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THE DISPLACED PERSONS (DEBTS ADJUSTMENT) ACT, 1951

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

Year : 1951



(1) On and from the 15th day of August, 1947, no interest shall accrue or be deemed to have accrued in respect of any debt owed by a displaced person, and no Tribunal shall allow any future interest in respect of any decree or order passed by it:

Provided that-

(a) Where the debt is secured by the pledge of shares, stocks, Governmental securities or securities of a local authority, the Tribunal shall allow, for the period commencing from the 15th day of August, 1947, and ending with the date of commencement of this Act, interest to the creditor at the rate mutually agreed upon or at a rate at which any dividend or interest has been paid or is payable in respect thereof, whichever is less;

(b) In any other case the Tribunal may, if it thinks it just and proper to do so after taking into account the paying capacity of the debtor as defined in section 32, allow, for the period mentioned in clause (a), interest at a rate not exceeding four per cent. per annum simple.

(2) Nothing in this section shall apply to the interest payable in respect of any monies advanced by a creditor, including an insurance company, on the security of a policy of life insurance of a displaced debtor in order to keep it alive.



No displaced person shall be liable to arrest or imprisonment in execution of any decree for the recovery of any debt whether passed before or after the commencement of this Act.



Section 60 of the Code of Civil Procedure, 1908 (Act V of 1908) shall, in relation to the execution of any decree for a debt  against a displaced person (whether passed before or after the commencement of this Act), have effect, as if-

(1) For clause (c) of the proviso to sub-section (1), the following clauses had been substituted, namely:-

"(c) Houses and other buildings (with the materials and the sites thereof and the land immediately appertaining thereto and necessary for their enjoyment) belonging to an agriculturist and not proved by the decree-holder to have been let out on rent or otherwise to any person other than the father, mother, wife, son, daughter, daughter-in-law, brother, sister or other dependent of the judgement-debtor or to have been left vacant for a period of one year or more;

(cc) Milch animals, whether in milk or in calf, kids,  animals used for the purpose of transport or draught cart and open spaces or enclosures belonging to an agriculturist and required for use in case of need for trying cattle, parking carts or stacking fodder or manure;.

(ccc) One main residential house and other buildings attached to it (with the materials and the sites thereof and the land immediately appertaining thereto and necessary for their enjoyment) belonging to a judgement-debtor other than an agriculturist and occupied by him;".

(2) In clause (I), for the words "hundred rupees" the words "two hundred and fifty rupees" had been substituted;

(3) After clause (p), the following clauses had been inserted; namely:-

"(q) Two-thirds of the agricultural produce of the judgement-debtor;

(r) So much of any other property of the judgement-debtor as constitutes the means of his livelihood and as is likely, in the opinion of the court, to yield to him an income of not less than two hundred and fifty rupees a month;

(s) Any loan advanced or agreed to be advanced by or on behalf of the funds of the Central Government or a State Government, or any asset created from any such loan;".

Explanation.-Where any such asset as is referred to in clause (s) has been created partly from such loan and partly from the private funds of the judgement-debtor, that portion of the asset which has been created from the private funds shall, if severable from the remaining portion, be liable to attachment or sale.



(1) Where, on the application of a displaced debtor under section 5 or sub-section (2) of section 11, the Tribunal has determined the amount due in respect of each debt n accordance with the provisions of this Act, it shall proceed to determine the paying capacity of the debtor.

(2) If the paying capacity of the debtor is equal to or exceeds the aggregate sum of all the debts so determined (exclusive of any debt in respect of which the creditor has elected to retain the security in accordance with the provisions of section 16), the Tribunal shall pass a decree for the aggregate sum so determined, specifying the amount due to each creditor and shall allow repayment thereof in installments, in accordance with the provisions contained in section 33, unless for reasons to be recorded it directs otherwise.

