Guidelines for appropriating Money paid under decree

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. v. RS Avthar Sing and Co. MANU/SC/0837/2012 : 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 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.

b) 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 notice given or on the amount being tendered outside the Court in the manner provided in Order 21 Rule 1 sub Clause (D).

c) If the payment made by the judgment debtors falls short of the decretal amount, the decree holder will be entitled to apply the general rule of appropriation by appropriating the amount deposited towards the interest, then towards costs and finally towards the principal amount due under the decree.

d) Thereafter, no further interest would run on the sum appropriated towards the principal. In other words, if a part of the principal amount has been paid along with interest due thereon as on the date of issuance of notice of deposit of interest on the part of the principal sum will cease to run thereafter.

e) In case where there is a shortfall in deposit of the principal amount, the decree holder would be entitled to adjust interest and costs first and then balance towards the principal and beyond that the decree holder cannot seek to reopen the entire transaction and proceed to recalculate the interest on the whole of the principal amount and seek for re-appropriation.

 In the judgment referred to by the High Court in the impugned judgment, this Court and the Privy Council consistently have taken a view that in case of appropriation of amount unless the decree contains a specific provision, the amounts have to be appropriated as contemplated under Order 21 Rule 1. If there is a shortfall in deposit, the amount has to be adjusted towards interest and costs, then it has to be adjusted towards principal. 

REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO. 3056 OF 2008
V. KALA BHARATHI & ORS.

VS.
THE ORIENTAL INS. CO. LTD.,
BR. CHITOOR
J U D G M E N T
N.V.RAMANA, J.
Citation; 2014 AIR SCW 1961

Dated;April 01, 2014.

Citation;AIR2014SC1563, 2014(1) An.W.R. 743(SC), 2014(3)BomCR282, 2014GLH(2)125, 2014(2)KarLJ631, 2014(2)KLJ275, 2014(2)RCR(Civil)573, 2014(2)RLW1358, 2014(4)SCALE449, 2014 (3) SCJ 725

1.The short question to be answered in this appeal
is whether the amount deposited by the judgment
debtor
towards
in
a
decree
interest
or
is
to
towards
be
adjusted
principal
first
decretal
amount.
2.The facts of the case are – On account of demise
of an Engineering Graduate, Mr. V. Raja Kumar on
29.04.1993 in a road accident, his legal heirs,
Civil Appeal No. 3056 of 2008

2
i.e.,
the
appellants
herein
filed
a
claim
petition being M.V.O.P. 774 of 1993 before the
Motor Accident Claims Tribunal (for short, ‘the
Tribunal’) claiming -
3.compensation to the tune of Rs.2 crores.
The
vehicle involved in the said accident was insured
by
the
respondent
–
Insurance
Company.
The
Tribunal vide its Award dated 29.04.1997 awarded
an amount of Rs.98,40,500/- as compensation with
interest
petition,
@
12%
p.a.
i.e.,
realization,
from
apart
from
date of till 
25.10.1993
the the date of
quantified at
costs
the
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
therein,
comply
with
deposited
a
the provisions
sum of
contained
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
Civil Appeal No. 3056 of 2008

3
of
depositing
Rs.99,443/-
a
sum
costs,
of
Rs.30
which
undisputedly deposited.
lakhs
amounts
and
were
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
Rs.98,40,500/-
interest
rate
compensation
to
of
amount
Rs.56,40,000/-,
12%
p.a.
was
from
however,
the
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
which
claiming
claim
Insurance
was
Company
an
amount
denied
on
by
the
of
the
Rs.20,16,700/-,
respondent
ground
that
–
its
liability to pay interest gets discharged when it
deposits the award amount in full.
Civil Appeal No. 3056 of 2008
Thus, relying


on
the
principle
of
accrual
method,
the
respondent – Insurance Company claimed that since
it satisfied the award amount in full, no more
interest was payable and as per its calculation,
only a sum of Rs.36,650/- was liable to be paid,
which was deposited on 29.07.2003.
7.While
adjudicating
the
aforesaid
Execution
Petition, the Executing Court took a view that
the
amounts
deposited
by
the
respondent
–
Insurance Company from time to time were liable
to be adjusted -
8.towards
the
component
of
interest
first
and
thereafter to the portion of the decretal amount.
After
taking
into
consideration
the
amounts
deposited by the respondent – Insurance Company
on different dates, its liability was fixed vide
order
dated
18.08.2004
to
the
extent
of
Rs.17,70,657/- together with interest @ 12% p.a.
from the date of filing of the Execution Petition
till the date of realization.

