When a decree-holder has been given permission to bid and set off, the set off must be deemed as made on the date of sale, and other decree-holders cannot benefit from rateable distribution after the conclusion of the sale.

Bardswell, J.

1. The respondent to these BardswellJ. appeals obtained a decree in O.S. No. 67 of 1920 on the file of the Subordinate Court of Vizagapatam. The decree was transmitted to the District Court of East Godavari for execution. The respondent filed an Execution Petition No. 45 of 1925 in that Court and was given permission, on an application on that behalf, to bid at the execution sale and to set off the amount of his bid, if successful, against the amount due to him under his decree. The actual expression in the order was not "set off" but "credit" but it is perfectly clear and is not disputed that the effect of the order was to give permission to set off. The sale began on 7th January, 1927 and was concluded on 12th January, 1927, on which date the property was knocked down to the respondent. There has been no objection to the sale on any ground. On the evening on which the sale was concluded, but just after its conclusion, the appellants in these appeals, each of whom held a decree against the same judgment-debtor, filed petitions, asking for rateable distribution. The learned District Judge of East Godavari has dismissed the petitions, holding that they had not been put in, as Section 73, Civil Procedure Code, requires that such petitions should be, before the receipt of the assets, which they asked to be distributed, by the Court that held them. In his view, in that the respondent had been given permission to set off, the sale proceeds must have been deemed to have been paid into Court by the respondent purchaser and immediately repaid to him towards satisfaction of his decree. The appellants, therefore, could not have the benefit of Section 73, as their applications were not made to the Court before it had received the assets. They appeal against this decision.

2. In Arunachalam Chetty v. Somasundaram Chetty (1920) 12 L.W. 328 a view was taken by Seshagiri Aiyar, J., sitting as a single Judge, that is favourable to the appellants. A decree-holder had obtained permission to bid and set off and was. the successful bidder at a sale which was held and concluded on 28th August, 1918. On the following day another decree-holder applied for rateable distribution. The learned Judge pointed out that under Order 21, Rule 72 permission to bid and set off is given subject to the rights of decree-holders under Section 73 and, as there was nothing to show that permission in that case was of a different character, he allowed the petition for rateable distribution. This decision, however, has been considered by Ramesam, J., when also sitting as a single Judge, in Ramaraju v. Lakshmiah 1930 M.W.N. 568 and he held it to be wrong. In his view when a decree-holder has been given permission to bid and set off and when, as in the case now under notice, the amount of the successful bid is less than the decree amount, the whole of the set off must be deemed as made on the date of sale and the whole of the amount must be deemed to have been received or realised eo instanti the sale is made. This view must, in my opinion, and with respect, be taken as the correct one. Ordinarily under Rule 84 of Order 21 the successful bidder has to pay a deposit of 25 per cent, of his bid immediately on his being declared to be the purchaser, but, if the purchaser is the decree-holder and is entitled to set off the purchase money under Rule 72, then the Court may dispense with the requirements of the rule. Normally there will be such dispensation, in which case, as soon as such decree-holder is declared the purchaser, the set off must be taken as having been made, and Section 73 will give no benefit to other decree-holders who apply for rateable distribution after the conclusion of the sale, however soon after its conclusion their applications may be made.

3. Mr. Lakshmannas main point for the appellants is that leave to set off cannot legally be given before the sale has been held and concluded, and he quotes in his support, an opinion to that effe