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Karnataka High Court
Judges : A.R.Somnath Iyer
SHAMSUNDAR AND COURT - Appellant
Versus
SHA SUNNILAL VESAJI AND COURT - Respondent
. . Of .
Decided On : 01/18/1961
Advocates Appeared :
S.SHESHA GIRI RAO, V.NARAYANA RAO
Rateable Distribution - Code of Civil Procedure - Section 73 - The court held that a decree-holder claiming rateable distribution should have made an application to the court for the execution of the decree obtained by him before the receipt of the assets by the court to which that application is made. The court also emphasized that the purpose of section 73 is to ensure equitable distribution of assets between diligent creditors and that the court should look to the substance rather than the form of the application in order to administer the equity provided by the law.
Fact of the Case:
The petitioner, a decree-holder, sought rateable distribution of assets held by the court, which was contested by the respondent-decree-holder. The court below had directed payment of the amount in deposit in court to the respondent-decree-holder, leading to the petitioner's application for rateable distribution.
Finding of the Court:
The court found that the petitioner's application for rateable distribution was valid and that the court below was not right in rejecting his application on the ground that he made no application for rateable distribution before the receipt of assets by it. The court set aside the order under revision and directed that the application made by the petitioner-decree-holder for rateable distribution shall be disposed of on its merits and according to law.
Issues: The main issue was whether the petitioner was entitled to rateable distribution of the assets held by the court, and whether the respondent had valid objections to the claim made by the petitioner for rateable distribution.
Ratio Decidendi: The court held that a decree-holder claiming rateable distribution should have made an application for the execution of the decree obtained by him before the receipt of the assets by the court to which that application is made. The court emphasized the equitable distribution of assets between diligent creditors and the need to look to the substance rather than the form of the application in order to administer the equity provided by the law.
Final Decision: The court allowed the petitions, set aside the order under revision, and directed that the application made by the petitioner-decree-holder for rateable distribution shall be disposed of on its merits and according to law. The respondent-decree-holder was given the opportunity to raise objections to the claim being recognized.
Key Points: - The court held that a decree-holder claiming rateable distribution should have made an application to the court for the execution of the decree before receipt of the assets by the court holding the assets. (!) - The purpose of section 73 is to ensure equitable distribution of assets between diligent creditors and the court should look to the substance of the application rather than its form. (!) - An application for rateable distribution can be maintained even if the decree-holder did not pre-file a separate rateable-distribution application, as long as the execution application was made. The court found the petitioner’s execution application valid for rateable distribution and set aside a contrary order. (!) - The respondent may raise objections to the rateable-distribution claim when the matter is reconsidered in the court below. (!) - The revision petitions were allowed; the court directed disposal of the rateable-distribution claim on its merits and according to law, with objections retrievable. (!) - The underlying aim is equitable distribution among diligent creditors, looking at substance over form. (!)
( 1 ) THESE two revision petition s arise our of proceedings under second. 73 of the Code of Civil procedure. In civil Revision Petition 827/59 the petitioner was a decree-holder who had obtained a decree against the judgment-debtor against whom the respondent had also obtained a decree. Both these decree-holders had attached certain movable properties belonging to their judgment-debtor and these movable were sold and the money realised by the sale was received by the court on March 17, 1959. By the time those assets were received by the court, both these decree-holders had made applications for the execution of their decrees.
( 2 ) AFTER the court below directed payment of the amount in deposit in court realised by the sale to the respondent -decree-holder, the petitioner-decree-holder made an application to the court below reminding that court that his own execution application was will pending before it, and that therefore there should be no payment of the entire amount to the respondent -decree-holder but that the assets in court should be ratably distributed between the two decree-holders. That application was presented after the receipt of the assets by the court below and the court below made an order that since no application for rateable distribution has been presented by the petition -decree-holder before the receipt of those assets by the court, the petitioner was not entitled to rateable distribution. It is against this order that this revision petition is directed.
( 3 ) MR. Seshagiri Rao appearing for the petitioner-decree-holder contends that the order of the court below rests upon a clear subconstruction of second. 73 of the Code of civil Procedure.
( 4 ) NOW in this case it cannot be disputed that the assets of which the petitioner claimed rateable distribution were assets held by the court below. The petitioner-decree-holder was the holder or a decree for the payment of money. It is also disposable for Mr. Sriada Rao appearing on behalf of the respondent -decree-holder to dispute that the petition-decree-holder had made an supplication for the execution of his decree before the receipt of the assets by the court below.
( 5 ) BUT what Mr. Sripada Rao stoutly contends is that since the petitioner-decree-holder made no application for rateable distribution of the assets held by the court below before the receipt of those assets by that court, but had merely made an application for the execution of his decree before that date, he was not entitled to ratable distribution.
( 6 ) THE argument addressed by Mr. Sripada Rao is that in order to entitle a person to rateable distribution, there should be an application by him for rateable distribution to the court holding the assets before the receipt of those assets and that it is not enough if he has merely made an execution application to that court for the execution of his decree without claiming rateable distribution in it.
( 7 ) THIS argument, to my mind, amounts to reading into section 73 words which are not contained there. What Second. 73 requires, is that a decree-holder claiming rateable distribution should have made an application to the court for the execution of the decree obtained by him before the receipt of the assets by the court to which that application is made. but the section does not requires that person to make an application for rateable, distribution before that date. It is enough if he makes, an application for the execution of his decree.
( 8 ) THE words occurring to section 73 clearly indicate that those decree-holder only could share in the rateable distribution who have actually applied for the execution of their decrees to the court holding the assets. There is nothing in that section warranting the inference that in addition to those decree-holder applying for execution of their decrees they should with have made application for rateable distribution. Any other construction migh
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