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Issues: Whether the amount deposited by the judgment-debtor in court was to be appropriated first towards interest or towards principal.
Analysis: There was no agreement between the parties governing appropriation of the amounts paid under the award. In the absence of such agreement, the settled rule is that an indefinite payment is to be adjusted first towards interest and then towards principal, unless the debtor makes a valid stipulation for appropriation towards principal and the creditor accepts it. The record showed only a unilateral assertion by the debtor that the deposit was towards principal. The amount was accepted by the creditor without prejudice to its rights and contentions, so there was no basis to infer consent or implied agreement. Sections 59 and 60 of the Indian Contract Act, 1872 were therefore not attracted, and the award, enforceable as a decree under Section 36 of the Arbitration and Conciliation Act, 1996, did not alter the rule of appropriation.
Conclusion: The amount had to be appropriated first towards interest, not principal, and the creditor was entitled to claim the balance accordingly.
Ratio Decidendi: In the absence of an agreement, a payment made towards satisfaction of an award or decree and accepted without prejudice must be appropriated first towards interest and only thereafter towards principal; a unilateral stipulation by the debtor cannot shift that appropriation unless validly accepted by the creditor.
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