9.The respondent – Insurance Company assailed the
aforesaid calculation / order of the Executing
Court dated 18.08.2004 in Civil Revision Petition
No. 4337 of 2004.
filed
Civil
thereby
The appellants herein also
Revision
challenging
Petition
that
the
No.
6108/2004
Executing
Court
could not have adjusted the amount paid as costs
towards the decretal amount.
The learned single
Judge of the High Court of Judicature, Andhra
Pradesh,
by
judgment
dated
29.07.2005,
allowed
both the Civil Revision Petitions while holding
that (i) the part payments deserve to be adjusted
towards the principal decretal amount and not any
component of interest accrued upto that date; and
(ii) the amount deposited towards costs, in -
10. pursuance of the directions of the court, must
be adjusted towards that, and not towards payment
of the decretal amount.
11. Learned counsel for the appellants vehemently
contended that
sustained being
the
impugned
contrary
Civil Appeal No. 3056 of 2008
to
order
law
of
cannot
the
be
land

declared under Article 141 of the Constitution of
India (for short, ‘the Constitution’).
He also
contended that judicial discipline to abide by
declaration of law made by this Court cannot be
forsaken under any pretext by any authority or
court, be it even the highest Court in a State.
It
tantamount
to
judicial
indiscipline.
In
support of his 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
Pahwa,
AIR
Corporation,
1997
SC
2951
Jaipur
and
has
Vs.
Poonam
passed
the
judgment by giving reasons which are basis for
his conclusion.
11.
We feel that it is appropriate to extract the
relevant paragraphs from the impugned judgment.
“It is true that in a plethora of
judgments, the Supreme Court as well as
the High Courts took the view that any
amount deposited under Rule 1 of Order 21
CPC must be first adjusted towards

interest. Discussion on those judgments
vis-à-vis sub-rules (4) and (5) of Rule 1
-
of Order 21 C.P.C. is prone to be taken
or mistaken as an attempt to explain the
judgments of the Supreme Court or High
Courts. However, since some of the
judgments of the Supreme Court were
delivered at a time, when sub rules (4)
and (5) were not on the statue book, and
in the judgments rendered thereafter, the
attention of the Hon’ble Supreme Court
and the High Courts was not pointedly
invited to these provisions in certain
cases
or
they
did
not
fall
for
consideration, it is felt necessary to
address the issue...”
“Viewed from this context, it is evident
that Parliament added sub rules (4) and
(5) with a definite and avowed object of
assessing the running of interest on the
deposits made by the decree holder into
a Court. The background in which those
provisions came to be incorporated has
already been indicated in the preceding
paragraphs.
Sub Rules (4) and (5) by
themselves do not disclose as to whether
the amount should be adjusted towards
principal or interest.
However, the
expression “interest if any” occurring
in both the provisions is significant.
A decree may comprise of principle
amount claimed in the suit, as well as a
component of interest up to the date of
decree.
Once a decree is passed for
certain amount, it becomes a principle
by itself and the liability to pay
interest thereon, and if so, the rate at
which it is to be paid, would depend
upon the terms of decree.
The amount
that carries the interest till the date
of
realization
would
be
the
one

