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Judgment
Bardswell, J.—The respondent to these BardswellJ. appeals obtained a decree in O.S. No. 67 of 1920 on the file of the Subordinate Court
of Vizagapatam. The decree was transmitted to the District Court of East Godavari for execution. The respondent filed an Execution Petition No.
45 of 1925 in that Court and was given permission, on an application on that behalf, to bid at the execution sale and to set off the amount of his
bid, if successful, against the amount due to him under his decree. The actual expression in the order was not ""set off"" but ""credit"" but it is perfectly
clear and is not disputed that the effect of the order was to give permission to set off. The sale began on 7th January, 1927 and was concluded on
12th January, 1927, on which date the property was knocked down to the respondent. There has been no objection to the sale on any ground. On
the evening on which the sale was concluded, but just after its conclusion, the appellants in these appeals, each of whom held a decree against the
same judgment-debtor, filed petitions, asking for rateable distribution. The learned District Judge of East Godavari has dismissed the petitions,
holding that they had not been put in, as Section 73, Civil Procedure Code, requires that such petitions should be, before the receipt of the assets,
which they asked to be distributed, by the Court that held them. In his view, in that the respondent had been given permission to set off, the sale
proceeds must have been deemed to have been paid into Court by the respondent purchaser and immediately repaid to him towards satisfaction of
his decree. The appellants, therefore, could not have the benefit of Section 73, as their applications were not made to the Court before it had
received the assets. They appeal against this decision.
In Arunachalam Chetty v. Somasundaram Chetty (1920) 12 L.W. 328 a view was taken by Seshagiri Aiyar, J., sitting as a single Judge, that is
favourable to the appellants. A decree-holder had obtained permission to bid and set off and was. the successful bidder at a sale which was held
and concluded on 28th August, 1918. On the following day another decree-holder applied for rateable distribution. The learned Judge pointed out
that under Order 21, Rule 72 permission to bid and set off is given subject to the rights of decree-holders u/s 73 and, as there was nothing to show
that permission in that case was of a different character, he allowed the petition for rateable distribution. This decision, however, has been
considered by Ramesam, J., when also sitting as a single Judge, in Ramaraju v. Lakshmiah 1930 M.W.N. 568 and he held it to be wrong. In his
view when a decree-holder has been given permission to bid and set off and when, as in the case now under notice, the amount of the successful
bid is less than the decree amount, the whole of the set off must be deemed as made on the date of sale and the whole of the amount must be
deemed to have been received or realised eo instanti the sale is made. This view must, in my opinion, and with respect, be taken as the correct
one. Ordinarily under Rule 84 of Order 21 the successful bidder has to pay a deposit of 25 per cent, of his bid immediately on his being declared
to be the purchaser, but, if the purchaser is the decree-holder and is entitled to set off the purchase money under Rule 72, then the Court may
dispense with the requirements of the rule. Normally there will be such dispensation, in which case, as soon as such decree-holder is declared the
purchaser, the set off must be taken as having been made, and Section 73 will give no benefit to other decree-holders who apply for rateable
distribution after the conclusion of the sale, however soon after its conclusion their applications may be made.
Mr. Lakshmanna''s main point for the appellants is that leave to set off cannot legally be given before the sale has been held and concluded, and
he quotes in his support, an opinion to that effect by Broomfield, J., in Navaj v. Totaram (1930) 33 Bom. L.R. 503. That opinion, however, was
obiter and was not necessary for the decision of the case which was then before the Bench of which that learned Judge was a member. It is
certainly not the view taken by Ramesam, J., in the case above cited, and it is also contrary to the view indicated by another Bench of the Bombay
High Court in Hazarimal v. Namdev ILR (1908) 32 Bom. 379. There with reference to Section 294 of the previous Code, to which the present
Order 21, Rule 72 corresponds, Sir Lawrence Jenkins, C.J., remarked ""that section is perfectly clear. The first paragraph of that section requires
the permission of the Court to enable the decree-holder to bid for the property. If he gets that permission and gets it without qualification then the
amount due on the mortgage may if he so desires be set off. But it may be one of the terms on which permission to bid is granted that there should
not be this right of set off"". If there can be a refusal in advance to allow set off, it would appear that it is equally permissible for set off to be
allowed in advance. And that permission to set off may be granted at the same time as the permission to bid seems clear from the terms of Section
84, by which the decree-holder purchaser may be dispensed from the immediate payment of the purchase money that would have otherwise to be
made. There could be no dispensation from immediate deposit unless the permission to set off had been obtained prior to the sale.
In my opinion the orders under appeal are correct. These appeals must, therefore, be dismissed with costs (one set). Pleader''s Fee Rs. 50.
Horace Owen Compton Beasley,Kt., C.J.
I agree