Appropriation of payments under a money decree follows interest-first accounting, with interest stopping on amounts already paid.

In execution of a money decree, where the decree contains no contrary direction, payments are appropriated first towards interest and costs and only then towards principal under Order XXI Rule 1 CPC. The rule means that interest stops running to the extent the principal has been paid or deposited, and the decree-holder cannot reopen completed appropriation to recalculate interest on the full principal as if no part payment had been made. Section 34 CPC and Section 3(3)(c) of the Interest Act do not alter this execution-stage appropriation principle. The decree-holder may continue to claim interest only on the unpaid balance until satisfaction of the decree.

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Issues: Whether, in execution of the decree passed on the arbitral award, the payments made by the judgment debtor had to be appropriated first towards interest and costs and only thereafter towards principal, and whether further interest ceased to run on the portion of principal already paid or deposited.

Analysis: The decree preserved the award amount and the interest payable thereon, with future interest directed from the date of decree if payment was not made within the stipulated time. Order XXI Rule 1 of the Code of Civil Procedure governs payment of money under a decree, and where the decree contains no contrary direction, the general rule of appropriation is that payments are adjusted first towards interest and costs and then towards principal. The Court applied the Constitution Bench rule that interest ceases to run on the amount paid or deposited to the extent of such payment, and the decree-holder cannot reopen completed appropriation to recalculate interest on the entire principal as though no part payment had been made. Section 34 of the Code of Civil Procedure and Section 3(3)(c) of the Interest Act did not assist the judgment debtor, because the controversy concerned execution and appropriation under the decree, not a barred award of interest upon interest in the abstract.

Conclusion: The respondent was entitled to appropriate the payments in the manner adopted by the courts below, and further interest remained payable on the balance principal until satisfaction of the decree; the appellant's objection failed.

Final Conclusion: The decree for interest and appropriation of payments was upheld, and the execution objection was rejected.

Ratio Decidendi: In execution of a money decree, absent a contrary direction in the decree, payments are appropriated first towards interest and costs and then towards principal, and interest stops on the amount paid or deposited to that extent; the decree-holder cannot recalculate interest on principal already satisfied.

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