(1) The provisions of this Act shall not apply to a loan advanced before the commencement of this Act:
Provided that no Court shall be competent to pass a decree for a sum exceeding the principal on account of any outstanding interest in respect of a loan advanced to a cultivator or labourer before the commencement of this Act.
(2) In an inquiry under sub-section (1) into the loan advanced to a cultivator or a labourer, the outstanding interest shall be computed in the following manner:-
(a) the account for the twelve years preceding the commencement of this Act shall be so examined that on the first day of the twelve years period and if the loan had commenced within twelve years, on the date on which the transaction commenced the amount outstanding against the debtor shall be entered against the debtor‘s name as principal;
(b) separate accounts, of the principal and interest shall be maintained;
11. Repealed by Central Act No.III of 1951 (Now see the Transfer of Property Act, 1882 (Central Act No.4 of 1882).
Power of Court to limit interest due in certain cases.
[Act No.V of 1349 F.] 13
(c) in the account of principal there shall be debited to the debtor‘s name all such amounts as may, from time to time, have been actually received by the debtor from the money-lender and if any goods is sold as part of the transaction, its price shall be included therein;
(d) in the account of principal there shall not be debited to the debtor‘s name any outstanding interest which has been converted into principal by any agreement, settlement, or contract in the course of the transaction;
(e) in the account of interest up to the date on which this Act comes into force, simple interest on the balance of principal shall be calculated at the rate agreed between the parties, provided that it does not exceed nine per cent per annum in the case of secured loan and twelve per cent per annum in the case of unsecured loan, and, from the date on which this Act comes into force upto 18th Khurdad 1355 F, the rate of interest shall not exceed nine percent per annum and twelve per cent per annum respectively. From 18th Khurdad 1355 F. the rate of interest shall not exceed six per cent per annum and nine per cent per annum respectively;
(f) all payments made in cash or kind by the debtor to the money lender or on his account, and all benefit of services or other advantages of every description, received by the money lender in the course of the transaction the value of which shall, if necessary, be determined by the court in its discretion or with the aid of arbitrators appointed by it, shall be credited first in the account of interest; and the balance, if any, after payment of the interest due shall be credited to the account of the principal;
(g) the principal and interest shall be calculated up to the date of institution of the suit, and the balance (if any) of the suit, outstanding against the debtor on the said date. If 14 [Act No.V of 1349 F.]
the amount of interest exceeds the principal, the amount of interest in excess of the principal shall not be allowed.