Execution of money decree - Rule of appropriation
The Constitution Bench in Gurpreet Singh's case [(2006) 8 SCC 457] has elaborately dealt with Order 21 Rules 1, 2, 4 and 5 CPC and has rendered a definite conclusion and succinctly clarified the application of the provision after a detailed discussion. From what has been stated in the said decision, the following principles emerge:
- (1) The general rule of appropriation towards a decretal amount is that such an amount is to be adjusted strictly in accordance with the directions contained in the decree and in the absence of such directions, adjustments are to be made firstly towards the payment of interest and costs and. thereafter towards payment of the principal amount subject, of course, to any agreement between the parties.
- (2) The legislative intent in enacting Order 21 Rules 1(4) and (5) CPC is clear that interest should cease to run on the deposit made by the judgment-debtor and notice given or on the amount being tendered outside court in the manner pro- vided for in Order 21 Rule 1(1)(b) CPC.
- (3) If the payment made by the judgment-debtor falls short of the decreed amount, the decree-holder will be entitled to apply the general rule of appropriation by appropriating the amount deposited first towards the interest, then towards costs and finally towards the principal amount due under the decree.
- (4) Thereafter, no further interest would run on the sum appropriated towards the principal. In other words if a part of the principal amount has been paid along with interest due thereon, as on the date of issuance of notice of deposit interest on that part of the principal sum will cease to run thereafter.
- (5) In cases where there is a shortfall in deposit of the principal amount, the decree-holder would be entitled to adjust interest and costs first and the balance towards the principal and beyond that the decree-holder cannot seek to reopen the entire transaction and proceed to recalculate the interest on the whole of the principal amount and seek for reappropriation.
[BHEL v. R.S. Avtar Singh and Co. (2013) 1 SCC 243 / AIR 2013 SC 252 ]
