Priority of claim

The claims made under section 9 with regard to matters specified in the Second Schedule shall have priority in accordance with the following principlese, namely :—

1. (a) Category I shall have precedence over all other categories and Category II shall have precedence over Category III and so on ;
2. (b) the claims specified in each of the categories shall rank equally and be paid in full, but, if the amount is insufficient to meet such claims in full, they shall abate in equal proportions and be paid accordingly ; and
3. (c) the question of discharging any liability with regard to a matter specified in a lower category shall arise only if a surplus is left after meeting all the liabilities specified in the immediately higher category. 11.

1. (1) On receipt of the claims or certificate made under section 9, the prescribed authority shall arrange them in the order of priorities specified in the Second Schedule and examine the same in accordance with such order. If on examination of the claim of the certificates, the prescribed authority is of opinion that the amount paid to him under this Act is not sufficient to meet the liabilities specified in any category, he shall not be required to examine any claim in respect of such lower category.
2. (2) The prescribed authority shall hold such inquiry as it thinks fit, and adjudicate on the claims mentioned in this section and also on any dispute as to title to the amount deposited, in the manner prescribed.
3. (3) The claims mentioned in section 9 shall be preferred or certificates in respect thereof sent to the prescribed authority within six months from the appointed day : Provided that if the prescribed authority is satisfied that the claimant was prevented by sufficient cause from preferring the claim within the said period of six months, it may entertain the claim within a further period of thirty days, but not thereafter.
4. (4) The claim admitted under this Act shall be satisfied from the amounts deposited by the Government with the prescribed authority, and on such satisfaction, the liability of the company or any person interested in respect of any claim relating to the sugar undertakings shall stand discharged.
5. (5) If the Government pay any amount to any person which according to the decision of the prescribed authority was not payable to him or exceeded the amount payable to him, the prescribed authority may make an order for the refund of such amount or, as the case may be, the excess amount, and such order shall have the force of a decree of a Civil Court. (6)
   • (a) The prescribed authority may disburse out of the amounts deposited with it in accordance with its decision or the decisions of the tribunal, as the case may be and may make such interim orders, respecting the withdrawals or investment of the whole or part of the amount, as it thinks just and expedient ;
   • (b) If out of the amounts deposited with the prescribed authority, in relation to the Sugar undertakings owned by the Company, there is a balance left after meeting the liabilities as specified in the Second Schedule, the prescribed authority shall disburse such balance to the Company ;
   • (c) Any amount paid to the prescribed authority which remains undisbursed or unclaimed on the date immediately preceeding the date on which the office of the prescribed authority is finally wound up shall be transferred by the prescribed authority, before its office is finally wound up, to the general revenue account of the Government, but a claim to any money so transferred may be preferred to the Government by the person, entitled to such payment and shall be dealt with as if such transfer had not been made, and the order, if any, for the payment of the claim being treated as an order for the refund of revenue. (7)
   • (a) Where any objection relating to a claim based on a debt, mortgage, charge or other encumbrance or lien, trust or similar obligation is preferred to the prescribed authority, the Government or the Corporation or any other creditor or other persons interested may context such claim, inter alia on any of the following grounds, namely :—
     • (i) that the transaction of debt, mortgage charge or other encumbrance or lien, trust or other obligation on which the claim is based, was entered into:—
   • (A) to defeat or delay any dues of the Government or any claim referred to in section 9 or the claim of any other creditor; or
   • (B) to give to the claimant, or to a person through whom he claims, a preference over the dues of the Government or of persons referred to in sub-sections (2),
6. (4) and
7. (5) of section 9, such transaction having been entered into within a period of one year immediately before the appointed day; or
   • (ii) that the transaction was not entered into in good faith and that its terms were not reasonable ;
   • (b) the prescribed authority after taking into consideration all the circumstances of any such transaction and of the sugar undertakings, may, unless the claimant is proved to the satisfaction of the prescribed authority to be a transferee in good faith and for consideration, make an order cancelling or varying the transaction on such terms as it may think fit to impose, and the transaction shall, thereupon cease to have effect or, as the case may be, shall have effect subject to such variation.
8. (8) Where any claim based on a liability specified in Category IV or category VI is preferred to the prescribed authority, it shall be lawful for the prescribed authority,—
   • (i) to adjudicate on the claim, having regard to the fact that the company has engaged in transactions other than the Sugar undertakings and to determine only such portion of the amounts advanced by the bank or public financial institution, as is primarily relatable to the sugar undertakings; and
   • (ii) to direct the bank or public financial institution to satisfy its claim or any portion thereof from the company, otherwise than in accordance with the provisions of this Act.