DISTRIBUTION OF ASSETSCentral
Section 73 of The Code of Civil Procedure, 1908
Proceeds of execution sale to be rateably distributed among decree-holders.
- (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 mortgage 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 in cumbrance 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 judgement-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 no 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.
Summary
- This section explains how to share money collected by a court among several people who are all owed money by the same debtor.
- To get a share, a person must apply for their own money decree execution before the court actually receives the assets.
- The court first pays the costs involved in getting the money before sharing the rest.
- If there are multiple claims on a property, the law sets a strict order of payment: first expenses, then the main decree, then later claims.
- If the court accidentally pays money to the wrong person, the person who should have received it can sue for a refund.
- These rules do not take away any legal rights that the Government may have.
Practical examples
1A court auctions a debtor's car for 50,000 rupees. Anil and Sunil both applied for execution before the money arrived. After the court takes 2,000 for sale costs, the remaining 48,000 is shared between Anil and Sunil in proportion to what they are owed.
2A house is sold to pay a mortgage. According to Section 73, the court first pays the auction fees, then pays the person who won the mortgage case, and then pays any other lenders who have registered claims on the house.
FAQ
1. When must I apply to get a share of money under Section 73 of the Code of Civil Procedure, 1908?
Under Section 73 of the Code of Civil Procedure, 1908, you must make an application before the court receives the assets.
2. What happens if a court pays the wrong person under Section 73 of the Civil Procedure Code?
Under Section 73 of the Civil Procedure Code, the person entitled to the assets may sue the person who received them to compel a refund.
3. Does Section 73 of the Code of Civil Procedure, 1908, apply to non-money decrees?
No, Section 73 of the Code of Civil Procedure, 1908, specifically mentions decrees for the payment of money.
Test yourself
1.Under Section 73 of the Code of Civil Procedure, 1908, what is deducted from assets before they are distributed?
2.If property is sold to discharge a mortgage under Section 73 of the Code of Civil Procedure, 1908, what is paid second?
3.How does Section 73 of the Code of Civil Procedure, 1908, affect the rights of the Government?