CPC Section 73 — Proceeds of execution sale to be rateably distributed among decree-holders
Civil
Summary
When a court holds money from the sale of a judgment-debtor’s property, and multiple people have asked the court to enforce money decrees against the same debtor before the money was received, the court must divide that money (after deducting sale costs) proportionally among those decree-holders. However, if the property was sold subject to a mortgage or charge, the mortgage holder cannot share in any extra money left over after the mortgage is paid. If the property is sold free of a mortgage with the mortgage holder’s consent, that holder gets the same share of the sale proceeds as they had in the property. For immovable property sold to clear a debt secured on it, the sale money is used first for sale expenses, then to pay the decree amount, then to pay later mortgage debts, and finally proportionally among other decree-holders who applied for execution before the sale. If someone who was not entitled to receive any of this money gets it anyway, the person who should have received it can sue to get it back. This section does not affect any rights of the government.
Official Text
(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.