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2006 DIGILAW 750 (DEL)

A. Tosh and Sons India v. N. N. Khanna

2006-04-26

SANJAY KISHAN KAUL

body2006
Judgement ORDER :- The petitioner filed an execution petition in respect of a decree passed by the Subordinate Judge, Kochi in O.S. No. 90/93. The decree was for the principal amount of Rs. 22,89,900/- along with interest at the rate of 18 per cent per annum from the date of institution of suit till date of realisation. The judgement debtor filed an appeal against the decree before the High Court of Kerala and interim orders were granted in favour of the judgement debtor subject to deposit of the amount of Rs. 5 lakh before this Court. It may be noticed at this stage that the judgement debtor had obtained transfer of the decree for enforcement to this Court. This amount of Rs. 5 lakh was released in favour of the decree holder on 15-4-1996. 2. The appeal of the judgement debtor was partly allowed in terms of the judgement in appeal dated 1-11-2000 and the decree was modified. The decree holder was held entitled to a sum of Rs. 9,24,666/- instead of Rs. 22,89,900/-. The decree holder was granted interest at the rate of 18 per cent per annum from the date of institution of suit till date of realisation as granted by the trial Court. A further direction was passed that the amount of Rs. 5 lakh paid during the pendency of the appeal be adjusted while recovering the balance amount. 3. The decree holder filed EA No. 363/2001 in view of the decree passed by the High Court. In para 5 of the application the decree holder set out the amounts which were liable to be recovered from the judgement debtor and the said para 5 is as under: "That as per the modified decree passed by the High Court, the decree holder is entitled to recover from the judgement debtor the following amount : Principal amount due as per the modified decree Rs. 9,24,666.00 Interest for the same @ 18% from 12-3-1993 to 4-3-1996 Rs. 4,99,319.64 Rs. 14,23,985.64 Less amount remitted on 4-3-96 Rs. 5,00,000.00 Balance amount due Rs. 9,23,985.64 Interest for Rs. 4,24,666.00 (Rs. 9,24,666-Rs. 5,00,000) @ 18% from 5-3-1996 to 5-8-2001 Rs. 4,14,450.75 Total Rs. 13,38,436.39 4. A reading of the aforesaid para 5 shows that the amount of Rs. 5 lakh was adjusted as on the date when it was remitted. 4,99,319.64 Rs. 14,23,985.64 Less amount remitted on 4-3-96 Rs. 5,00,000.00 Balance amount due Rs. 9,23,985.64 Interest for Rs. 4,24,666.00 (Rs. 9,24,666-Rs. 5,00,000) @ 18% from 5-3-1996 to 5-8-2001 Rs. 4,14,450.75 Total Rs. 13,38,436.39 4. A reading of the aforesaid para 5 shows that the amount of Rs. 5 lakh was adjusted as on the date when it was remitted. However while calculating interest the decree holder itself made the calculation on the basis as if the sum of Rs. 5 lakh was liable to be adjusted against the principal and accordingly calculated interest from 5-3-1996 till date of filing of the application on only Rs. 4,24,666/- and not on Rs. 9,23,985.64. On notice being issued on the application, the judgement debtor moved EA No. 507/2001 seeking to pay the decretal amount in instalments. The judgement debtor states that he could not pay the decretal amount of Rs. 13,38,436.39 in lump sum but was willing to pay Rs. 2,38,440/- in the first week of December, 2001 and the remaining decretal amount in monthly instalments of Rs. 1,00,000/- each. 5. The application was considered on 7-11-2001 by this Court and in the presence of both the counsel for the decree holder and judgement debtor, the EA was disposed of in terms of the prayer made by the judgement debtor. The execution petition was re-notified for payment of the amount in terms thereof. 6. The next date of hearing was fixed as 3-12-2001 when the judgement debtor handed over the cheque of Rs. 2,38,440/- as prayed for in EA No. 507/2001 and the petition was again re-notified on 5-3-2002 for payment of remaining instalments "as per the application of the judgement debtor". On 5-3-2002, the Court noted that the judgement debtor had paid further three instalments. 