Court deposits are not payment in decree satisfaction, and tax cannot be unilaterally withheld from a judgment debt.

A deposit made in court to resist execution of an award is not treated as payment in satisfaction of the decree under Order XXI Rule 1 CPC when it is made only to secure interim protection or avoid execution. The claimant may therefore compute the balance on the basis of the amount due on the date of actual remittance, without the exchange risk shifting merely because funds were lodged in court. Once the contractual claim merges into an award and decree, it becomes a judgment debt executable according to its tenor, and tax cannot be unilaterally withheld at source from the decretal amount or awarded interest unless the governing law expressly permits it.

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Issues: (i) Whether amounts deposited by the judgment-debtor in court pending challenge to the award could be treated as payment in satisfaction of the decretal debt under Order XXI Rule 1 of the Code of Civil Procedure, 1908; (ii) whether tax was deductible at source from the decretal amount, including the interest component, when the claim had merged into a judgment debt.

Issue (i): Whether amounts deposited by the judgment-debtor in court pending challenge to the award could be treated as payment in satisfaction of the decretal debt under Order XXI Rule 1 of the Code of Civil Procedure, 1908.

Analysis: The deposited sums were made to obtain protection against execution and not as an unconditional payment in discharge of the award. A deposit made to buy peace, avoid execution, or secure interim relief is different from payment to the decree-holder in the manner contemplated by Order XXI Rule 1. The claimant was therefore entitled to compute the outstanding amount on the basis of the sum due on the date of actual remittance, and the exchange fluctuation risk did not shift to the claimant merely because money had been lodged in court.

Conclusion: The deposits were not payments in satisfaction of the decree, and the claimant was entitled to recover the balance of the decretal amount.

Issue (ii): Whether tax was deductible at source from the decretal amount, including the interest component, when the claim had merged into a judgment debt.

Analysis: Once the contractual claim was merged into an award and the resulting decree, the liability assumed the character of a judgment debt. In that form, it had to be executed according to its tenor, subject only to deductions and adjustments permissible under the Code of Civil Procedure. The judgment-debtor could not invoke the Income-tax Act to unilaterally reduce the decretal amount by withholding tax at source from the interest component.

Conclusion: No deduction of tax at source was permissible from the decretal amount or the awarded interest.

Final Conclusion: The claimant succeeded in full on the substantive execution issues, and the respondent was directed to pay the outstanding decretal dues, the arbitration costs, and the costs of the present application, failing which coercive reliefs were to follow.

Ratio Decidendi: A deposit made in court to resist execution is not payment in satisfaction of a decree under Order XXI Rule 1, and once a claim merges into a judgment debt, tax cannot be unilaterally deducted at source from the decretal amount unless the governing law expressly permits it.

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