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THE DISPLACED PERSONS (DEBTS ADJUSTMENT) ACT, 1951

Title : THE DISPLACED PERSONS (DEBTS ADJUSTMENT) ACT, 1951

Year : 1951



(1) At any time within one year after the date on which this Act comes into force in any local area, a displaced debtor may make an application for the adjustment of his debts to the Tribunal within the local limits of whose jurisdiction he actually and voluntarily resides, or carries on business or personally works for gain.

(2) Every application by a displaced debtor shall contain the following particulars, namely:-

(a) The place where he resides;

(b) The trade, calling, profession or other employment in which he is now engaged and in which he was engaged in West Pakistan before he became a displaced person;

(c) His average annual income in India during the three years immediately preceding the application;

(d) The income-tax  and super-tax, if any, to which he has been assessed for the three years immediately preceding the application;

(e) Such other particulars as may be prescribed;and shall be accompanied by the following schedules, namely:-

(i) A schedule containing full particulars of all his debts, whether owed jointly or individually, with the names and addresses of his creditors and joint-debtors, if any, so far as they are known to, or can by the exercise of reasonable care and diligence be ascertained by him;

(ii) A schedule of all his properties, both movable and immovable (including claims due to him) which are not liable to attachment either under the Code of Civil Procedure, 1908 (Act V of 1908), as amended by section 31 of this Act or under any other law for the time being in force, a specification of the values thereof and of the places where the same may be found;

(iii) A schedule of all his properties, both movable and immovable (including claims due to him) which are not included in the schedule under item (ii) of this clause; and

(iv) A schedule of all his properties in respect of which a claim has been submitted to the registering officer under the Displaced Persons (Claims) Act, 1950 (XLIV of 1950), and, where any order has been passed in relation to the verification and valuation of the claim under that Act, with a certified copy of the order.

(3) All persons whose names are shown in any schedule as having claims against the displaced debtor and all persons whose names are shown as joint-debtors shall be deemed to be the respondents to the application and there shall be filed along with the application, or with the permission of the Tribunal at any later state of the proceedings, as many copies of the application and as many envelops and notices in the prescribed form duly addressed to the respondents as there are respondents.



Where an application made under section 5 does not comply with any of the requirements of that section, the Tribunal may either reject it, or grant to the applicant such further time as it thinks fit to comply with such requirements.



If the application is not rejected under section 6, the Tribunal shall, after causing the date for the hearing of the application to be entered in the notices referred to in section 5, cause them to be served on the respondents.



In response to a notice under section 7, the respondent may show cause against the application by filing a written statement containing his objections to the application:

Provided that where he does not appear in person or through any authorised agent, the written statement may be sent by registered post, acknowledgement due, to the Tribunal after having been signed in the presence of a civil judicial officer or a magistrate or any other prescribed office and duly attested by such officer or magistrate.



(1) If there is a dispute as to whether the applicant is a displaced person or not or the assets of any displaced debtor, the Tribunal shall decide the matter after taking such evidence as may be adduced by all the parties concerned and shall pass such decree in relation thereto as it thinks fit.

(2) If there is no such dispute or if the respondents do not appear or have o objection tot he application being granted, the Tribunal may, after considering the evidence placed before it, pass such decree in relation thereto as it thinks fit.



Any displaced person having a claim against a displaced debtor may make an application, in such form as may be prescribed, for the determination thereof to the Tribunal within the local limits of whose jurisdiction the displaced debtor actually and voluntarily resides, or carries on business, or personally works for gain, together with a statement of the debts owed to the creditor with full particulars thereof.



(1) Where an application under section 10 has been made  the Tribunal shall cause notice thereof to be served on the displaced debtor calling upon him either to show cause, if any, against the application or to make an application on his own behalf under section 5.

(2) If, in response to a notice under sub-section (1), the displaced debtor makes an application in accordance with the provisions of section 5, the Tribunal shall proceed further in the matter as if it had commenced with an application by the displaced debtor under section 5, and all the other provisions of this Act shall apply accordingly; but, if the displaced debtor does not choose to make any such application, the Tribunal shall, after considering such evidence, if any, as may be produced before it, determine the claim and pass such decree in relation thereto as it thinks fit.

(3) The period of limitation specified in sub-section (1) of section 5 in respect of an application by a displaced debtor shall not apply to an application made under sub-section (2).



