Proceeds of execution-sale to be rateably distributed among decree-holders
Full Text
(1) Where assets are held by a Court and more persons than one have, before the receipt of such assets, made application to the Court for the execution of decrees for the payment of money passed against the same judgment-debtor and have not obtained satisfaction thereof, the assets, after deducting the costs of realization, shall be rateably distributed among all such persons:
Provided as follows:—
(a) where any property is sold subject to a mortgage or charge, the mortgagee or incumbrancer shall not be entitled to share in any surplus arising from such sale;
(b) where any property liable to be sold in execution of a decree is subject to a mortgage or charge, the Court may, with the consent of the mortgagee or incumbrancer, order that the property be sold free from the mortgage or charge, giving to the mortgagee or incumbrancer the same interest in the proceeds of the sale as he had in the property sold;
(c) where any immovable property is sold in execution of a decree ordering its sale for the discharge of an incumbrance thereon, the proceeds of sale shall be applied—
First, in defraying the expenses of the sale;
Secondly, in discharging the amount due under the decree;
Thirdly, in discharging the interest and principal monies due on subsequent incumbrances (if any); and
Fourthly, rateably among the holders of decrees for the payment of money against the judgment-debtor, who have, prior to the sale of the property, applied to the Court which passed the decree ordering such sale for execution of such decrees, and have not obtained satisfaction thereof.
(2) Where all or any of the assets liable to be rateably distributed under this section are paid to a person not entitled to receive the same, any person so entitled may sue such person to compel him to refund the assets.
(3) Nothing in this section affects any right of the Government.
Plain English Summary
Section 73 establishes the statutory scheme of rateable distribution, ensuring that when assets realized in execution against a common judgment-debtor are held by a court, all creditors who applied for execution of money decrees prior to the receipt of such assets share the proceeds pro-rata after deducting realization expenses, while preserving priority for secured mortgagees, crown debts, and suits for refund against wrongful recipients.
Key Legal Elements
- Pari Passu Sharing Among Money Creditors: Prevents a race among creditors by pooling debtor assets and distributing them rateably.
- Strict Cut-Off Date: Creditors must have applied for execution of their money decrees before the court actually receives the assets.
- Same Judgment-Debtor Requirement: Decrees must be passed against the same person in the same legal capacity.
- Priority Hierarchy (Sec 73(1)(c) & (3)): Realization expenses, prior mortgagees, subsequent encumbrancers, and Government crown debts retain absolute priority before rateable division.
- Suit for Refund (Sec 73(2)): Grants an express statutory right of suit to recover wrongfully disbursed assets from ineligible recipients.
Practical Note
Rateable Distribution Prerequisites, Priority of Secured Creditors & Suit for Refund: (1) Essential Conditions for Section 73: To claim rateable distribution, four conditions are mandatory: (a) assets must be held by the court, (b) decrees must be for money, (c) decrees must be against the same judgment-debtor in the same capacity, and (d) execution application must be filed BEFORE the court receives the assets. Filing after the sale proceeds enter court custody forfeits the right to rateable distribution. (2) Crown Debts & Secured Creditors: Under sub-section (3) read with public law, Government sovereign tax dues and secured creditors under SARFAESI/IBC/mortgages take precedence over unsecured money decree-holders. (3) Wrongful Payment Remedy: If the executing court erroneously disburses the entire proceeds to one aggressive decree-holder without rateable distribution, an aggrieved co-creditor is not restricted to revision; Section 73(2) explicitly confers a right to file a regular civil suit for refund against the payee.
हिंदी पाठ
(1) जहां न्यायालय द्वारा आस्तियां (धन/संपत्ति) धारित हैं और ऐसी आस्तियों की प्राप्ति से पूर्व एक से अधिक व्यक्तियों ने उसी निर्णीत-ऋणी के विरुद्ध पारित धन के संदाय की डिक्रियों के निष्पादन के लिए न्यायालय को आवेदन किया है और उनकी तुष्टि (वसूली) प्राप्त नहीं की है, वहां वसूली के खर्चों को काटकर शेष आस्तियां ऐसे सभी व्यक्तियों के बीच आनुपातिक रूप से (Rateably) वितरित की जाएंगी:
परन्तु यह कि:—
(क) जहां कोई संपत्ति किसी बंधक या भार के अध्यधीन बेची जाती है, वहां बंधकदार या भारधारी ऐसे विक्रय से प्रोद्भूत किसी अधिशेष (बचे हुए धन) में अंश पाने का हकदार नहीं होगा;
(ख) जहां किसी डिक्री के निष्पादन में बेची जाने योग्य कोई संपत्ति किसी बंधक या भार के अध्यधीन है, वहां न्यायालय बंधकदार या भारधारी की सहमति से यह आदेश दे सकेगा कि संपत्ति बंधक या भार से मुक्त बेची जाए, और बंधकदार या भारधारी को विक्रय के आगमों (प्राप्त रकम) में वही हित दिया जाए जो उसका बेची गई संपत्ति में था;
(ग) जहां कोई स्थावर (अचल) संपत्ति उस पर के किसी भार के उन्मोचन के लिए उसके विक्रय का आदेश देने वाली डिक्री के निष्पादन में बेची जाती है, वहां विक्रय के आगम निम्नलिखित क्रम में उपयोजित किए जाएंगे—
प्रथमतः, विक्रय के व्ययों को चुकाने में;
द्वितीयतः, डिक्री के अधीन शोध्य रकम के उन्मोचन में;
तृतीयतः, पाश्चात्यवर्ती भारों (यदि कोई हों) पर शोध्य ब्याज और मूलधन के उन्मोचन में; तथा
चतुर्थतः, निर्णीत-ऋणी के विरुद्ध धन के संदाय की डिक्रियों के उन धारकों के बीच आनुपातिक रूप से, जिन्होंने संपत्ति के विक्रय से पूर्व उस न्यायालय को, जिसने ऐसा विक्रय आदिष्ट करने वाली डिक्री पारित की थी, ऐसी डिक्रियों के निष्पादन के लिए आवेदन किया है और उनकी तुष्टि प्राप्त नहीं की है।
(2) जहां इस धारा के अधीन आनुपातिक रूप से वितरित की जाने योग्य समस्त या कोई आस्तियां ऐसे व्यक्ति को संदत्त कर दी जाती हैं जो उन्हें प्राप्त करने का हकदार नहीं है, वहां ऐसा कोई व्यक्ति जो इस प्रकार हकदार है, ऐसे व्यक्ति पर आस्तियों के प्रतिदाय (रिफंड) के लिए विवश करने हेतु वाद ला सकेगा।
(3) इस धारा की कोई भी बात सरकार के किसी अधिकार पर प्रभाव नहीं डालती है।