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TMI Blog2012 (10) TMI 1016X X X X Extracts X X X X X X X X Extracts X X X X ..... ecution Petition No.208/2000 contending that the appellant did not furnish the award amount in its entirety. The appellant while resisting the Execution Petition, also filed EA No.522 of 2000 under Section 47 of the Code of Civil Procedure by taking the stand that entire award amount has been fully paid and, therefore, there was nothing to be granted in the Execution Petition. The learned Single Judge dismissed the objections by order dated 12.07.2002 which was the subject matter of appeal in which the impugned judgment came to be passed by the Division Bench of the High Court of Delhi. 3. The issue centres around the interpretation of Order XXI Rules (1), (4) and (5) of CPC read with Section 34 CPC and Section 3 (3) (c) of Interest Act. Though the legal issue falls within the narrow compass, to appreciate the respective contentions of the parties, certain details about award dated 15.03.1982, the order of the Court which granted the seal of approval to the award dated 31.05.1985 in suit No.594-A/1982, the order of the Division Bench dated 18.07.2000 by which the challenge to the award and the order dated 31.05.1985 came to be rejected and the subsequent order dated 31.07.2000 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me is hereby taken on record and made a rule of the Court with the modification that the claimant shall be entitled to interest at the rate of 12 % per annum from March 12,1981 till the date of the decree and a decree is hereby passed in terms thereof which shall form part of the decree. It is further ordered that the claimant shall be entitled to future interest at the rate of 12 % per annum from the date of the decree till realization, in case the award amount is not paid within two months from today the 31st May, 1985. It is lastly ordered that suit No.409-A/1982 is hereby disposed of. Given under my hand and the seal of the Court this the 31st day of May, 1985. 5. When the appellant challenged the said decision of the learned Single Judge dated 31.05.1985 in FAO (OS) 188 of 1985, the same came to be dismissed by the order dated 18.07.2000. During the pendency of the suit FAO (OS) No.188 of 1985 by way of an interim order dated 13.09.1985 the recovery under the award was stayed subject to the condition that the respondent paid the sum of ₹ 1 crore into the Court which was directed to be withdrawn by the respondent on furnishing Bank guarantee for the purpose of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of last order dated 23.08.2002 whatever amount which was ultimately directed to be paid by learned Single Judge in the order dated 12.07.2002 was also paid to the respondent. Keeping the above factors in mind, counsel for the appellant, Mr. Chandhiok, learned Additional Solicitor General appearing for the appellant raised the following contentions. 8. Mr. Chandhiok, learned ASG for the appellant by referring to Order XXI Rule 1 sub-clauses (1), (4) and (5) submitted that after the passing of the award by the Arbitrator on 15.3.1982 and it was made as a Rule of the Court by the learned Single Judge in the order dated 31.05.1985 substantial payment towards the decretal amount was made by 18.10.1985 and what remained to be paid in satisfaction of the decretal amount was only ₹ 41,68,474/- apart from interest which was due and payable in a sum of ₹ 1,53,22,603/- in all a sum of ₹ 1,94,91,077/-. The learned ASG submitted that after the filing of the Execution Petition and the orders passed thereon when the appellant moved the learned Single Judge pursuant to interim orders dated 01.12.2000, the entire balance amount was also deposited by way of two cheques re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as on that date, remained unpaid. The learned Senior Counsel contended that the payment of decretal amount was not satisfied as stipulated under Order XXI Rule 1 (1) and consequently the operation of sub-clauses (4) and (5) of Order XXI Rule 1 cannot be held to have operated upon until such satisfaction of payment of decretal amount was not made by the appellant. The learned Senior Counsel, therefore, contended that after the award was made as a Rule of the Court after 31.05.1985 and when the first payment of ₹ 1 crore was made by the appellant on 18.10.1985, the decretal amount which was due and payable by the appellant as on that date was in a sum of ₹ 2,19,61,134/- and after giving credit to the payment of ₹ 1 crore a balance amount of ₹ 1,19,61,134/- was due and payable as from 19.10.1985. The learned Senior Counsel, therefore, contended that when the next payment was made by the appellant only on 13.12.2000 in a sum of ₹ 1,94,93,885/-, based on the calculation of the respondent, a further sum of ₹ 1,42,96,318/- was due and payable which remained unpaid. The learned Senior Counsel, however, fairly admitted that even as per the stand