(1) Any creditor of a disposed debtor may make an application to the Tribunal stating that the displaced debtor, who has made an application under section 5 or sub-section (2) of section 11, has concealed any part of his assets, and the Tribunal shall, after giving due notice thereof to the displaced debtor, determine the matter.

(2) If the Tribunal finds that the displaced debtor has willfully and fraudulently omitted to include such assets in his application, the Tribunal may dismiss the application or refuse to allow to the displaced debtor any of the reliefs under this Act to which he would otherwise have been entitled or pass such other order in relation thereto as it thinks fit.



At any time within one year after the date on which this Act comes into force in any local area, any displaced creditor claiming a debt from any other person who is not a displaced person may make an application, in such form as may be prescribed, to the Tribunal within the local limits of whose jurisdiction he or the respondent or, if there are more respondents than one, any of such respondents, actually and voluntarily resides, or carries on business or personally works for gain, together with a statement of the debt owing to him with full particulars thereof.



(1) Where an application under section 13 has been made to the Tribunal, the Tribunal shall cause notice thereof to be given to the debtor, calling upon him to show cause, if any, against the application.

(2) If there is a dispute as to whether the applicant is a displaced creditors or not or as to the existence of the debt or as to the amount thereof, the Tribunal shall decide the matter, after taking such evidence as may be produced before it, and pass such decree in relation thereto as it thinks fit.

(3) If there is no such dispute or if the debtor does not appear or has no cause to show, the Tribunal may, after considering the evidence placed before it, pass such decree in relation thereto as it thinks fit.



Where a displaced debtor has made an application to the Tribunal under section 5 or under sub-section (2) of section 11, the following consequences shall ensue, namely:-

(a) All proceedings pending at the date of the said application in any civil court in respect of any debt to which the displaced debtor is subject (except proceedings by way of appeal, or review or revision against decrees or orders passed against, the displaced debtor) shall be stayed, and the records of all such proceedings other than those relating to the appeals, reviews or revisions as aforesaid shall be transferred to the Tribunal and consolidated;

(b) All attachments, injunction orders appointing receives or other processes issued by any such court and in force at the date of the said application in respect of any such debt shall cease to have effect and no fresh process shall, except as hereinafter expressly provided, be issued:

Provided that where an order appointing a receiver ceases to have effect under this section, the receiver shall, within fourteen days from the date on which his appointment ceases to have effect or within such further time as the Tribunal may in any case allow, submit to the Tribunal instead of to the court which appointment him his outstanding accounts, and the Tribunal shall, in relation to such accounts, have the same powers with respect to the receiver as the court which appointed him had or could have had;

(c) No fresh suit or other proceeding [other than any such appeal, review or revision as is referred to in clause (a)] shall be instituted against a displaced debtor in respect of any debt mentioned by him in the relevant schedule to his application;

(d) Any immovable property belonging to the displaced debtor and liable to attachment shall not be transferred except under the authority of the Tribunal and on such terms as it thinks fit, until the application of the displaced debtor has been finally disposed of or any decree passed against him is satisfied in accordance with the provisions of this Act.



(1) Where a debt incurred by a displaced person is secured by a mortgage, charge or lien on the immovable property belonging to him in West Pakistan, the Tribunal may, for the purpose of any proceeding under this Act, require the creditor to elect to retain the security or to be treated as an unsecured creditor.

(2) If the creditor elects to retain the security, he may apply to the Tribunal, having jurisdiction in this behalf as provided in section 10, for a declaration of the amount due under his debt.

(3) Where in any case, the creditor elects to retain his security if the displaced debtor receives any compensation in respect of any such property as is referred to in sub-section (1), the creditor shall be entitled-

(a) Where the compensation is paid in cash, to a first charge thereon:

Provided that the amount of the debt in respect of which he shall be entitled to the first charge shall be that amount as bears to the total debt the same proportion as the compensation paid in respect of the property bears to the value of the verified claim in respect thereof and to that extent the debt shall be deemed to have been reduced;

(b) Where the compensation is by way of exchange or property, to a first charge on the property situate in India so received by way of exchange:

Provided that the amount of the debt in respect of which he shall be entitled to the first charge shall be that amount as bears to the total debt the same proportion as the value of the property received by way of exchange bears to the value of the verified claim in respect and to that extent the debt shall be deemed to have been reduced.

