Schedule 2

SECOND SCHEDULESection 42.Rules as to proof of debtsProof in ordinary cases

1. Every creditor shall prove his debt as soon as possible after the making of a receiving order.

2. A debt may be proved by delivering or sending through the post in a prepaid letter to the Official Assignee an affidavit verifying the debt.

3. The affidavit may be made by the creditor himself or by some person authorised by or on behalf of the creditor or his estate. If made by a person so authorised, it shall state his authority and means of knowledge.

4. The affidavit shall contain or refer to a statement of account showing the particulars of the debt and shall specify the vouchers, if any, by which the same can be substantiated. The Official Assignee may at any time call for the production of the vouchers.

5. The affidavit shall state whether the creditor is or is not a secured creditor.

6. A creditor shall bear the cost of proving his debt unless the court otherwise specially orders.

7. Every creditor who has lodged a proof shall be entitled to see and examine the proofs of other creditors at all reasonable times.

8. A creditor proving his debt shall deduct therefrom all trade discounts, but he shall not be compelled to deduct any discount not exceeding 5% on the net amount of his claim, which he has agreed to allow for payment in cash.Proof by secured creditors

9. If a secured creditor realises his security he may prove for the balance due to him after deducting the net amount realised.

10. 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.

11. If a secured creditor does not either realise or surrender his security he shall, before ranking for 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.12.—

13. 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 orders, unless the Official Assignee allows the amendment without application to the court.

14. Where a valuation has been amended in accordance with rule 13, 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.

15. If a creditor, after having valued his security, subsequently realises it, or if it is realised under 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.

16. If a secured creditor does not comply with these Rules he shall be excluded from all share in any dividend.

17. Subject to rule 12, a creditor shall in no case receive more than 100 cents in the dollar and interest as provided by this Act.Taking accounts of property mortgaged and sale thereof

18. Upon application by motion of any person claiming to be a mortgagee of any part of the bankrupt’s immovable property, whether the mortgage is of a legal or equitable nature, the court shall proceed to inquire whether the person is such mortgagee and for what consideration and under what circumstances; and if it is found that the person is such mortgagee, and if no sufficient objection appears to the title of the person to the sum claimed by him under the mortgage, the court shall direct such accounts and inquiries to be taken as are necessary for ascertaining the principal, interest and costs due upon the mortgage and the rents and profits or dividends, interest or other proceeds received by the person or by any other person by his order or for his use, in case he has been in possession of the property over which the mortgage extends or any part thereof; and the court, if satisfied that there ought to be a sale, shall direct notice to be given, in such manner as it thinks fit, when and where and by whom and in what way the property or the interest therein so mortgaged is to be sold, and that the sale be made accordingly and that the Official Assignee, unless it is otherwise ordered, shall have the conduct of the sale; but it shall not be imperative on any such mortgagee to make such application. At any such sale the mortgagee may bid and purchase.

19. All proper parties shall join in the conveyance to the purchaser as the court directs.

20. The moneys arising from the sale shall be applied in the first place in payment of the costs, charges and expenses of the Official Assignee of and occasioned by the application to the court and of and attending the sale, and then in payment and satisfaction, so far as the same will extend, of what is found due to the mortgagee for principal, interest and costs; and the surplus of the said moneys, if any, shall then be paid to the Official Assignee; but if in case the moneys arising from the sale are insufficient to pay and satisfy what is so found due to the mortgagee, then he shall be entitled to prove as a creditor for the deficiency and receive dividends thereon rateably with the other creditors, but not so as to disturb any dividend then already declared.

21. For the better taking of such inquiries and accounts and making a title to the purchaser, all parties may be examined by the court upon interrogatories or otherwise as it thinks fit, and shall produce before the court upon oath all deeds, papers, books and writings in their respective custody or power relating to the estate or effects of the bankruptcy as the court directs.Proof in respect of distinct contracts

22. If a debtor was at the date of the receiving order liable in respect of distinct contracts as a member of two or more distinct firms or as a sole contractor and also as member of a firm, the circumstance that the firms are in whole or in part composed of the same individuals, or that the sole contractor is also one of the joint contractors, shall not prevent proof in respect of the contracts against the properties respectively liable on the contracts.Periodical payments

23. When any rent or other payment falls due at stated periods, and the receiving order is made at any time other than one of those periods, the person entitled to the rent or payment may prove for a proportionate part thereof up to the date of the order, as if the rent or payment grew due from day to day.Interest

24. On any debt or sum certain payable at a certain time or otherwise, whereon interest is not reserved or agreed for and which is overdue at the date of the receiving order and provable in bankruptcy, the creditor may prove for interest at a rate not exceeding 6% per annum, to the date of the order from the time when the debt or sum was payable, if the debt or sum is payable by virtue of a written instrument at a certain time, and if payable otherwise then 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.Debt payable at a future time

25. A creditor may prove for a debt not payable when the debtor committed an act of bankruptcy as if it were payable presently, and may receive dividends equally with the other creditors, deducting only thereout a rebate of interest at the rate of 6% per annum computed from the declaration of a dividend to the time when the debt would have become payable according to the terms on which it was contracted.Admission or rejection of proofs

26. The Official Assignee shall examine every proof and the grounds of the debt, and in writing admit or reject it in whole or in part or require further evidence in support of it. If he rejects a proof he shall state in writing to the creditor the grounds of the rejection.

27. If the Official Assignee thinks that a proof has been improperly admitted the court may on his application, after notice to the creditor who made the proof, expunge the proof or reduce its amount.

28. If a creditor is dissatisfied with the decision of the Official Assignee in respect of a proof, the court may on the application of the creditor reverse or vary the decision.

29. The court may also expunge or reduce a proof upon the application of a creditor if the Official Assignee declines to interfere in the matter, or in the case of a composition or scheme upon the application of the debtor.

30. For the purpose of any of his duties in relation to proofs the Official Assignee may administer oaths and take affidavits.