of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in this case. The opening words of sub-rule (1) of Order XXI reads as under: All money, payable under a decree shall be paid as follows, namely:- . Sub-rule (4) is to the following effect: (4). On any amount paid under clause (a) or clause (c) of sub-rule (1), interest, if any, shall cease to run from the date of service of the notice referred to in sub-rule (2). A plain reading of the above clauses in the sub-rule of Order XXI is to the effect that on payment of the amounts payable under a decree, as provided under sub-rule (1), the calculation of interest on such amount payable under the decree would cease to operate from the date of service of notice as stipulated under sub-rule (2) of Order XXI. 12. Leaving aside the intimation by way of service, as regards the payment as provided under sub-rule (2), inasmuch as in the case on hand on different dates the payments were made, such payments were all made after due notice to the respondent. Therefore, there was no controversy relating to the date when the respective payments were made. We are, therefore, only concerned with the implication and application of sub-rule (1) of Order XXI and the consequent effect on what ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lief granted under the award and the ultimate Rule of the Court together, we find that learned Arbitrator directed that the calculation of payment of interest on the said amount of the award which should run from 06.01.1981 should now run from 12.03.1981 by virtue of Rule of the Court dated 31.05.1985. As per the direction of the learned Arbitrator, such payment of interest would be payable till the appellant make the payment or the decree whichever is earlier. The decree, having regard to the applicable provision, would be the date of the Rule of the Court, namely, 31.05.1985. Therefore, a strict construction of the said direction of the learned Arbitrator as regards the manner of calculation of interest would mean either the date of payment or the date of decree whichever is earlier. Since, the first date of payment in the case on hand was subsequent to the date of the Rule of the Court, namely, 31.05.1985, going by the direction of the learned Arbitrator, the calculation of interest should be made up to 31.05.1985. Since, the award received the seal of approval only after the same was made as the Rule of the Court, it is the stipulation contained in the said Rule would ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.07.1985, the future interest again at the rate of 12 per cent per annum can be claimed. In our considered opinion, it should be on the award amount which was in a sum of ₹ 1,41,68,474/-. We say so because both the award of the learned Arbitrator as well as the Rule of the Court makes a clear distinction between the award amount and the interest payable. The award having become the Rule of the Court and while making the said Rule it was clearly made known that the award contained an amount which was payable to the respondent quantifying the said amount in a sum of ₹ 1,41,68,474/-. After quantification of the said amount, the learned Arbitrator dealt with the grant of interest independent of the said payment and fixed the rate of such interest at 12 per cent per annum. When such a clear distinction was consciously made by the learned Arbitrator while passing the award no one can even attempt to state that the award amount and the interest mentioned in the award dated 15.03.1982 should be merged together and state that the award amount would comprise of a sum of ₹ 1,41,68,474/- and the interest worked out thereon became payable when once it was made the Rule of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date under the decree, both the award amount along with the interest, worked out to ₹ 2,19,61,134/-. The said figure, as calculated by the appellant, was not disputed by the respondent. On 18.10.1985, the appellant paid a sum of ₹ 1 crore by way of deposit pursuant to the order of the Division Bench dated 13.09.1985 when the appellant challenged the decree dated 31.05.1985. The respondent was also permitted to withdraw the said sum of ₹ 1 crore in the said order dated 13.09.1985. 