(4) Notwithstanding anything contained in this section, where a debt is secured by a mortgage of agricultural lands belonging to a displaced person in West Pakistan and the mortgage was with possession, the martgage shall, if he has been allotted lands in India in lieu of the lands of which he was in possession in West Pakistan, be entitled to continue in possession of the lands so allotted until the debt is satisfied from the usufruct of the lands or is redeemed by the debtor:

Provided
that in either case the amount of the debt shall be only that amount as bears to the total debt the same proportion as the value of the lands allotted to the creditor in India bears to the value of the lands left behind by him in West Pakistan and to that extent the debt shall be deemed to have reduced.

(5)  Where a creditor elects to be treated as an unsecured creditor, in relation to the debt, the provisions of this Act shall apply accordingly.



(1) Where in respect of a debt incurred by a displaced debtor and secured by the pledge of movable property belonging to him, the creditor had been placed in possession of such property at any time before the debtor became displaced person, the following rules shall regulate the rights and liabilities of the creditor and the debtor, namely:-

(a) The creditor may, if he is still in possession of the pledged property, realise the sum due to him by the sale of such property after giving to the debtor reasonable notice of the sale;

(b) The creditor shall not be liable, in the case where the pledged property is no longer in his possession or is not available for redemption by the debtor, to recover from the debtor the debt or any part thereof for which the pledged property was security;

(c) The debtor shall not be liable, in the case of a sale by the creditor of any pledged property, whether under clause (a) or otherwise, to pay the balance where the proceeds of such sale are less than the amount of the debt due;

(d) The creditor shall in any case where the proceeds of the sale of the pledged property are greater than the amount of the debt, pay over the surplus to the debtor.

Explanation
I.-For the purposes of this section, the creditor shall be deemed to be in possession of the pledged property in any case in which the pledged property, although not delivered to him was delivered to a person authorised by him or was being held by the debtor on behalf of the creditor, and the ownership or possession thereof could not have been transferred to a third party without the express consent or permission of the creditor.

Explanation
II.-Where any motor vehicle or other movable property has been purchased with money the whole or any part of which has been advanced by a creditor who retains the ownership thereof by way of security but allows the debtor to use it with his permission, the property shall for the purposes of this section be deemed to be pledged property of the debtor in the possession of the creditor.

(2) Notwithstanding anything contained in this section, the creditor shall be entitled to receive, and to give a valid discharge in respect of, any sum due under this Act or under any other law for the time being in force from an insurance company in respect of any claim arising out of the loss or destruction of the pledged property, but the creditor shall, in any case where the sum received from the insurance company is greater than the amount of the debt due to him, pay over the surplus to the debtor.



(1) Where any property in West Pakistan belonging to a displaced person was insured with any insurance company before the 15th day of August, 1947, against any risk arising out of fire or theft or riot and civil commotion and there has been a loss in respect of such property arising out of any such risk at a time when the contract of insurance was in force, such company shall not be entitled to refuse payment of the sum due under any claim in relation thereto on the ground that-

(a) No report was lodged with the police within the agreed time, or

(b) The claim was not made to the company within the agreed time, or

(c) In the case of a policy covering any risk arising out of riot and civil commotion, the disturbances in West Pakistan were not in the nature of a riot and civil commotion, the disturbances in West Pakistan wee not in the nature of a riot or civil commotion, or

(d) The displaced person has not fulfilled any other condition of the contract which in the opinion of the Central Government is of a technical nature and which the Central Government has, by notification in the Official Gazette, specified as a condition of the contract for the purposes of this section.and any contract to the contrary, to the extent to which it is in contravention of the provisions of this sub-section, shall be deemed to have had no effect.

(2) Where a loss has been incurred in respect of any property in the circumstances specified in sub-section (1), the Tribunal shall, in every proceeding where it is necessary to do so, determine respectively the amount of the loss, the amount for which the property was insured on the date of such loss, and the amount, if any, paid by the insurance company, and shall make a report thereof to such board or other authority as may be prescribed, and the prescribed board or other authority shall, after taking into account such matters as may be prescribed as being relevant thereto, and subject to any rules made in this behalf, in turn propose to the Tribunal the amount for which the claim against the insurance company shall be deemed, and the Tribunal shall pass a decree accordingly.

