Section 39 : Creditors to have equal status

1) In case anyone has obtained credit from several creditors in one or several instalments by pledging his/her property as collateral, and the property so pledged as collateral is not sufficient to repay the credit of all the creditors, all the creditors who have used the property as collateral shall be deemed to have equal status in respect to outstanding credit and all of them may make a proportionate claim on the property, except when otherwise provided for in the contract.

2) In case any property which has already been pledged as collateral under sub-section (1) is again pledged as such with a provision to give priority to the second creditors in the future, the concerned contract shall be void. In case the (second) creditor has already realised his/her credit from the collateral before the contract becomes void, even while knowing that there are other creditors with respect to the collateral, he/she shall refund the amount to the other creditors and realise his/her credit from the other assets of the person who has pledged the property as collateral.