(3) If the paying capacity of the debtor is less, than the aggregate sum referred to in sub-section (2), the Tribunal shall divide the decree into two parts and provide in the first part thereof (hereinafter referred to as the first part of the decree) that the sum equivalent to the paying capacity shall, subject to the provisions contained in section 33, be realised from the assets of the debtor in India, and provide in the second part thereof (hereinafter referred to as the second part of the decree) that the balance shall be realised, subject to the provisions contained in sub-section (6) from any compensation which the debtor may receive:

Provided that if no such compensation is received, the balance shall be irrecoverable.

(4) A creditor who has elected to retain the security under section 16 shall have o right to realise any money due to him from the assets of the debtor in India, but nothing in this sub-section shall affect any of the rights given to him by section 16.

(5) A creditor shall have the right at any time at least six months before the receipt by the debtor of compensation to apply that the whole or the balance of the first part of the decree, in so far as any debt due to him is concerned, may be added to the second part of the decree, and thereupon he shall have no right to realise any money from the assets of the debtor in India.

(6) For the purposes of this Act, the amount payable from the compensation for the satisfaction of the second part of the decree shall be that amount as bears to the aggregate amount of all the debts in the second part of the decree [including therein any sum added to it under sub-section (5) and the sum determined in favour of the secured creditor in the manner specified in the proviso to clause (a) of sub-section (3) of section 16] as the compensation in respect of the property of the debtor payable to him under the Displace Persons (Claims) Act, 1950 (XLIV of 1930) bears to the verified claim; and the balance of the compensation, if any shall be, refunded to the displaced debtor.

(7) Every installment paid by the displaced debtor in respect of the first part of the decree and any sum payable from the compensation in accordance with sub-section (6) shall be distributed rateably amongst the decree-holders, if more persons than one are entitled thereto:

Provided that the secured creditor who has not elected to be treated as an unsecured creditor under section 76 shall be entitled to a prior charge on the amount payable from the compensation.

(8) Where a displaced person receives compensation by way or exchange of property, then, subject to the prior charge, if any, of a creditor under section 16, the aggregate sum payable in respect of the second part of the decree shall be a second charge upon the property received by way of exchange, but the amount of the second charge shall be that amount as bears to the total sum the same proportion as the value of the property received by way of exchange bears to the value of the original property verified and valued under the Displaced Persons (Claims) Act, 1950 (XLIV of 1950).

(9) Where a displaced person makes a default in the payment of any installment fixed in respect of the first part of the decree or does not pay the amount determined in accordance with sub- section (4) of section 16 or sub-section (8) of this section for which the first or the second charge may have been created upon the property received by way of exchange, the creditor may apply for the execution of the decree by the attachment and sale of the attachable assets of the judgement-debtor or by the sale of the property obtained by way of exchange upon which the charge has been created, as the case may be, and the amount realised by such execution shall be distributed rateably among the decree-holders:

Provided that nothing contained in this sub-section shall  affect the rights of any charge-holders.

(10) For the purposes of this Act, where the compensation is paid in cash, the amount which shall be available for purposes of satisfaction of the debts in the second part of the decree shall in no case exceed seventy-five percent. of the amount of such compensation; and where it is by way of exchange of property, the extent of the property which shall be available for the said purposes shall in no case exceed seventy-five percent. in value of such property.

Explanation.-In this section the expression "paying capacity" means the aggregate of the market value of all the attachable assets in India of the displaced debtor plus the income which is likely to accrue to him for the next three years succeeding, excluding from the computation of such income a sum calculated at the rate of two hundred and fifty rupees a month.



(1) In directing payment of any sums by installments under the first part of the decree, the Tribunal shall take into account among other matters-

(a) The present income of the displaced debtor from all sources and the income that is likely to accrue to him in future;

(b) The size of the family dependent upon him for the ordinary necessaries of life and the expenditure likely to be incurred for the education and marriage of the children of the displaced person dependent upon him.

(2) Where a displaced creditor is a minor, or a widow or a person who, by reason of any physical disability, is permanently disabled from earning his livelihood, the Tribunal may direct that any installment payable to him or her shall be twenty-five per cent. higher than what would otherwise have been directed to be paid, and where it does so, it shall also direct that the installments of other decree-holders shall be proportionately reduced.



