16. Settlement of liabilities by court.

(1) The court shall, after determination of the admissibility and the amount of each claim under sub-section (6) of section 15, settle the liabilities of the debtor in the manner mentioned thereunder, namely:-(a) one-fourth of the entire assets, not exceeding six thousand five hundred rupees in value, shall be allotted and given over to the debtor subject only to such liabilities by way of public revenue due on land or any tax, cess, fee, rent, jenmikaram or such other dues chargeable thereon by virtue of any enactment for the time being in force:Provided that in such allotment, the homestead in which the debtor lives shall , on his application, be allotted to his share;(b) after payment of all liabilities by way of public revenue due on land or any tax, cess, fee, rent, jenmikaram or such other dues chargeable by virtue of any enactment for the time being in force, all the remaining assets shall be distributed and made over to the creditors:Provided that secured creditors shall, in the order of mutual priority, be paid in preference to unsecured creditors, and after payment of all debts due to the Government or to any local authority, the balance of the assets shall be distributed amongst unsecured creditors in proportion to the debts due to them.(2) Notwithstanding anything contained in sub-section (1), where the value of the homestead allotted under clause (a) of that sub-section exceeds one fourth of the entire assets of the debtor or six thousand five hundred rupees, the amount of such excess, or where the value of the homestead exceeds both one fourth of the entire assets and six thousand five hundred rupees, the excess of the value of the homestead over-(a) one fourth of the entire assets, or(b) six thousand five hundred rupees, whichever is smaller,shall be deposited by the debtor in court in fifteen half-yearly instalments together with interest accrued due on the amount outstanding after payment of each instalment, at the rate of six per-cent per annum, for distribution to the creditors in the manner specified in clause (b) of the said sub-section.(3) For the amount of the excess to be deposited by the debtor under sub-section (2), there shall be a first charge on the homestead subject only to the charge for public revenue due on land or any tax, cess, fee or such other dues chargeable by virtue of any enactment for the time being in force, in respect of the land on which the homestead is situated.(4) The first instalment of the excess amount to be deposited under sub-section (2), shall be deposited before the expiry of a period of six months from the date of allotment of the homestead.Explanation.- In this section, the expression "public revenue due on land" shall have the same meaning as in the Revenue Recovery Act for the time being in force.