Section 16(3) in The Displaced Persons (Debts Adjustment) Act, 1951
(3)Where in any case, the creditor elects to retain his security, if the displaced debtor received any compensation in respect of any such property as is referred to in sub-section (1), the creditor shall be entitled--(a)Where the compensation is paid in cash, to a first charge thereon:Provided that the amount of the debt in respect of which he shall be entitled to the first charge shall be that amount as bears to the total debt the same proportion as the compensation paid in respect of the property bears to the value of the verified claim in respect thereof and to that extent the debt shall be deemed to have been reduced:(b)Where the compensation is by way of exchange of property, to a first charge on the property situate in India so received by way of exchange:Provided that the amount of the debt in respect of which be shall be entitled to the first charge shall be that amount as bears to the total debt the same proportion as the value of the property received by way of exchange bears to the value of the verified claim in respect thereof and to that extent the debt shall be deemed to have been reduced.