Where a displaced debtor has been ordered to pay an allowance periodically to any person for his maintenance under any decree or order of a court, or is liable to pay such allowance under any agreement voluntarily entered into, the rate at which such allowance is payable may be varied by the Tribunal on application made to it in his behalf, if the Tribunal thinks that such variation is necessary, and such variation shall have effect for such period as the Tribunal may direct, notwithstanding anything in any decree, order or agreement to the contrary.



In directing payment of costs by any person as costs in respect of fees to any legal practitioner employed in any proceeding before it, the Tribunal shall be guided by any rules for the time being in force regulating the payment of such costs in proceedings of a similar nature before the ordinary civil courts, and shall not award more than one-half of what in its opinion the costs before the civil court would have been.



Notwithstanding anything contained in the Indian Limitation Act, 1908 (IX of 1908) or in any special or local law or in any agreement,-

(a) Any suit or other legal proceeding in respect whereof the period of limitation was extended by section 8, or the Displaced Persons (Institution of Suits) Act, 1948 (XLVII of 1948), and

(b) Any suit or other legal proceeding for the enforcement of a claim against an insurance company not falling within the provisions of clause (a) in respect whereof the cause of action had arisen, whether wholly or in part, in the territories now suitable in West Pakistan and the institution of the suit or other legal proceeding has become barred by reason of a condition in the contract, which, but for the condition, would have been governed by the provisions contained in clause (a).may be instituted at any time within one year from the commencement of this Act.



Notwithstanding anything contained in section 48 of the Code of Civil Procedure 1908 (Act V of 1908), or in any other law for the time being in force, no order for the execution of a decree in respect of a debt against a displaced person shall be made upon an application presented after the expiration of-

(a) In the case of decrease passed before the commencement of his Act, six years from such commencement;

(b) In the case of decree passed after the commencement of this Act, six years from the date of the decrees;

(c) In the case of decrees directing payment of money to be made at prescribed intervals or no certain dates, six years from the date of default in making the payment in respect of which the decree-holder seeks to have the decree executed:

Provided that nothing in this section shall be construed as extending the limit of time for execution as provided in section 48 of the said Code for an application for the execution of a decree passed before the commencement of this Act.



(1) Where in the execution of any decree for the recovery of a debt against a displaced person his immovable property is sought to be sold, the court executing the decree shall, in the first instance, determine the market value of the property and, if the value so determined is less than or equal to the amount of the decree together with the proportionate amount of any prior encumbrance, the court shall transfer the property to the decree-holder.

(2) If the value determined under sub-section or (1) is greater than the amount of the decree together with the proportionate amount of any prior encumbrance, the court shall determine the portion of such property the value of which is equal to the amount of the decree with the proportionate amount of such prior encumbrance, and may, if it is reasonable or convenient to do so, transfer that portion to the decree-holder.

(3) Where any property is transferred under the provisions of this section to the decree-holder, the decree shall be deemed to be satisfied to the extent of the value of the property so transferred:

Provided that if the decree-holder does not desire to take the property or, in the opinion of the court, it is not reasonable or convenient to transfer the property to him, the property may be sold by public auction, but irrespective of the price fetched at the public auction the market value of the property as determined under this section (and not the amount payable to the decree holder out of the sale proceeds of the public auction) shall be deemed to be the amount which has been paid to the decree-holder in respect of the decree, and satisfaction thereof shall be entered accordingly.



If the displaced debtor and the creditor or, where there are more creditor than one, such number thereof as hold more than two-thirds in value of the debts due from the displaced debtor enter into an agreement for the adjustment of the liabilities, the Tribunal shall, if an application is made to it in this behalf, after giving due notice to the other creditors affected, adjust the remaining debts accordingly if the terms of the agreement are just and fair, and pass a decree accordingly.

Last updated on July, 2016

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