(1) After determining the amount of debts scaled down in the manner provided in section 35 the Board shall, save as otherwise provided in section 37 make an award.
(2) The award shall be in the prescribed form and shall be drawn up subject to the foIIowing provisions:- Debts payable by debtors to be scaled down.
Award.
[Act No. XII of 1952] 23
(i) the amount of the secured debts scaled down shall be charged on the properties on which they may have been secured;
(ii) subject to clause (i) the amount of unsecured debts shall be charged on all the properties of the debtor;
(iii) in fixing the priority in which debts shall be paid the following order shall be followed:-
(a) debts due to Government which are charged on the immovable property belonging to the debtor or which are recoverable as the current year’s land revenue,
(b) debts due to local authorities, which are charged on the immovable property belonging to the debtor or which are recoverable as the current year’s dues,
(c) secured debts in order of priority,
(d) debts due to Government, local authorities and other bodies including co-operative societies, and recoverable as arrears of land revenue,
(e) other debts due to co-operative societies,
(f) unsecured debts:
Provided that in the case of unsecured debts they shall be paid pro rata;
(iv) the total annual instalments shall not exceed twenty:
Provided that in fixing the amount of instalments in which the debts shall be paid the Board shall ascertain the net annual income of the debtor and the annual instalments 24 [Act No. XII of 1952] payable by the debtor shall not exceed his net annual income.
Explanation:- For the purposes of this clause, the net annual income of the debtor shall mean the balance of his annual income after deducting (i) such sum as may be considered necessary for the payment of the liability, if any, imposed on the debtor under a decree or order for maintenance passed by a competent court, (ii) such sum as may be considered necessary for the maintenance of the debtor and his dependents, and (iii) the sum required by the debtor to pay the assessment and taxes in respect of the current year to Government and to local authorites;
(v) the Board may pass an order for the delivery of possession of any property notwithstanding any law or contract to the contrary;
(vi) the rate of interest shall not exceed 6 percent per annum or such less rate as may be notified in this behalf by the Government or the rate agreed upon between the parties when the debt was originally incurred or the rate allowed by the decree in respect of such debt whichever is the lowest.
37. Where the amount of debts of the debtor as scaled down under section 35 exceeds half the value of the debtor’s immovable property as determined by the Board, the Board shall intimate to the creditors the amount of the said debts of the debtor and the said value of the debtor’s immovable property and call upon them to state in writing within a specified period not exceeding one month whether they agree to the further scaling down of the said debts so as to reduce them to a sum not exceeding half the said value of the immovable property of the debtor. If all the creditors agree to the further scaling down of the debts, the Board shall make an award directing the debtor to pay the Procedure for further scaling down of debts.
[Act No. XII of 1952] 25 amount of such debts so agreed upon within a period of one month from the date of the award.
38. The amount of debts scaled down under section 35 or further scaled down under section 37 shall for the purposes of this Act be the amount due by the debtor in respect of the said debts and the portion of the debts in excess of this amount shall be extinguished.
39. If the Board making an award under section 36 is at any stage of the proceeding satisfied-
(1) that the debtor had in collusion with any creditor furnished in such proceeding incorrect information in respect of the debt due by him to such creditor with a view to defeat the lawful claims of any other creditor, the Board may refuse to scale down any of the debts of such debtor in the manner provided in section 35 and may make an award for the full amount of the debts due from such debtor;
(2) that any claim by a creditor in such proceeding had been put forward in collusion between the debtor and such creditor with a view to defeat the lawful claims of any other creditor, the Board shall order that the debt due by the debtor to such creditor shall be extinguished and such debt shall not be recoverable.