, in which case double the latter balance shall be deemed to be the amount then due:
Provided that where transactions between the parties have commenced more than 30 years before the 30th January 1943, any settlement of accounts which has been last arrived at between the parties before the said period of [Act No. XII of 1952] 19 30 years and which is in writing and bears the signature of the debtor or the person through whom the liability is derived shall be accepted as binding between the parties and no enquiry into the history and merits of the case shall be made prior to the date of such settlement.
29. Where any mortgaged property is in the possession of the mortgagee or his tenants other than the mortgagor and the Board is unable to determine what profits have actually been received, it may fix a fair rent for such property and charge to the mortgagee such rent as profits for the purpose of section 28.