(3) The amount realised from the insurance company under any decree passed under sub-section (2) shall first be applied towards the satisfaction of the debt due from the displaced person, and the balance, if any, shall be refunded to the displaced person.

(4) An application under this section may be made either by a displaced person having a claim against the insurance company in the circumstances specified in sub-section (1) or by an assignee or any other person having an interest in the claim of any such displaced person, to the Tribunal within the local limits of whose jurisdiction the displaced person actually and voluntarily resides or carries on business or personally works for gain or, in the case of a displaced bank making an application under this section, within whose limits the bank carries on business, for the determination of the amount due in respect of the claim in accordance with the provisions of sub-section (2).

(5) To every proceeding under sub-section (4) the insurance company and all persons interested in the claim shall be made parties:

Provided
that the Tribunal may at any stage of the proceedings direct that the name of any person whose presence before the Tribunal may be necessary in order to enable the Tribunal effectually and completely to adjudicate upon and settle all the questions involved, be added to the proceeding.

(6) No application under this section shall be entertained in any case where no claim has been made to the insurance company within one year after the date of the loss.

Explanation
.-A claim shall be deemed to have been made within the meaning of this sub-section if intimation thereof has been given to the insurance company within one year after the date of the loss notwithstanding that the intimation does not specify the amount of the claim or is not in the form, if any, required by the contract of insurance or in any other specified form.



(1) Where a company or a co-operative society has made any call upon a displaced person or a displaced bank in respect of any moneys remaining unpaid on any share held by him or it on the 15th day of August, 1947, in the company or co-operative society, as the case may be, and there has been a failure on the part of the shareholder to pay any moneys due in respect of such call, then, notwithstanding anything to the contrary contained in the Companies Act, or in the memorandum or articles of association or the Co-operative Societies Act, no interest shall be payable inn respect of any such moneys due and the company or the co-operative society, as the case may be, shall not be entitled to forfeit the share or any part thereof , and any forfeiture made before the commencement of this Act in respect of any share in the circumstances specified in this sub-section shall be deemed to have had no effect, and no person shall he deemed to have ceased to be a member of the company or co-operative society merely by reason of such forfeiture.

(2) Notwithstanding anything contained in the Companies Act, or in the memorandum or articles of association, of the Co-operative Societies Act, it shall be lawful for a displaced person or a displaced bank to apply to the company or the co-operative society, as the case may be, for the conversion of any partly paid-up share held by him or it in the company or society into such smaller manner of fully paid-up shares as the society or company may have issued and in respect of which calls have already been made.

(3) Where any share forfeited before the commencement of this Act has been disposed of by the company in accordance with its articles of association and it is not possible for the company in accordance with its articles of association and it is not possible for the company to give to the displaced person the relief to which he is entitled under this section without increasing its capital, the capital of the company shall be deemed to have been increased to the extent to which it is necessary to provide that relief.

(4) if the company or the co-operative society refuses to comply with any such request as is contained in an application under sub-section (2), the Tribunal may, on application made to it in this behalf and if satisfied that there is no cause for such refusal, issue a direction to the company or the co-operative society accordingly, and the company or society shall be bound  comply therewith and every such direction shall take effect from the date thereof.

(5) Save as otherwise provided in this section, nothing contained herein shall affect the validity of any action taken by the company or its board of directors in pursuance of the provisions of the Companies Act or of the memorandum or articles of association relating to the company.

(6) The provisions of this section shall have effect for a period of ten years from the 15th day August, 1947, and thereafter shall cease to have effect except as respects things done or omitted to be done.



(1) Where a company or a co-operative society is being wound up, no displaced person or displaced bank shall be called upon, notwithstanding anything to the contrary contained in the Companies Act, or in the memorandum or articles of association or the Co-operative Societies Act, to make any contribution to the assets of the company or co-operative society, as the case may be, in respect of any share held by him or it in the company or society on the 15th day of August, 1947.

(2) The provisions of this section shall have effect for a period of ten years from the 15th day of August, 1947, and shall also apply in respect of any calls made and not satisfied before that date, and shall cease to have effect after the expiry of the said period except as respects things done or omitted to be done.



(1) Where before the commencement of this Act, a decree has been passed by  a civil court against, or a settlement has been entered into by, a displaced debtor in respect of any debt, the Tribunal shall, on the application of such debtor revise it so as to bring it into accord with the provisions of this Act.

