(1) Whenever the bankruptcy trustee has sufficient funds in his hand, he may declare and distribute interim dividend among the creditors in respect of the bankruptcy debts which they have respectively proved.
(2) Where the bankruptcy trustee has declared any interim dividend, he shall give notice of such dividend and the manner in which it is proposed to be distributed.
(3) In the calculation and distribution of the interim dividend, the bankruptcy trustee shall make provision for-
(a) any bankruptcy debts which appear to him to be due to persons who, by reason of the distance of their place of residence, may not have had sufficient time to tender and establish their debts; and
(b) any bankruptcy debts which are subject of claims which have not yet been determined;
(c) disputed proofs and claims; and
(d) expenses necessary for the administration of the estate of the bankrupt.
Legal Commentary & Landmark Judgments: Section 174
Section 174 empowers the Bankruptcy Trustee to declare and distribute Interim Dividends to proved creditors during the administration of the estate.
Trustees declaring an interim dividend under Section 174 must retain an escrow reserve for claims currently under appeal before the DRT/NCLT to prevent personal liability in the event an appeal succeeds.