1. Application for rateable distribution of non-sale assets held by court — Dispute under Section 73 CPC. (Para 1 , 2 , 3 , 4 , 5 )
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2024 Supreme(Online)(AP) 4619
HIGH COURT OF ANDHRA PRADESH
Nyapathy Vijay, J
Kanchana Krishnamurthy Reddy – Appellant
Versus
Galeti Jyothi – Respondent
CIVIL REVISION PETITION NO: 6572/2018
Advocates:
For the Appellants/Petitioners: Prakash C
For the Respondents: Virupaksha Dattatreya Gouda
For the Appellants/Petitioners: Prakash C
For the Respondents: Virupaksha Dattatreya Gouda
Section 73 of the CPC applies only to execution sale proceeds. For non-sale assets held by the court, the court should exercise its inherent powers under Section 151 CPC to ensure rateable distribution among decree holders to maintain fairness, as no priority is granted based on prior attachment.
Headnote:(A) Code of Civil Procedure - Section 73 - Scope of Rateable Distribution - The provision relating to rateable distribution of assets held by a court applies specifically to proceeds derived from an execution sale and does not extend to non-sale deposits or receipts. (Para 11, 12, 14)
(B) Statutory Interpretation - Use of Headings - Headings of a section can be referred to resolve ambiguity and determine the scope of a provision when the plain words are unclear. (Para 11, 12)
(C) Inherent Powers of Court - Distribution of Non-Sale Assets - In the absence of a specific statutory mechanism for non-sale assets, the civil court should invoke its inherent powers under Section 151 C.P.C. to ensure fairness and justice by rateably distributing amounts among decree holders, provided the application is filed prior to disbursal. (Para 15, 16)
Issues: Whether Section 73 of the C.P.C. regarding rateable distribution applies to non-sale assets received by the Court and whether such assets should be distributed rateably under inherent powers.
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2. Decree holder sought rateable distribution; respondent claimed priority due to prior attachment of assets. (Para 8 , 9 )
3. Section 73 CPC applies only to execution sale proceeds; non-sale assets require invocation of inherent powers under Section 151 CPC. (Para 10 , 11 , 12 , 13 , 14 , 15 , 16 )
4. Section 73 CPC does not apply to non-sale assets; court must use inherent powers under Section 151 for rateable distribution. (Para 16 )
5. Revision allowed; order set aside; all decree holders entitled to rateable distribution; respondent to re-deposit amount. (Para 19 , 20 )
6. Does Section 73 CPC apply to non-sale assets held by a court?
No, Section 73 CPC applies only to proceeds of execution sales, not to non-sale receipts held by the court. (Para 10 , 11 , 12 , 13 , 14 )
7. What mechanism governs distribution of non-sale assets among decree holders?
Courts must invoke inherent powers under Section 151 CPC for fair and just distribution of non-sale assets. (Para 16 )
8. Can a decree holder claim priority over others solely based on prior attachment of non-sale assets?
No, priority among decree holders is not contemplated for non-sale assets; all decrees stand on equal footing. (Para 15 )
The Court made the following:
HON'BLE SRI JUSTICE N.VIJAY
C.R.P.No.6572 of 2018
ORDER:
1. The present Civil Revision Petition is filed questioning the order passed in E.A.No.50 of 2018 in E.P.No.36 of 2013 in O.S.No.155 of 2009 passed by the Principal Senior Civil Judge, Tirupathi.
2. The Petitioner is the decree holder and the petitioner had advanced loan to one G.Gangaraju on 30.03.2006 under a promissory note. The said Gangaraju expired leaving behind his wife i.e respondent No.1 herein. The petitioner then filed suit for recovery of money in the year 2009 and the same was decreed on contest on 19.02.2013. During the pendency of the suit, the petitioner got attached the amounts in dispute vide I.A.No.354 of 2009. The petitioner thereafter filed E.P.No.36 of 2013. However, no amounts were being paid by the respondent No.1.
3. The petitioner then filed E.A.No.50 of 2018 seeking for rateable distribution of amounts lying in the Court. In the said application, it was contended that respondent No.2 herein had filed O.S.No.169 of 2006 against respondent No.1 for recovery of amount advanced to late G.Gangaraju. The said suit was decreed ex parte by the very same Principal Senior Civil Judge, Tirupathi and in E.P.No.171 of 2006, the death benefits in the hands of garnishee of late G.Gangaraju were attached and the amount was sent to the Court and was available for distribution.
4. It was also pleaded that the respondent No.3 also filed a suit against respondent No.1 in O.S.No.552 of 2006 and the same was decreed by the Additional Junior Civil Judge, Tirupathi by attaching the amount lying in the Court.
5. The respondent Nos.1 and 3 did not contest the E.A, while respondent No.2 filed counter contending that the amounts were attached pending his suit. It was contended that in the suit O.S.No.552 of 2006 filed by respondent No.3, amounts lying in the Court were sought to be attached in I.A.No.106 of 2008. The respondent No.2 then filed claim petition I.A.No.254 of 2008 in O.S.No.552 of 2008 and objected to the attachment. The claim petition of the respondent No.2 was rejected, however in appeal filed there on i.e A.S.No.34 of 2011, the X Additional District Judge, Tirupathi allowed the same. In view of the judgment in appeal, it was contended that the respondent No.3 cannot have any claim and the petitioner is also not entitled to the amounts as the garnishee had sent the amounts for satisfaction of his decree only.
6. The executing Court passed a reasoned order holding that as the amount was received to the account in E.P.No.171 of 2006, the same cannot be sought for rateable distribution and dismissed the application. Hence, the present revision is filed.
7. Heard Sri C.Prakash, learned counsel for the petitioner and Sri Virupaksha Dattatreya Goud for the respondents.
8. The counsel for the petitioner contended that Section 73 C.P.C., provides for rateable distribution with regard to sale proceeds and would not be applicable with regard to non-sale deposits and that the Court should have in fairness rateably distributed the amounts under inherent powers rather than non-suiting the petitioner merely on account of the fact that the respondent No.2 got the amounts attached.
9. The Counsel for Respondent No.2 contended that the amounts were attached in his E.P. and the amounts were sent to satisfy his decree and as such, he has priority over the petitioner. Both the counsel cited case law in support of their contentions.
10. The Section 73 C.P.C. provides for rateable distribution and the same reads as under:
73. 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 distribute
