Subramania Iyer vs Sankaran Unni

The assignee-decree-holder in O.S. No. 20 of 1115 of the Trichur District Court is the revision Petitioner. The revision petition is from an order in execution allowing rateable distribution u/s 73, Code of Civil Procedure. The decree in this case was obtained against one Govinda Menon, who died and whose legal represervatives are counter-Petitioners 2 to 14. The first counter-Petitioner had obtained a decree against Govinda Menon in O.S. No. 47 of 1939 of the District Munsiff''s Court of Palghat. The assignee-decree-holder in O.S. No. 20 of 1115 attached the properties of Govinda Menon and brought them to sale. The sale took place on 28-6-1124 and the properties were purchased by one Sadasiva Iyer for Rs. 1700/-. He deposited the whole purchase money in Court on the date of sale. The decree-holder in Anr. decree obtained against Govinda Menon, namely O.S. No. 62 of 1112 of the Anjikammal District Court, had applied for execution of his decree before the date of the sale in O.S. 20/15. He also put in a petition on 26-7-1124 for setting aside the sale. That petition was. however, dismissed on 17-8-1124. The first counter-Petitioner filed an execution petition in the Trichur District Court on 8-7-1124 after getting his decree transferred to that Court in which he claimed rateable distribution of the assets realised by the auction sale, in O.S. No. 20 of 1115. He also put in a petition on 17-8-1124 for setting aside the auction sale. That petition is still pending. The petition for rateable distribution was opposed by the assignee-decree-holder in O.S. No. 20 of 1115 on the ground! that it was presented after the receipt of assets by the Court. This contention was repelled by the learned District Judge who held that the decree-holder in O.S. No. 47 of 1939 was entitled to share in the distribution of the assets. On the authority of a Single Bench decision of the Judicial Commissioner''s Court of Peshawar in - ''Makhan Singh v. Moti Ram'' AIR 1936 Pesh 164 (A) the learned Judge held that the assets could be deemed to have been received by the Court only on the 15th day after the auction sale since the auction-purchaser had time till then to deposit 75 per cent, of the purchase money after depositing 25 per cent, on the date of sale. It was also held in that case that until after the sale was confirmed it could not be said that the assets were received by the Court. This view also was accepted by the learned District Judge.

The question for consideration in the revision petition is whether in this casa the assets can be said to have been received by the Court before the first counter-Petitioner applied for execution of his decree in the Trichur District Court. Section 73(1), Code of Civil Procedure, provides thus:

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 realisation shall be rateably distributed among all such persons.

In the Code of 1882 the words used were "prior to the ''realisation''" while in the new Coda they were substituted by the words "before the ''receipt'' ". The word "realisation" was interpreted in different manner by different Courts and it was with a view to make the meaning clear that the word "receipt" was substituted for the word "realisation". What we have to decide in tills case is whether the assets can be said to have been received by the Court when the auction-purchaser deposited in Court the whole purchase money.

One of the reasons given by the learned District Judge for holding that the assets can not be held to have Been received by the Court when the purchase money was deposited by the auction-purchaser is that the auction-purchaser was bound to deposit only 25 per cent, of the purchase money on the date of sale and that the balance of 75 per cent, could be deposited within 15 days from the date of sale as provided in Order 21, Rule 84 and 85, Code of Civil Procedure. But Rule 85 is only an enabling provision and there is nothing to prevent the auction-purchaser from depositing the whole purchase money on the date of sale itself. Rule 85 reads thus:

The full amount of purchase money payable shall be paid by the purchaser into Court before the Court closes on the 15th day from the sale of the property.

