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

(1) The Claims Officer shall, in accordance with the rules prescribed, determine the principal amount legally and 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 notwithstanding the provisions of any agreement or law to the contrary, proceed in the following manner: (a) he shall ascertain the amount the principal originally advanced in each case, irrespective of the closing of accounts, execution of fresh bonds or decree or order of a Court; (b) he shall ascertain the amount of the interest already paid or realized and shall set off towards the amount of the principal any amount paid or realized 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 realized 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 mortgage, or a lease executed in lieu of an advance made of an estate or in the case of possession of such estate or part thereof by a widow in lieu of her dower debt, the net amount of rents and profits accruing from such estate shall be deemed to be the interest for the purpose of this section; (e) in other cases, the amount of the principal ascertained to be due to the claimant shall carry interest at such 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) Where 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 relevant provisions of the Transfer of Property Act, 1882, or of any other law which may govern the transaction. (4) Where a claim under clause (a) of sub-section (1) of Section 18 relates to two or more estates, the Claims Officer while determining the claim shall apportion the claim amount in respect of each estate in proportion to the net income thereof. (5) The Claims Officers shall determine the claim of each maintenance holder in an estate having regard to the proportion that the net monetary allowance that was being received by the maintenance-holder bears to the net income of the estate computed under Section 27.