Appropriation of decretal deposits depends on notice; without it, payment may be adjusted towards interest and dues.

A payment or decretal deposit made without intimation of appropriation may be applied by the creditor in the ordinary manner under Section 60 of the Indian Contract Act, 1872. In execution proceedings, Order XXI Rule 1 CPC requires notice of payment or deposit to the decree-holder, and interest on the deposited amount stops only from service of that notice. Mere deposit in court, without communication of the intended appropriation, does not compel adjustment first towards principal. The rule in Meghraj therefore continued to apply, and the decree-holder was entitled to adjust the deposit towards interest and other dues rather than principal.

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Issues: Whether a decretal amount deposited by the judgment-debtor had to be adjusted first towards the principal debt or could be appropriated towards interest and other charges in the absence of notice to the decree-holder.

Analysis: The governing rule under Section 60 of the Indian Contract Act, 1872 permits the creditor to apply a payment where the debtor does not intimate the mode of appropriation and no other circumstance shows the intended application. In execution of decrees, Order XXI Rule 1 of the Code of Civil Procedure, 1908 requires notice of payment or deposit to the decree-holder, and interest on the amount deposited ceases only from service of that notice. Mere deposit in court, without communication of the intended appropriation, does not by itself compel adjustment towards principal. The prior rule in Meghraj continued to apply with greater force after the amendment to Order XXI Rule 1.

Conclusion: The amount deposited by the judgment-debtor could not be treated as appropriated towards principal in the absence of the required notice, and the decree-holder was entitled to have it adjusted in the ordinary manner towards interest and other dues.

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