According to this rule the purchaser may pay the balance purchase money any day before the close of the 15th day from the date of sale. If the money is paid before the 15th day there is no reason to treat it as money received by the Court on the 15th day and not on the day on which it is paid. The decree may grant time to the judgment-debtor to pay the decree-debt, but there is nothing to prevent him from paying the amount before the expiry of the time granted by the decree. If he so pays, it cannot be said that the assets are received by the Court not when the amount is paid into Court but on the expiry of the time granted by the decree. Similarly, the fact that Rule 85 allows the purchaser to deposit 75 per cent, of the purchase money within 15 days from the date of sale cannot stand in the way of his paying the amount earlier and there is no reason to hold that the assets are not received by the Court when the whole purchase money is paid into Court. This question did not directly arise for consideration in ''AIR 1936 Pesh 164 (A)'' relied on by the learned District Judge. In that case, the property was purchased by the decree-holder himself and ha was allowed to set off the proceeds of the sale against the amount due to him under the decree. The real question that arose for consideration in that case was whether the assets could be deemed to have been received by the Court before the sale was confirmed. In the course of the judgment the learned Assistant Judicial Commissioner observed thus:

It is an accepted principle of law that the date on which the 75 per cent, deposit is made under Order 21, Rule 85, CPC is the date before which the applications u/s 73 should be filed.

The learned Assistant Judicial Commissioner does not say that that date should necessarily be the 15th day after the date of sale. The words used are "the date on which the 75 percent, deposit is made". If, therefore, the 75 per cent, deposit is made along with the 25 per cent, on the date of sale itself it cannot be said that the 75 per cent, was not received by the Court on the day on which it was actually paid. It is true that, in a case in which only the 25 per cent, of the purchase money is deposited on the date of sale and the balance 75 per cent, is deposited afterwards, the assets can be said to have been received by Court only when the 75 per cent, is deposited. If, therefore, an application for rateable distribution is filed after the date of the deposit of the 25 per cent, and before the deposit of the balance 75 per cent., the applicant will be entitled to rateable distribution even in respect of the 25 per cent, deposited before the date of the application. The reason is that the twenty-five per cent, of the purchase money deposited by the purchaser on the date of sale is a mere deposit and not "assets received" and it is only when the balance 75 per cent, also is deposited that the assets can be said to have been received. Vide - ''Hafez Mahomed Ali Khan v. Damodar Pranamick'' 18 Cal 242 (B). Reference may be made to the following observation of Mookerjee and Caspersz JJ. in - ''Maharaja of Burdwan v. Apurba Krishna Roy'' 15 Cal WN 872 (C):

Till the whole of the purchase money has been deposited it cannot be held that the assets are held by the Court and admit of rateable distribution. If the purchaser fails to deposit the balance of the purchase money, the one-fourth amount deposited by him may be forfeited and in that event a fresh sale would be necessitated. Consequently we must hold that till the whole of the purchase money has been deposited by the purchaser it is open to the decree-holders to apply for execution.

''But this does not mean that in cases in which ''the whole purchase money is deposited before the expiry of the time granted for depositing 75 per cent, the assets are not received by the ''Court when the money is deposited in Court.

Learned, counsel for the first counter-Petitioner relied on the decisions in - ''Ramanathan Chettiar v. Subramania Sastrial'' 26 Mad 179 (D), and - Barendra Nath Mitter Vs. Martin and Co. and Others, in support of the view taken by the learned District Judge. In those cases properties were sold in different parcels and it was held that the sale proceeds could not be deemed to have been received by the Court until the entire amount of purchase money in respect of all the parcels was paid into Court. A different view was taken in - ''Viswanath Maheshwar v. Virchand Panachand'' 6 Bom 16 (F) and'' in - Girindra Nath Ray Vs. Kedar Nath Bidyanta and Others, It is, however, not necessary to discuss that question in this case. Here the properties were sold in one lot and the, whole purchase money was paid into Court on the date of sale. The argument that the assets cannot be deemed to have been received by the Court before the expiry of the time allowed for paying the 75 per cent, of the purchase money, even if the whole amount is paid earlier is, therefore, without any substance.

The second reason given by the learned District Judge is that the assets cannot be deemed to have been received by Court before the auction sale is confirmed and that since the first counter-Petitioner applied for execution of his decree before the sale was confirmed he must be held to have complied with the requirements of Section 73, Code of Civil Procedure. That is the view taken in ''AIR 1036 Pesh 164 (A)''. But the learned Assistant Judicial Commissioner who decided that case has not referred to any authority in support of his position. As stated already, the auction-purchaser in that case was the decree-holder himself who has been allowed to set off the sale proceeds against the amount due to him under the decree. The effect of allowing such set-off under Order 21, Rule 72 has been considered in many cases. Order 21, Rule 72, Sub-rule (2) reads thus:

Where a decree-holder purchases with such permission, the purchase money and the amount due on the decree may, subject to the provisions of Section 73, be set off against one Anr. , and the Court executing the decree shall enter up satisfaction of the decree in whole or in part accordingly.

