Report No. 26
Proof by secured creditors
9. Proof where security is realised.-If a secured creditor realises his security, he may prove for the balance due to him, after deducting the net amount realised.
[Section 47(1), P.A.] [Cf. Sch. II, rule 9, P.T.A.]
10. Proof where security is surrendered.-If a secured creditor surrenders his security to the Official Assignee for the general benefit of the creditors, he may prove for his whole debt.
[Section 47(2), P.A.) (Cf. Sch. II, rule 10, P.T.A.]
11. Proof in other cases.-If a secured creditor does not either realise or surrender his security, he shall, before ranking for the dividend, state in his proof the particulars of his security, the date when it was given and the value at which he assesses it, and shall be entitled to receive a dividend only in respect of the balance due to him after deducting the value so assessed.
[Section 47(3), P.A.] [Cf. Sch. II, rule 11, P.T.A.]
12. Valuation of security.-(1) Where a security is so valued the Official Assignee may at any time redeem it on payment to the creditor of the assessed value.
(2) If the Official Assignee is dissatisfied with the value at which a security is assessed, he may require that the property comprised in any security so valued be offered for sale at such times and on such terms and conditions as may be agreed on between the creditor and the Official Assignee, or as, in default of agreement, the court may direct; and if the sale is by public auction, the creditor, or the Official Assignee on behalf of the estate, may bid or purchase:
Provided that the creditor may at any time, by notice in writing, require the Official Assignee to elect whether he will or will not exercise his power of redeeming the security or requiring it to be realised, and if the Official Assignee does not, within six months after receiving the notice, signify in writing to the creditor his election to exercise the power, he shall not be entitled to exercise it; and the equity of redemption, or any other interest in the property comprised in the security which is vested in the Official Assignee, shall vest in the creditor, and the amount of his debt shall be reduced by the amount at which the security has been valued.
[Section 47(4), P.A.] (Cf. Sch. II, rule 12, P.T.A.]
13. Amendment of valuation.-Where a creditor has so valued his security, he may at any time amend the valuation and proof on showing to the satisfaction of the Official Assignee, or the court, that the valuation and proof were made bona fide on a mistaken estimate, or that the security has diminished or increased in value since its previous valuation; but every such amendment shall be made at the cost of the creditor and upon such terms as the court shall order, unless the Official Assignee shall allow the amendment without application to the court.
[Cf. Sch. II, rule 13, P.T.A.]
14. Refund of excess received.-Where a valuation has been amended in accordance with the foregoing rule, the creditor shall forthwith repay any surplus dividend which he has received in excess of that to which he would have been entitled on the amended valuation, or, as the case may be, shall be entitled to be paid out of any money for the time being available for dividend, any dividend or share of dividend which he has failed to receive by reason of the inaccuracy of the original valuation, before that money is made applicable to the payment of any future dividend, but he shall not be entitled to disturb the distribution of any dividend declared before the date of the amendment.
[Cf. Sch. II, rule 14, P.T.A.]
15. Amendment where security subsequently realised.-If a creditor after having valued his security subsequently realises it, or if it is realised under the provisions of rule 12, the net amount realised shall be substituted for the amount of any valuation previously made by the creditor and shall be treated in all respects as an amended valuation made by the creditor.
[Section 47(5), P.A.] (Cf. Sch. II, rule 15, P.T.A.]
16. Exclusion from sharing in dividend.-If a secured creditor does not comply with the foregoing rules, he shall be excluded from all share in any dividend.
[Section 47(6), P.A.] (Cf. Sch. II, rule 16, P.T.A.]
17. Limit of receipt.-Subject to the provisions of rule 12, a creditor shall in no case receive more than one hundred naye paise in the rupee and interest as provided by this Act.
[Cf. Sch. II, rule 17, P.T.A.]