Section 106(3) in Karnataka Land Reforms Act, 1961
(3)Where the land in respect of which the annuity payable under subsection (2) is subject to encumbrances,-(a)if the value of the encumbrance is less than the amount of the annuity the holder of the encumbrance shall be paid in full from out of the amount of annuity and the balance shall be paid to the institution;(b)if the value of the encumbrance is more than the amount of the annuity, five per cent of such value shall be paid from out of such amount till the value of the encumbrance is fully paid and the balance shall be paid to the institution;(c)if there are more encumbrances than one, the amount under clauses (a) and (b) shall be distributed according to priority.
