(1) On the date fixed for the hearing of an application made under section 4, the Court shall decide the following points as preliminary issues :-
(a) whether the person for the adjustment of whose debts the application has been made is a debtor;
(b) whether the total amount of debts due from such person on the date of the application exceeds Rs. 15,000.
(2) If the Court finds that such person is not a debtor or that the total amount of debts due from such person on the date of the application is more than Rs. 15,000 the Court shall dismiss the application forthwith:
Provided that before the application is so dismissed the creditors or any of them may remit any specific portion of their claim so as to reduce the total amount of the debts of all the creditors due from such person on the date of the application to a sum not exceeding Rs. 15,000. In such case the Court shall not dismiss the application but shall proceed further with the same.
(3) The portion of the debts in respect of which the claim is remitted under sub-section (2) shall be extinguished.
1[Explanation.- For the purposes of this section, the expression "the date of the application" shall mean the date of an application which has been made within the period prescribed under section 4 and where there are two or more applications made for adjustment of debts of the same debtor, the date of the last of such applications.]
(a) whether the person for the adjustment of whose debts the application has been made is a debtor;
(b) whether the total amount of debts due from such person on the date of the application exceeds Rs. 15,000.
(2) If the Court finds that such person is not a debtor or that the total amount of debts due from such person on the date of the application is more than Rs. 15,000 the Court shall dismiss the application forthwith:
Provided that before the application is so dismissed the creditors or any of them may remit any specific portion of their claim so as to reduce the total amount of the debts of all the creditors due from such person on the date of the application to a sum not exceeding Rs. 15,000. In such case the Court shall not dismiss the application but shall proceed further with the same.
(3) The portion of the debts in respect of which the claim is remitted under sub-section (2) shall be extinguished.
1[Explanation.- For the purposes of this section, the expression "the date of the application" shall mean the date of an application which has been made within the period prescribed under section 4 and where there are two or more applications made for adjustment of debts of the same debtor, the date of the last of such applications.]
Source footnotes
1. This Explanation was added by Bom. 70 of 1948, s. 5.आगे पढ़ें / Continue reading
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More sections of this act
Section 1 · Short title and extent.Section 2 · Definitions.Section 3 · Savings.Section 4 · Application for adjustment of debts.Section 5 · Every creditor and debtor to file a true and correct statement before Court.Section 6 · Application by debtor jointly and severally liable.Section 7 · Assignees from non-debtor not entitled to benefit of this Act.Section 8 · Application for recording settlement.India Code, Government of India. Text fetched 17 Oct 2026. Check the linked official text and subsequent notifications when applying a provision.