What is meant by ‘rateable distribution of assets’?
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Question: What is meant by ‘rateable distribution of assets’? [JJS 2018]Find the answer to the mains question only on Legal Bites. [What is meant by ‘rateable distribution of assets’?] AnswerSection 73 provides for a case where the assets are held by a court, and multiple individuals have made an application to the court for the execution of decrees and payment of money before the receipt of assets. And have not obtained the assets after the deduction of the cost of realization....
Question: What is meant by ‘rateable distribution of assets’? [JJS 2018]
Find the answer to the mains question only on Legal Bites. [What is meant by ‘rateable distribution of assets’?]
Answer
Section 73 provides for a case where the assets are held by a court, and multiple individuals have made an application to the court for the execution of decrees and payment of money before the receipt of assets. And have not obtained the assets after the deduction of the cost of realization. Such assets will be ratably distributed among all persons entitled to the property provided if any property is sold subject to mortgage or charge; the mortgagee shall not be entitled to share in any surplus arising from the sale. And any property liable to be sold in execution of decree subject to mortgage or charge may be ordered by the Court to be sold free from mortgage or charge with consent of the mortgagee, giving him the same interest in the proceeds of the sale as he had in the property sold.
With regard to the distribution of the proceeds of the sale, Section 73(1)(c) provides, “Where any immovable property is sold in execution of a decree ordering its sale for the discharge of an incumbrance thereon, the proceedings of sale shall be applied in the following way:
- Firstly, in defraying the expenses of the sale;
- Secondly, in discharging the amount due under the decree;
- Thirdly, in discharging the interest and principal money due on subsequent incumbrances (if any); and
- Fourthly, ratably 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 the execution of such decrees, and has not obtained satisfaction thereof?”
The distribution of rateable assets is done by sale if two or more parties are involved. A property entitled to two individuals is sold by the Court and the cost of realization is deducted from the total sale value of the property. The remaining amount is then divided between the two parties based on the share they are entitled to and distributed.
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