It has been held that when a set-off is allowed under this sub-rule the purchase money will be deemed to have been received ''eo instanti'' the sale is held. Reference may be made to - Bhyraraju Ramaraju Vs. Pulavarthi Lakshmiah, - Sait Punnamchand Chatraban, Firm of Marwadi Bankers Vs. Vijjapu Satyanandam, ; - A.M.A. Murugappa Chettiar Vs. S.M.A.M. Ramasami Chettiar and Others, ; - Ahinath Ganguli Vs. Nepal Chandra Ghosh and Others, and - AIR 1944 295 (Nagpur) . It was held in those cases that when a decree-holder-auction-purchaser is allowed to set off the sale proceeds against the amount due to him under the decree he is deemed to have paid the purchase money into Court at the time of sale and to have taken it back at the same time. Therefore, the assets will be deemed to have been received by Court the moment the sale is held. The effect of the clause "subject to the provisions of Section 73" is that the decree-holders (SIC) have applied for execution before the (SIC) will be entitled to rateable distribution and that it will be subject to this right that the decree-holder-purchaser will be allowed to set off the sale proceeds against the decree amount due to him. But since the set-off takes place, subject to this restriction, the moment the sale is held, it is clear that it is only those decree-holders who have applied for execution of their decrees before the sale that can claim the benefit of Section 73. In A.M.A. Murugappa Chettiar Vs. S.M.A.M. Ramasami Chettiar and Others, '' the application for execution by the decree-holders who claimed rateable distribution were filed within 15 days after the date of sale. They contended that the right of the decree-holder-auction-purchaser to set off the sale proceeds against the decree amount due to him was subject to the provisions of Section 73 and that therefore the set-off could not be allowed so as to prejudice their claim for rateable distribution. It was held that only those decree-holders who had applied for execution before the sale could claim rateable distribution and that the purchaser was bound to deposit only the amount due to them. In AIR 1944 295 (Nagpur) the decision in '' AIR 1936 Pesh 164 (A)'' was considered.

The main reason given by the learned Assistant Judicial Commissioner in the Peshawar case for holding that the assets cannot be deemed to have been received by the Court before the sale is confirmed is that if the sale is set aside no question of set off of the sale proceeds against the decree amount would arise and that, therefore, there is no justification for holding that the assets have been received by the Court on the date of sale. It is true that it is only if the sale is confirmed that there will be any assets available for distribution among the decree-holders. But that does not affect the question as to who all will be entitled to rateable distribution if the sale is confirmed. That will depend on the question whether the provisions of Section 73 have been complied with by those who claim rateable distribution. If they have not complied with those provisions they will not be entitled to share in the assets when the sale is confirmed. Reference may be made in this connection to the following observation of Kemball J. in ''6 Bom 16 (F)'' already referred to:

It is contended that the purchase money held by the Court cannot be regarded as ''assets'' realised until such time as the sale becomes absolute, because, until the happening of that event such money is liable under certain contingencies to be refunded to the purchaser. But there is nothing in the aforesaid section (Section 295 of Act 10 of 1877) to show that such was the intention of the Legislature and we see no reason for placing so forced a construction on the word "assets"... So long as assets are in the hands of, and held by, the Court, every creditor who has, prior to such realisation, applied for execution of his money decree is entitled to a rateable division; and the circumstance that such money may, under some possible contingency, have to be refunded to the person paying them in Court, cannot be held to affect their character while within the control of the Court, as assets realised in execution of a decree.

We are clearly of opinion that assets in this case were received by the Court when the whole purchase money was deposited in Court by the purchaser. It follows that only those decree-holders who have applied for execution before the money was deposited in Court can claim rateable share in the sale proceeds. Since the first counter-Petitioner applied for execution of his decree only after the purchase money was deposited in Court he has not complied with the requirements of Section 73, CPC and is, therefore, not entitled to share in the rateable distribution of the assets in this case.

The order of the Court below is, therefore, set aside and the revision petition is allowed with costs.