(2) In determining the amount due under any such decree or settlement, the Tribunal shall accept as binding the findings of the court which passed the decree or the facts contained in the settlement, as the case may be, to the extent to which the findings or the facts are not inconsistent with the provisions of this Act:

Provided that the Tribunal shall not determine any claim under any such decree until any appeal or revision filed against it has been finally decided or the period allowed for any appeal therefrom has expired, and in all such cases the findings of the Tribunal shall be based on the final decree.

(3) Notwithstanding anything contained in this section,  Tribunal shall in respect of any debt revise any settlement arrived at before the commencement of this Act between an insurance company and a displaced person or between an insurance company and a displaced bank having an interest in the claim of a displaced person against the insurance company and arriving at such settlement by virtue of that interest:

Provided that payment in full has been made in pursuant of such settlement.



Where a debt is due from a displaced person jointly with another person, the Tribunal shall, for the purposes of this Act, apportion the liability between them according to the following rules, namely:-

(a) If the liability of each debtor is defined, then according to the defined share of each;

(b) If the debt was taken for any trade or business of the joint debtors then according to the shares held by each of the joint debtors in the trade or business;

(c) If the debt was not taken in any defined shares or for any trade or business in which the partners have any defined share, the debt shall be apportioned into as may parts as there are joint debtors, and each joint debtor shall be liable only for the part apportioned to him;

(d) If one joint debtor is a placed is a displaced person and another is not, the sum apportioned to the non-displaced person shall not be deemed to be a debt within the meaning of this Act and the creditor may in respect of such debt seek any remedy open to him in a civil court or otherwise;

(e) If the debt was taken by a joint Hindu family, the members of the joint Hindu family shall be deemed to be joint debtors within the meaning of this section and the debt shall be apportioned amongst the members thereof in the same proportion in which shares would be allotted to them on partition:

Provided that the share of any member of such a joint family any of whose male lineal ascendants in the male line of ascent is alive and joint with such member shall be deemed to be included in the share of his oldest surviving ascendant in the made line of ascent, and such member shall not be separately regarded as a joint debtor for the purpose of this clause;

(f) If the liability is secured by a mortgage of movable and immovable properties, the debt shall be apportioned between the two properties in the same proportion as the value of each property bears to the total value of the properties.

Explanation.-For the purposes of this clause, the value of the movable property shall be deemed to be the value thereof immediately before the date on which the debtor became a displaced person, and the value of the immovable property shall be deemed to be the value of the verified claim in respect thereof;

(g) Where the relationship between the joint debtors is that of principal and surety, nothing contained in this Act shall prevent the institution of a suit for the recovery of the debt against the surety but no decree shall be passed in such suit for an amount in excess of the amount decreed or which can be decreed against the principal debtor in accordance with the provisions of this Act:

Provided that the total amount which may be recovered from the principal debtor and the surety shall not exceed the amount decreed or which can be decreed by the Tribunal against the principal debtor in accordance with the provisions of this Act.



In the determination of any individual debt which does not exceed five thousand rupees,-

(a) It shall not be necessary for the Tribunal to take down the evidence of the witnesses in writing at length but the Tribunal, as the examination of each witness proceeds, shall make a memorandum of the substance of what he deposes and such memorandum shall be written and signed by the Tribunal and shall form part of the record;

(b) The decision of the Tribunal need not contain more than the points for determination and the decision thereon.



It shall be presumed until the contrary is proved that any document registered under the Indian Registration Act, 1908 (XVI of 1908) or any certified copy thereof and produced before the Tribunal has been proved.



Save as otherwise expressly provided in this Act or in any rules made there under, all proceedings under this Act shall be regulated by the provisions contained in the Code of Civil Procedure, 1908 (Act V of 1908).



Every application and the schedules, if any, attachment thereto and every written statement filed before the Tribunal for any relief under this Act shall be signed and verified in the manner prescribed by the Code of Civil Procedure, 1908 (Act V of 1908), for the signing and verification of pleadings



In all cases in which the Tribunal passes a decree on the application of a displaced person, it shall prepare a complete of the creditors and of the assets and liabilities of the displaced person.



It shall be competent for the civil court which has been specified as the Tribunal for the purposes of this Act to execute any decree or order passed by its as the Tribunal in the same manner as it could have done if it were a decree or order passed by it as a civil court.

Last updated on July, 2016

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