Whether the government has any priority in execution under section 73 of CPC? Whether failure to claim rateable distribution will be detrimental to separate execution by a decree-holder? Whether it is necessary that assets of judgment-debtor should have been realized by the court in execution?

Question: Whether the government has any priority in execution under section 73 of CPC? Whether failure to claim rateable distribution will be detrimental to separate execution by a decree-holder? Whether it is necessary that assets of judgment-debtor should have been realized by the court in execution?

Find the answer to the mains question only on Legal Bites. [Whether the government has any priority in execution under section 73 of CPC? Whether failure to claim rateable distribution will be detrimental to separate execution by a decree-holder? Whether it is necessary that assets of judgment-debtor should have been realized by the court in execution?]

Answer

It is a common principle that a claim of a state has priority over all other claims. So accordingly, a judgment debtor who has a debt due to government, such debt will have preference over other debts Thanmal v. I. T. officer, [AIR 1958 All 636 (D.B.)], and this will not violate the fundamental rights under Article 14 of the Constitution of India.

The Supreme Court of India has held that the English common law of doctrine of equality also applies to the territories of India as well. It will not be out of place to mention here that the government need not file a separate suit to enforce its right of priority over other money decree – holders. However, the application must be made before the assets are paid over to the decree-holder.

In Union of India v. M/s Somasundaram Mills (P) Ltd & Another, [AIR 1985 S.C. 407], it was observed that “where the property is attached by state, but however, sale of the property taking place on execution petition by private decree-holders, before its sale after attachment by state, the state would be entitled to recover the sale proceeds from such decree-holder as the debts due to the state is entitled to priority over all other dues”.

Nothing like this is suggestive under Section 73 of the Civil Procedure Code, 1973, the failure to claim rateable distribution under Section 73, is in no way detrimental to the separate execution of the decree by a decree-holder against the same judgment- debtor.

It is not necessary that the receipt of assets should have been under process of execution. But it is necessary that the assets should have reached the hands of the court in execution, i.e. on the execution side. Thus, a payment made by the judgment- debtor of the decree amount in court is an asset held by the court, for though it is not realized by any process in execution but is still one in execution.

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