7. The judgement debtor at that stage moved EA No. 205/2002 seeking leave to negotiate the sale of immoveable property bearing No. B-410, Ansal Chambers-1, 3, Bhikaji Cama Place, New Delhi which had remained as security for satisfaction of the decree in the present case. In view of the payments made by the judgement debtor, the application was allowed on 24-4-2002. On 22-7-2002, another cheque of Rs. 2 lakhs was delivered to the decree holder towards part satisfaction of the decree and once again on 6-9-2002, the judgement debtor brought another cheque of Rs. 2 lakhs but the decree holder was not represented. In view of the payments made by the judgement debtor, the application was allowed on 24-4-2002. On 22-7-2002, another cheque of Rs. 2 lakhs was delivered to the decree holder towards part satisfaction of the decree and once again on 6-9-2002, the judgement debtor brought another cheque of Rs. 2 lakhs but the decree holder was not represented. The counsel undertook to deliver the cheque to the decree holder and it is recorded in the proceedings that the learned counsel for the decree holder submitted that he shall clear all dues till the next date of hearing. The matter was re-notified for 10-12-2002. 8. The matter was however listed then on 25-11-2002 when learned counsel for judgement debtor submitted that out of Rs. 13 lakhs, Rs. 11 lakhs had already been paid and a cheque of Rs. 1 lakh had been paid on that date. Learned counsel for the decree holder took time to file a statement of total amount received. On 10-12-2002, it was noticed that the cheque given by the judgement debtor had been dishonoured and thus the statement of account could not be forwarded. A fresh cheque in lieu of dishonoured cheque was handed over to the decree holder. Thereafter time was taken by the decree holder to submit statement of account and such a statement was filed thereafter. Interestingly, the judgement debtor moved an EA No. 184/2004 claiming that the excess payment had been made but did not press the application on 18-1-2005. 9. It is only vide EA No. 401/2005 that the matter was again sought to be re-agitated which was listed on 22-11-2005. It was noticed that no further date was given in the execution petition after 18-1-2005 and thus this application had been filed. The application was allowed on 7-02-2006 and the execution petition was taken on Board. 10. The controversy in the present case in view of the aforesaid is limited to the extent that while on the one hand the decree holder as per the statement of account filed seeks to adjust payment of Rs. 5 lakhs against the interest accrued as on that date and thereafter seeks to calculate interest on the balance amount, the judgement debtor contends that sum of Rs. 5 lakhs is liable to be adjusted against the principal amount. In support of its contention, learned counsel for the judgement debtor makes a two-fold submission. 11. 5 lakhs against the interest accrued as on that date and thereafter seeks to calculate interest on the balance amount, the judgement debtor contends that sum of Rs. 5 lakhs is liable to be adjusted against the principal amount. In support of its contention, learned counsel for the judgement debtor makes a two-fold submission. 11. The first submission of learned counsel for the judgement debtor is that in view of amendment of the provisions of the Code of Civil Procedure, 1908 (hereinafter referred as the said Code) most specifically Order 21, the deposit of any such amount, unless otherwise directed, has to be against the principal element and not against the interest. In this behalf, learned counsel has relied upon the judgement of the learned single Judge of the Andhra Pradesh High Court in The Oriental Insurance Co. Ltd. v. Smt. V. Kala Bharathi and Ors., AIR 2006 Andhra Pradesh 31. The learned single Judge took note of the amendment made to Rule 1 Order 21 of the Code as also the recommendations of the Law Commission prior to the amendment. Before amendment, Act 104 of 1976, Rule 1 of Order 21 CPC read as under : "1. All money payable under a decree shall be paid as follows, namely :- a) into the Court whose duty it is to execute the decree, or b) out of Court to the decree-holder; or c) otherwise as the Court which made the decree directs. 2) Where any payment is made under Clause (a) of sub rule (1) notice of such payment shall be given to the decree holder." 12. There is no doubt about the legal proposition that in view of the aforesaid provision and the judicial pronouncements in this behalf, payment of any amount was liable to be adjusted first against the interest and only thereafter against the principal. 13. There is no doubt about the legal proposition that in view of the aforesaid provision and the judicial pronouncements in this behalf, payment of any amount was liable to be adjusted first against the interest and only thereafter against the principal. 13. Order 21 Rule 1 of the Code as it stands now, reads as under : "Modes of paying money under decree (a) all money, payable under a decree shall be paid as follows, namely :- a) by deposit in to the Court whose duty it is to execute the decree, or sent to that Court by postal money order or through a bank; or b) out of Court, to the decree holder by postal money order or through a bank or by any other mode wherein payment is evidenced in writing; or (c) otherwise, as the Court which made the decree, directs. 