17. Keeping the above factual position in mind when we examine Order XXI Rule 4 CPC, the said sub-rule states that on any amount paid under Clause (a) or Clause (c) of sub-rule 1, interest, if any, shall cease to run from the date of service of the notice referred to in sub-rule 2. In the case on hand since the deposit of the amount pursuant to the order of the Division Bench dated 13.09.1985 came to be made and was also withdrawn by the respondent from the date of service of notice as contemplated in sub-rule 2 the same was deemed to have been effected. Therefore, applying sub-rule 4 to the case on hand in so far as the cessation of interest is concerned, the same should operate up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppropriation in respect of amounts deposited in court or in respect of payment into court, is contained in Order 24 of the Code at the pre-decretal stage and in Order 21 Rule 1 at the post-decretal stage. Though, we are not directly concerned with it, we may notice that special provisions relating to mortgages are found in Order 34 of the Code. Under Order 24 Rule 1, a defendant in a suit for recovery of a debt may at any stage of the suit deposit in court such sum of money as he considers a satisfaction in full of the claim in the plaint. Rule 2 thereof provides for issue of notice of deposit to the plaintiff through the court and for payment out of the amounts to the plaintiff if he applies for the same. Rule 3 specifically states that no interest shall be allowed to the plaintiff on any sum deposited by the defendant from the date of such deposit, whether the sum deposited is in full discharge of the claim or it falls short thereof. Rule 4 enables the plaintiff to accept the deposit as satisfaction in part and allows him to pursue his suit for what he claims to be the balance due, subject to the consequences provided for therein regarding costs. It also deals with the procedure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o apply the rule of appropriation in respect of that amount, first towards interest and costs and then towards the principal, unless the decree otherwise directs. (Emphasis added) 23. Ultimately, in paragraph 49, the Constitution Bench decision has summed up the legal position as under: 49. Though, a decree-holder may have the right to appropriate the payments made by the judgment-debtor, it could only be as provided in the decree if there is provision in that behalf in the decree or, as contemplated by Order 21 Rule 1 of the Code as explained by us above. The Code or the general rules do not contemplate payment of further interest by a judgment-debtor on the portion of the principal he has already paid. His obligation is only to pay interest on the balance principal remaining unpaid as adjudged either by the court of first instance or in the court of appeal. On the pretext that the amount adjudged by the appellate court is the real amount due, the decree- holder cannot claim interest on that part of the principal already paid to him. Of course, as indicated, out of what is paid he can adjust the interest and costs first and the balance towards the principal, if there is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... due thereon which has been set out in the last part of judgment dated 12.07.2002 of the learned Single Judge, the following summing up: To sum up on 03.01.2001 ₹ 1,19,61,134/- was due towards principal amount and ₹ 23,35,134/- was due towards interest. The judgment debtor has further to pay the principal sum of ₹ 1,19,61,134/- with 12% interest calculated from 04.01.2002 to the date of final payment minus ₹ 23,35,184/- + ₹ 19,97,192/- allowed to be deducted as TDS. The contention of the judgment debtor that only a sum of ₹ 1,94,93,885/- was due as on 03.01.2001 under the decree is wrong and is rejected. As such the contention of the judgment debtor that the decree holder is charging interest on the amount of interest and contravening section 3(3)(c) of Interest Act is incorrect and is rejected. Having regard to the above discussion the objections filed by the judgment debtor have no merit the objection application is dismissed. 26. In fact in the calculation which was sought to be made by the respondent in its statement filed before the learned Single Judge, interest was calculated for the period subsequent to 06.03.2001 that was the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticularly with regard to the manner in which the amounts paid are to be appropriated. Because of these part payments, which had to be appropriated first against the interest, which kept on mounting, part principal amount always remain payable as a consequence whereof further interest on the balance principal amount also became payable by the appellant. For this, it is the appellant only which is to be blamed. 28. Inasmuch as, we find that the learned Single Judge as well as the Division Bench has applied the rule of construction on Order XXI Rule 1 based on the Constitution Bench decision of this Court wherein the earlier decision of this Court in Prem Nath Kapur (supra), in regard to the rule of appropriation, as set out in paragraph 48, was also approved, we do not find any illegality in the said judgment of the Division Bench while affirming the order of the learned Single Judge dated 12.07.2002. 29. As far as the contention based on Section 34 of CPC having regard to the general rule of appropriation in cases of this nature where there is a short payment made pursuant to the decree, we do not find any conflict with the said provision in so far as it related to payment o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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