(1) The proceeds from the sale of the estate of the bankrupt shall be distributed in the following order of priority—

1. the fees payable to the bankruptcy trustee;
2. the fees and expenses incurred by the bankruptcy trustee for the proceedings;
3. the wages and unpaid dues owed to employees of the bankrupt for the period not exceeding twelve months preceding the date of the bankruptcy order;
4. the amount due to any secured creditor who has relinquished his security interest;
5. the amount due to any unsecured financial creditor;
6. the amount due to the Central Government or any State Government in respect of the whole or any part of the period of two years preceding the date of the bankruptcy order;
7. all other debts and dues owed by the bankrupt including unsecured debts due to operational creditors; and
8. any surplus remaining after payment of all the debts proved in the bankruptcy shall be distributed among the partners of the firm or used for the benefit of the bankrupt, as the case may be.