2) Where any payment is made under Clause (a) or Clause (c) of sub-rule (1) the judgement debtor shall give notice thereof to the decree holder either through the Court or directly to him by registered post, acknowledgment due. 3) Where money is paid by postal money order or through a bank under Clause (a) or Clause (b) of sub-rule (1) the money order or payment through bank, as the case may be, shall accurately state the following particulars, namely :- a) the number of the original suit; b) the names of the parties or where there are more than two plaintiffs or more than two defendants, as the case may be, the names of the first two plaintiffs and the first two defendants; c) how the money remitted is to be adjusted, that is to say, whether it is towards the principal, interest or costs; d) the number of the execution case of the Court, where such case is pending; and e) the name and address of the payer. 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). 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). 5) On any amount paid under Clause (b) of sub rule (1), interest, if any, shall cease to run from the date of such payment : Provided that where the decree holder refuses to accept the postal money order or payment through a bank, interest shall cease to run from the date on which the money was tendered to him, or where he avoids acceptance of the postal money order or payment through bank, interest shall cease to run from the date on which the money would have been tendered to him in the ordinary course of business of the postal authorities or the bank, as the case may be. 14. Learned single Judge of the Andhra Pradesh High Court took note of the various judgements of the Supreme Court whereby it was held that adjustment must be made against the interest first. However, the learned Judge has taken a view that addition of sub rules 4 and 5 was made with the avowed object of arresting the running interest on the deposit made by the decree holder in the Court as the purpose of awarding interest on the decretal amount is to compensate the decree holder for the delayed payment, the object continues to be honoured even where part payment is made by the judgement debtor is adjusted towards principal. 15. Learned Judge has, however, noted that there are certain limitations which are inbuilt in Order 21 Rule 1 of the Code where a Court may direct a particular mode of payment and payment of instalments can be one such methodology which may contain a component of decretal amount and interest. Learned Judge gives his conclusion in para 30 as under : 30. The deposits made by the judgement debtors, in compliance with the condition imposed by the appellate Courts, present a different kind of situation. If the orders of the appellate Courts are clear, as to the mode of adjustment, no problem as such, would arise. Learned Judge gives his conclusion in para 30 as under : 30. The deposits made by the judgement debtors, in compliance with the condition imposed by the appellate Courts, present a different kind of situation. If the orders of the appellate Courts are clear, as to the mode of adjustment, no problem as such, would arise. However, where such orders are silent on that aspect, sub rule (4) of Rule 1 would govern the situation, and the part payments deserve to be adjusted towards the principal decretal amount, and not any component of interest accrued, up to that date. 16. Learned single Judge of this Court however in Hindustan Construction Corporation v. DDA and Ors., 2002 (65) DRJ 43 has taken a view that where a deposit of decretal amount is made by the judgement debtor under the orders of the appellate Court, such deposit in Court to avoid execution keeps the amount beyond the reach of the decree holder and is not a payment to the decree holder in terms of Order 21 Rule 1 of the Code. It was observed in paras 5 and 6 as under : "5. The only question to be determined in this petition is as to whether the deposit of the decretal amount by the judgement debtor under the orders of the Appellate Court, could be construed as payment to decree holder or not. According to Rule 1 of Order 21 of the Code of Civil Procedure, the modes of payment of a money decree are (a) by depositing into Court whose duty it is to execute the decree or sent to that Court by postal money order or through a Bank; or (b) out of Court to the decree holder by postal money order or through a Bank or by any other mode wherein payment in evidenced in writing; or (c) otherwise as the Court, which made