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Section 48 of THE PROVINCIAL INSOLVENCY ACT, 1920 in hindi

(1)On any debt or sum certain whereon interest is not reserved or agreed for, and which is overdue when the debtor is adjudged an insolvent, and which is provable under this Act, the creditor may prove for interest at a rate not exceeding six per centum per annum—
1. (a)if the debt or sum is payable by virtue of a written instrument at a certain time, from the time when such debt or sum was payable to the date of such adjudication; or,
2. (b)if the debt or sum is payable otherwise, from the time when a demand in writing has been made giving the debtor notice that interest will be claimed from the date of the demand until the time of payment to the date of such adjudication.
(2)Where a debt which has been proved under this Act includes interest or any pecuniary consideration in lieu of interest, the interest or consideration shall, for the purposes of dividend, be calculated at a rate not exceeding six per centum per annum, without prejudice to the right of a creditor to receive out of the debtor's estate any higher rate of interest to which he may be entitled after all the debts proved have been paid in full.

Summary

(1) On any debt or sum certain whereon interest is not reserved or agreed for, and which is overdue when the debtor is adjudged an insolvent, and which is provable under this Act, the creditor may prove for interest at a rate not exceeding six per centum per annum, (a) if the debt or sum is payable.

Practical examples

1Manoj has a written contract saying a loan was due on January 1st, but it does not mention interest. Since the debtor became insolvent after that date, Manoj can claim six percent interest from January 1st until the day the debtor was officially declared insolvent.

2Leela is owed money but has no written contract and no agreed interest. She sends a written demand to the debtor on May 1st stating she will charge interest. She can claim six percent interest from May 1st until the insolvency date.

FAQ

1. What is the maximum interest rate for debts without an agreement in the Provincial Insolvency Act 1920?

Section 48 of the Provincial Insolvency Act 1920 limits the interest to a rate not exceeding six percent per year.

2. When does interest start for a debt with a written due date under the Provincial Insolvency Act 1920?

According to Section 48 of the Provincial Insolvency Act 1920, interest runs from the time the debt was payable until the date of the insolvency declaration.

3. Can a creditor ever get more than six percent interest under the Provincial Insolvency Act 1920?

Yes, Section 48 of the Provincial Insolvency Act 1920 says a creditor can receive a higher rate if there is a surplus after all proved debts are paid in full.

Test yourself

Q1.Under Section 48 of the Provincial Insolvency Act 1920, what is the maximum interest rate allowed for calculating dividends?

Q2.If a debt is not in writing, what must a creditor do to claim interest under Section 48 of the Provincial Insolvency Act 1920?

Q3.Under Section 48 of the Provincial Insolvency Act 1920, interest on a debt with a fixed time of payment is calculated up to which date?

Q4.According to Section 48 of the Provincial Insolvency Act 1920, when can a creditor receive interest higher than six percent?

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