‘Rateable Distribution’: Law Designed to Ensure Fairness. Insights from Koshy Abraham v. Shaji, 2026:KER:20267.

Jojy George Koduvath.

Abstract

  • Section 73 CPC mandates Rateable Distribution among various Decree Holders. It is designed to ensure fairness.
  • The decree-holder who brings the property to sale does not get a preferential share of the entire proceeds.
  • There should be a Pending Execution Petition for getting Rateable Distribution.
  • It is not obligatory for decree-holders to file an application to obtain a rateable distribution.
  • If attached by several courts, according to Section 63(1) of the CPC, the Court of highest grade, or the Court under whose decree the property was first attached, has to sell it.
  • “Assets … held by a Court” in Section 73 conveys the idea – assets held within the ‘power and control’ of the court.

Koshy Abraham v. Shaji, 2026:KER:20267; 2026 KHC(Online) 232; 2026 KLT(Online) 1508 (Sathish Ninan & P. Krishna Kumar, JJ.) considered the following points:

Pending Execution Petition

  • 1. Should there be a pending Execution Petition before the Court for getting Rateable Distribution?
    • Answer: Yes.
      • Cheriyan v. Acheyamma Mathen, 1961 KLT 531, relied on.
      • (Also See: Shaji v. Dinesan, 1999-1 CivCC 102; 1998-2 KLJ 647; 1998-2 KLT 917; 1998 KHC 483
      • Achuri Narayana v. Mamidi Eshwaraiah, 2017-1 ALD 207 ; 2017-1 ALT 211)

It is Not Obligatory for a DH Entitled Rateable Distribution to File an Application

  • 2. Is it obligatory for the decree-holders who claim rateable distribution under Section 73 to specifically apply for such rateable distribution
    • Answer: No.
      • (Suraj Lal Bal Krishna Das vs Padrauna Raj Krishna Sugar Works, AIR 1961 All. 371 relied on).

Pendency of an Application for Restoration

  • 3. Does the pendency of an application for restoration of the execution petition suffice for claiming rateable distribution?
    • Answer: Strictly speaking ‘Not’.
      • However, in Bincy Scaria v. Joseph @ Josemon (2024 (3) KHC 102) and Danish Varghese v. Jancy Danish (2021 (1) KHC 1), it was held that a sale will not become absolute until the ancillary proceedings to set aside the sale are ultimately disposed of, either at the original side or at the appellate side.

The Court of highest grade, or that Attached the property First, has to sell it

  • 4. If attached by several courts, according to Section 63(1) of the CPC, the Court of highest grade, or the Court under whose decree the property was first attached, has to sell it.

DH who Purchased the Property has to Deposit the Balance Sale Price (Deducting his Decree Amount) in Court

  • 5. Should a decree holder who purchased the property at a sale is liable to deposit the Balance Sale Price (deducting his decree amount) for rateable distribution?
  • Answer: Yes.
    • (E.P. Abdul Latheef v. K. Vinodan, 2007 (1) KHC 624, relied on.)
      • As per Section 63(2) of the Code, a decree holder who has purchased the property at a sale held in execution of a decree is entitled to set off the purchase money against the which he is entitled to realise under the decree. The balance has to be deposited in the court.

End Notes 1

What is meant by “assets are held by a Court” in Section 73 when it says – “Where assets are held by a Court …. shall be rateably distributed”? Does it include ‘money’?

  • Answer: “Assets are held by a Court” in Section 73 conveys the idea – assets “held within the authority of the court (to control and to exercise the power to give orders and make decisions)”.
  • “Assets … held by a Court” does not include “money” (Nachiappa Chettiar v. Subbier AIR 1923 Mad 505).

Does money deposited to set aside a sale, under Order XXI, Rule 89 CPC, override the general rule of rateable distribution?

  • Answer: Yes, because it dictates a specific mode of distribution.

End Notes 2

Section 73 of the CPC reads as follows:

“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 realisation, shall be rateably distributed among all such persons:
Provided as follows:–
(a) where any property is sold subject to a mortgage or charge, the mortgagee 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 incumbrance 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 judgment-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 not 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.”

Section 63 of the CPC reads as under:

63. Property attached in execution of decrees of several Courts –
(1) Where property not in the custody of any Court is under attachment in execution of decrees of more Courts than one, the Court which shall receive or realise such property and shall determine any claim thereto and any objection to the attachment thereof shall be the Court of highest grade, or, where there is no difference in grade between such Courts, the Court under whose decree the property was first attached.
(2) Nothing in this section shall be deemed to invalidate any proceeding taken by a Court executing one of such decrees.
[Explanation – For the purposes of sub-section (2), “proceeding taken by a Court” does not include an order allowing, to a decree-holder who has purchased property at a sale held in execution of a decree, set off to the extent of the purchase price payable by him.]

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