the decree directs. A perusal of the judgements cited by the learned counsel for the decree holder and particularly the judgement of the Apex Court in the case of PSL Ramanathan Chettiar and Ors. A perusal of the judgements cited by the learned counsel for the decree holder and particularly the judgement of the Apex Court in the case of PSL Ramanathan Chettiar and Ors. v. ORMPRM Ramanathan Chettiar, AIR 1968 SC 1047 (supra) make it clear that the deposit of decretal amount by judgement debtor in the Court to purchase peace by way of stay of execution of the decree does not pass title in the deposited money in favour of the decree holder and as such, is not a payment in terms of Order 21 Rule 1 of the Code of Civil Procedure which prescribes specific modes for the satisfaction of a money decree. 6. The payment made to a decree holder under Rule 1 of Order 21 CPC and a deposit made by a judgement debtor in Court for obtaining stay of execution of decree against him are altogether different courses adopted by a judgement debtor. Payment under Order 21 Rule 1 CPC satisfies a decree holder whereas a deposit in the Court to avoid execution keeps the amount beyond the reach of decree holder and leaves him waiting for its release. The deposit of the decretal amount, therefore, by a judgement debtor as a condition for obtaining stay of the execution of the decree cannot be treated at par with payment to the decree holder. As such in spite of such deposit of interest, as ordered in favour of the decree holder by the Court passing the decree continues to run against the judgement debtor till the decree holder actually receives the money. The rationale behind this view is that a judgement debtor who files an appeal to challenge a Decree and applies for stay of execution pending disposal of his appeal seeks to avoid payment of decretal amount to the decree holder and as such, upon getting stay of execution, even on deposit of decretal amount, succeeds in preventing payment of decretal amount to decree holder. Therefore, his liability to pay interest to decree holder continues till the amount is actually paid to decree holder. Therefore, his liability to pay interest to decree holder continues till the amount is actually paid to decree holder. A judgement debtor therefore on whose appeal the execution is stayed subject to deposit of decretal amount in Court must take appropriate steps by way of requesting the Court to ensure that the deposited amount is invested fruitfully so that at the end of the day, in case his appeal is dismissed and the amount becomes payable to decree holder, the interest earned on the deposited amount is available for discharging the liability of interest." (Emphasis supplied) 17. I am in agreement with the view taken by R. C. Chopra, J. in Hindustan Construction Corporation case (supra) and respectfully differ from the views expressed by the learned single Judge of the Andhra Pradesh High Court to the extent of deposit made by any party as a condition of stay before the appellate forum. It has to be appreciated that a distinction must be made between the amounts paid in the execution proceedings where there is no appeal pending and where a party chooses to challenge the decree before the appellate forum and the appeal Court grants conditional stay. The amount deposited by the judgement debtor in such a case is only to keep the portion of the decree in abeyance and it cannot be said that such amount deposited is akin to a tender of the amount to the decree holder. 18. The amount of Rs. 5 lakh deposited by the judgement debtor in the present case was a condition of stay of the decree and thus it is not permissible for the judgement debtor to contend on that basis that the amount of Rs. 5 lakh ought to be adjusted from the principal amount. I am thus unable to accept the plea of the judgement debtor on this account. 19. The second limb of the submission of the learned counsel for the judgement debtor rests on the manner in which the decree holder himself appropriated the amount. Learned counsel contends that once the decree holder has himself appropriated the amount against the principal, it is not now permissible for the decree holder to contend otherwise. 