Determination of amount due to creditor and the order of priority as between two or more creditors

(1) The Claims Officer shall in accordance with the Rules to be made under this Act, determine the principal amount justly due to each creditor and the interest (if any) due at the date of such determination in respect of such principal amount. (2) In determining the principal amount and interest under sub-section (1), the Claims Officer shall proceed in the following manner. - (a) he shall ascertain the amount of the principal originally advanced in each case irrespective of the closing of accounts, execution of fresh bonds, of decree or order of a Court; (b) he shall ascertain the amount of the interest already paid or realised and shall set off towards the amount of the principal any amount paid or realised as simple interest in excess of six per centum per annum or the stipulated rate of interest whichever is lower; (c) he shall separately specify the amount of the principal and the amount of the interest, if any due to the creditor, such interest being calculated at the rate mentioned in clause (b) and being limited to the amount of the principal originally advanced; (d) if he finds that in any case the creditor has received or realised by way of interest an amount equal to or more than the amount of the principal, he shall not allow any further interest to run on such principal; Explanation. - In the case of usufructuary mortage, zarpeshgi lease or a satua patua lease of an estate or tenure, or in the case of possession of such estate or tenure or part thereof by a widow in lieu of her dower debt the net amount of rent and profits accruing from such estate or tenure shall be deemed to be the interest for the purposes of the Section, (e) in other cases the amount of the principal ascertained to be due to the claimant shall carry interest at the rate of three per centum per annum or such other rate not exceeding six per centum per annum as may be prescribed by the State Government. (f) no future interest shall run on any interest ascertained to be due to a creditor. (3) When there are two or more such creditors, the Claims Officer shall also settle the order in which each creditor is entitled to receive the amount due to him. In doing so he shall be guided by the appropriate provisions of the Transfer of Property Act. 1882 (Act 4 of 1882).