Hi Vinod,
If you do a partial settlement before maturity, then the offsetting contract flows will be posted on that early date itself. So the question of TPM1 valuation arises only for the remaining contract.
The fundamental reason why we do valuation for a contract is that it is yet to be exercised and we wish to calculate the unrealised gain/loss.
So the MTM run will have to be done on the contract which is yet to mature.
Please let me know if I am missing out something here.
Regards,
Rohit