TaxTMI 
TaxTMI 
2014 (4) TMI 1255
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.... date of realization, apart from costs quantified at Rs. 99,443/-. 4.Being aggrieved, the respondent - Insurance Company filed an appeal under Section 173 of the Motor Vehicles Act, 1988 (for short, 'the Act') and to comply with the provisions contained therein, deposited a sum of Rs. 25,000/-. On 15.12.1997, the High Court in C.M.A. No. 1726 of 1997 granted stay of execution of the Award dated 29.04.1997 subject to the condition of depositing a sum of Rs. 30 lakhs and Rs. 99,443/- costs, which amounts were undisputedly deposited. The said order was made absolute on 15.07.1998 subject to the condition of depositing a further sum of Rs. 30 lakhs, which was also complied with. A Division Bench of the High Court partly allowed the appeal on 19.12.2001 thereby - 5.reducing the compensation amount from Rs. 98,40,500/- to Rs. 56,40,000/-, however, the interest rate of 12% p.a. was retained. The respondent - Insurance Company also deposited a sum of Rs. 23,27,635/- on 19.09.2002, claiming to be full and final satisfaction of the award. 6.The appellants filed Execution Petition No. 11 of 2003 on 06.06.2003 before the Executing Court / Tribunal claiming an amount of Rs. 20,16,700/-....
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....submissions, the learned counsel relied upon the judgment of this Court Industrial Credit and Development Syndicate (ICDS) Ltd. Vs. Smithaben H. Patel & Ors. 1999 (3) SCC 80, Venkatadri Appa Rao Vs. Parthan Sarathy Appa Rao AIR 1922 PC 233, Meghraj Vs. Bayabai 1969 (2) SCC 274 and Gurpreet Singh Vs. Union of India 2006 (8) SCC 457. 12. On the other hand, learned counsel appearing for the respondent - Insurance Company contended that, in the facts and circumstances of the case, there is no - 13. reason to interfere with the impugned order passed by the High Court. 14. We have heard learned counsel for the parties and gone through the entire material available on record. 15. Before adverting to the various issues involved in the case and the contentions advanced by the counsel on either side, we have given our anxious consideration to the judgment impugned of the learned single Judge of the Andhra Pradesh High Court. The learned Judge, while adjudicating the issue, has considered the judgments of this Court in Meghraj (supra), Industrial Credit and Development Syndicate (supra) and Rajasthan State Road Transport Corporation, Jaipur Vs. Poonam Pahwa, AIR 1997 SC 2951 and h....
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.... "It is true that the cases decided so far, do not strictly support this view, and in a way, may suggest the other point of view. However, an effort is made by this Court, to explain the purport of sub-rules (4) and (5) of Rule 1. This Court is conscious of the requirement to follow the precedents, as well as its obligation, to give effect to the legislative mandate. An endeavor is made to honour both the obligations. Having regard to the importance of the issue and the implications involved in it, further discussion may ensue at appropriate levels." 12. From the above findings of the learned Judge, it appears that he passed the order basing on three considerations: Firstly, the judgments relied upon by the claimants are based on the pre-amended provisions of Order 21 Rule 1 C.P.C. Secondly, in the cases which were decided subsequent to amendment, the issue - of appropriation of amounts has not fallen for consideration. Thirdly, a decree comprises of principal claimed in the suit as well as component of interest. Hence, once a decree is passed for certain amount, it becomes principal by itself and Section 3(3) of Interest Act cle....
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.... 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. A bare perusal of the aforesaid provisions makes it amply clear that the scope of Order XXI Rule 1 of the CPC is that the judgment debtor is required to pay the decretal amount in one of the modes specified in sub-rule (1) thereof. Sub-rule (2) of Rule 1 provides that once payment is made under subrule (1), it is the duty of the judgment debtor to give notice to the decree-holder through the Court or directly to him by registered post acknowledgement due. Sub-rule (3) of Rule 1 merely indicates that in case money is paid by postal money order or through a bank under clause (a) or clause (b) of sub-rule (1) thereof, certain particulars are required to be accurately incorporated while making such payment. Sub-rules (4) and (5) of Rule 1 states from which date, interest shall cease to run - in case amount is paid under clause (a) or (c) of sub-rule (1), - interest shall cease to run from the date of service of notice as indi....
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....moneys that are received without a definite appropriation on the one side or on the other, and the rule which is well established in ordinary cases is that in those circumstances the money is first applied in payment of interest and then when that is satisfied in payment of the capital." (Emphasis supplied) The above principle was reiterated by the Privy Council in Rai Bahadur Sethnemichand Vs. Seth Rada Kishen AIR 1922 PC 26. 18. We may notice that the principle laid down in the above case has been not only approved by the Supreme Court, but also followed in several other subsequent cases. In Meghraj (supra), it was held as under: "4. ... Unless the mortgagees were informed that the mortgagors had deposited the amount only towards the principal and not towards the interest, and the mortgagees agreed to withdraw the money from the Court accepting the conditional deposit, the normal rule that - the amounts deposited in Court should first be applied towards satisfaction of the interest and costs and thereafter towards the principal would apply." 19. In Mathunni Mathai (supra), it was held that the right of the decree-holder to appropriate the amount deposit....
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.... of compensation towards costs, interest, additional amount under Section 23 (1-A) with interest and then to claim the total balance amount with further interest. ... ... ... ... ... ... ... ... ... ... ..." 22. In Gurpreet Singh (supra), the Constitution Bench of this Court had an occasion to consider the issue regarding execution of money decree, the principle of appropriation and its applicability, which was recently followed by this Court in Bharath Heavy Electricals Ltd. Vs. RS Avthar Sing & Co., 2013 (1) SCC 243, and culled down the principles laid down in Gurpreet Singh's case as follows: a) The general rule of appropriation towards a decretal amount was that - b) such an amount was to be adjusted strictly in accordance with the directions contained in the decree and in the absence of such directions, adjustment be made firstly towards payment of interest and costs and thereafter towards payment of the principle amount subject, of course, to any agreement between the parties. c) The legislative intent in enacting sub rules (4) and (5) is clear to the points that interest should cease to run on the deposit made by the judgment debtor and....
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....t proceeded on the assumption as if sub-rules (4) and (5) of Rule 1, which were inserted pursuant to Amendment to C.P.C. in 1976, there is change in procedural law and the tenor of sub-rule (1) thereof. But, sub-rules (4) and (5) do not have any relevance with regard to appropriation, except stating when interest ceases to - run. Thus, it is no way guide for appropriation of amount as contemplated under Order XXI Rule 1 of the CPC. In Industrial Credit Development Syndicate (supra) which is subsequent to the amendment to the provision, this Court has categorically observed the procedure to be followed and which squarely applies to the case, but the High Court has given its own interpretation to the judgment and failed to consider the law laid down by this Court in its proper perspective. 25. The next finding of the High Court is with regard to interest on interest. In money suit, the amount consists of principal and interest till the suit is filed. But, in case of award passed under the Act, the question of inclusion of any interest on the decretal amount does not arise. Unfortunately, the High Court proceeded on the assumption that it amounts to interest on interest which....