19. The second limb of the submission of the learned counsel for the judgement debtor rests on the manner in which the decree holder himself appropriated the amount. Learned counsel contends that once the decree holder has himself appropriated the amount against the principal, it is not now permissible for the decree holder to contend otherwise. In this behalf learned counsel relied upon the judgement of the Apex Court Mathunni Mathai v. Hindustan Organic Chemicals Limited, AIR 1995 SC 1572 where it was held that the deposit could not be deemed to be towards principal only because the deposit was made in pursuance of an order of the Court. The Apex Court while construing the provisions of Order 21, Rule 1 of the Code after amendment has come to the conclusion that the view in this behalf would be no different from what was the manner of construction of the provision in Meghraj v. Mst. Bayabai, AIR 1970 SC 161 . In fact the Supreme Court has observed that the ratio laid down in Meghraj case (supra) applies now with greater rigours. This is another reason why I am unable to agree with the view taken by the Andhra Pradesh High Court in The Oriental Insurance Co. Ltd. case ( AIR 2006 AP 31 ) (supra). However the ratio of the judgement in Mathunni Mathai case (supra) is in the following terms: "The Court held that even though the judgement debtor while depositing decretal amount from time to time stated that payments were being made towards the principal due but in absence of any evidence that the decree holder was informed about the nature of deposit or the decree holder appropriated it towards the principal, the ordinary rule applied and the payments by the judgement debtor would be appropriated towards interest and cost as held in Meka Venkatadri case (AIR 1922 PC 233) (supra)." 20. Learned counsel for the judgement debtor emphasizes on the aspect "or the decree holder appropriated it towards the principal". Learned counsel contends that the application filed by the decree holder EA No. 363/2001 itself shows how the decree holder has dealt with the amount of deposit and what amount the decree holder came to recover from the judgement debtor. Learned counsel for the judgement debtor emphasizes on the aspect "or the decree holder appropriated it towards the principal". Learned counsel contends that the application filed by the decree holder EA No. 363/2001 itself shows how the decree holder has dealt with the amount of deposit and what amount the decree holder came to recover from the judgement debtor. In this behalf, there is no doubt that a reading of the said application and more specifically para 5 leaves no manner of doubt that the decree holder has himself adjusted the sum of Rs. 5 lakh against the principal amount and has thus claimed interest only on the balance principal amount for the period after deposit of Rs. 5 lakh. I thus find force in the contention of learned counsel for the judgement debtor. There is nothing which precludes the decree holder from adjusting payment made by the judgement debtor against the principal amount. This is what the decree holder has done while filing EA No. 363/2001. At no stage of time did the decree holder move proceedings in this Court stating that there was a mistake in the calculation. It is only after the full payment was made was this statement of account filed where calculations were sought to be made in a different manner. 21. There is another important aspect which supports this view. The judgement debtor had moved an EA 507/2001 on the basis of the calculation filed by the decree holder in EA No. 363/2001 and volunteered to pay the decretal amount of Rs. 2,38,440/- immediately and balance in instalments of Rs. one lakh each. The order passed allowing the said application was in the presence of the counsel for the decree holder and the decree holder not only accepted the said amount on subsequent date but continued to accept the instalment of Rs. 1 lakh per month. It appears that the arrangement was that there would in fact be on further accrual of interest on that amount and it was agreed that the amount of Rs. 13,38,436.39 would be in full and final satisfaction of the claims. It is on that basis that instalments of one lakh have been paid subsequently and the decree holder in fact kept silent for almost ten months after the application of the judgement debtor was disposed of. 13,38,436.39 would be in full and final satisfaction of the claims. It is on that basis that instalments of one lakh have been paid subsequently and the decree holder in fact kept silent for almost ten months after the application of the judgement debtor was disposed of. It appears that there was only some subsequent re-thought to the matter by the decree holder which has given rise to the decree holder seeking to re-agitate the whole issue. It may be noticed that the judgement debtor has paid more than Rs.18 lakh to the decree holder against the decree for Rs. 9,24,666/- with interest. 22. In view of the aforesaid, I am of the considered view that the decree stands satisfied and the execution petition accordingly stands disposed of.