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srilawsby aturio
As enacted
Contents

Part XV

427. Set-off between a bankrupt debtor and another party

Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.

(1)

Subject to subsections (3), (4) and (5), where there have been mutual credits, mutual debts or other mutual dealings between a bankrupt debtor and a person who seeks or, but for the operation of this section, would seek to have a claim admitted in a Bankruptcy, by way of proof of debt –

(a)

an account shall be taken of what is due from one party to the other in respect of those credits, debts or dealings;

(b)

an amount due from one party shall be set off against an amount due from the other party;

and

(c)

only the balance of the account shall be admitted as a provable debt or be payable to the Bankruptcy Trustee as part of the

Bankruptcy Estate.

(2)

For the purposes of subsection (1), mutual credits, mutual debts and other mutual dealings do not include –

(a)

any debt arising out of an obligation incurred at any time after the commencement of the

Bankruptcy or after which the person had notice of –

(i)

ongoing proceedings on a Bankruptcy application relating to the bankrupt debtor under section 81; or

(ii)

a pending Bankruptcy petition relating to the bankrupt debtor under section 85;

(b)

any debt acquired by the person, by assignment or otherwise, under an agreement entered into at any time after the commencement of the

Bankruptcy or after which the person had notice of –

Rescue, Rehabilitation and Insolvency

(i)

ongoing proceedings on a Bankruptcy application relating to the bankrupt debtor under section 81; or

(ii)

a pending Bankruptcy petition relating to the bankrupt debtor under section 85.

(3)

For the purposes of this section, rules may be prescribed on determining the said amounts under section 426.

(4)

Where an amount due from the bankrupt debtor to the person referred to in subsection (1) includes both preferential claims and claims that are not preferential claims, the amount due from the person to the bankrupt debtor shall under paragraph (b) of subsection (1) be set off rateably against such claims.

Read on from s 428

Part XVI

Read on from Part XVI

Part XVII

Read on from Part XVII

Schedules