Chapter III Chapter III

Liquidation of certain debts

Notwithstanding anything contained in any other law for the time being in force or in any contract or other instrument having the force of law, and save as otherwise expressly provided in this Act, every debt outstanding on date of commencement of this Act including the amount of interest, if any, payable by an agricultural labourer or a rural artisan either of whose annual family income does not exceed two thousand and four hundred rupees or a marginal farmer shall be deemed to be wholly discharged, and the consequences as hereinafter set forth shall, with effect from that day ensue, namely,—

1. (a) no such debt due from the debtor shall be recoverable from him, or from or against, any movable or immovable property belonging to him, nor shall any such property be liable to be attached and sold or proceeded against in any manner in the execution of any decree or order relating to such debt against him;
2. (b) no court shall entertain any suit or proceedings against such debtor for the recovery of any debt, including interest, if any: Provided that, where a suit or proceeding is instituted jointly against such debtor and any other person, nothing in this clause shall apply to the maintainability of a suit or proceeding in so far as it relates to such other person;
3. (c) all suits, applications and proceedings (including appeals, revisions, attachment or execution proceedings) pending on the day of coming into force of this Act for the recovery of any such debt against such debtor shall abate: Provided that nothing in this clause shall apply to the sale of—
   • (i) any movable property, held and concluded before the day of coming into force of this Act;
   • (ii) any immovable property, confirmed before the day of coming into force of this Act;
4. (d) every debtor undergoing detention in prison in the execution of any decree for money passed against him by any court in respect of any such debt shall be released forthwith;
5. (e) every property pledged or mortgaged by such debtor shall stand released in favour of such debtor and the creditor shall be bound to return the same to the debtor forthwith. Explanation.— Nothing in this section shall be construed as to entitle any such debtor to the refund of any part of a debt already repaid by him or recovered from him before the date of coming into force of this Act.

Where a creditor fails to return the property to the debtor forthwith as required by clause (e) of section (4) or the debtor is opposed or impeded in taking possession of the property, the debtor may, subject to the provisions of section 6, request the District Magistrate to enforce delivery of possession of such property and the District Magistrate shall take or cause to be taken such steps or use or cause to be used such force as may be reasonably necessary for securing the delivery of possession of the property to the debtor.

If any question arises as to whether any person is a debtor entitled to benefits under this Chapter, the Board may, on an application made to it by the debtor or any of his creditors and after giving the parties concerned a reasonable opportunity of being heard, determine the said question.