stipulated in the decree.
It is not
permissible
for
a
Court
to
award
interest on interest.
Sub section (3) of Section 3 of the -
Interest Act clearly prohibits grant of
interest on interest.
Therefore, the
only component of the decree that can be
related to the expression “interest if
any” occurring in sub sections (4) and
(5) of Rule (1) is the decretal amount,
which,
in
other
words,
is
the
principal.”
“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
comprises of
fallen for consideration.
Thirdly,
a
decree
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
clearly
prohibits
grant of interest on interest.
13.
or
Now, before we proceed to decide the legality
otherwise
of
the
order
passed
by
the
learned
Judge, it is worthwhile to examine Rule 1 of Order
XXI of the Code of Civil Procedure, 1908 (for short,
‘the CPC’), which reads as under:
Civil Appeal No. 3056 of 2008
Page 10 of 26
Page 10
11
“ORDER XXI
EXECUTION OF DECREES AND ORDERS
1.Modes of paying money under decree. –
(1) All money, payable under a decree,
shall be paid as follows, namely:-
(a) by
it
to
or
deposit into the Court whose duty
is to execute the decree, or sent
that Court by postal money order
through a bank; or
(b) out of Court, to the decree-holder
by postal money order or through a
bank or -
(c) by any other mode wherein payment is
evidenced in writing; or
(d) otherwise, as the Court which made
the decree, directs.
(2)
Where any payment is made under
clause (a) or clause (c) of sub-rule (1), the
judgment-debtor shall give notice thereof to
the decree-holder either through the Court or
directly
to
him
by
registered
post,
acknowledgement due.
(3)
Where money is paid by postal money
order or through a bank under clause (a) or
clause (b) of sub-rule (1), the money order
or payment through bank, as the case may be,
shall
accurately
state
the
following
particulars, namely:-
(a) the number of the original suit;

(b) the names of the parties or where
there are more than two plaintiffs
or more than two defendants, as the
case may be, the names of the first
two plaintiffs and the first two
defendants;
(c) how the money remitted is to be
adjusted, that is to say, whether it
is towards the principal, interest
or costs;
(d) the number of the execution case of
the
Court,
where
such
case
is
pending; and
(e) the name and address of the payer.
(4)
On any amount paid under clause (a)
or clause (c) of sub-rule (1), interest, if
any, shall cease to run from the date of
service of the notice referred to in sub-rule
(2).
(5)
On any amount paid under clause (b)
of sub-rule (1), interest, if any, shall
cease to run from the date of such payment.
Provided
that,
where
the
decree-holder
refuses to accept the postal money order or
-
payment through a bank, interest shall cease
to run from the date on which the money was
tendered
to
him,
or
where
he
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
specified in sub-rule (1) thereof.
of
the
modes
Sub-rule (2) of
Rule 1 provides that once payment is made under sub-
rule (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,
accurately
certain
particulars
incorporated
while
are
required
making
such
to
be
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 indicated under sub-rule (2); while in
case of out of court payment to the decree-holder by
way of any of the modes mentioned under clause (b) of
sub-rule (1), interest shall cease to run from the
date of such payment.

15.
The language contained in the aforesaid sub-
rules clearly indicates the appropriation of amount
to be made in case the decree contains a specific
clause,
specifying
deposited to be
Rule indicates
1
the
manner
appropriated.
the
money
in
which
the
money
Sub-rule (1)(c)
deposited
of
to
be
appropriated as per the direction of the Court, if
there is a provision in that behalf.
In the absence
of specific direction with regard to appropriation,
then only the manner of appropriation would arise for
consideration.
indicate
the
Sub-rules
procedure
to
(2)
be
to
(5)
followed
of
Rule
when
1
the
deposit is made either under clause (a) or (b) of
sub-rule (1) thereof, but it does not leave any scope
for interpretation with regard to appropriation of
deposited amount by the decree-holder.
-
16.
In this regard, it is also pertinent to extract
Rule 472 of the Andhra Pradesh Motor Vehicles Rules,
1989 (for short, ‘the A.P.M.V. Rules’), which is as
under:

“472. Enforcement of an award of the Claims
Tribunal:- Subject to the provisions of
Section 174, the Claims Tribunal shall, for
the purpose of enforcement of its award, have
all the powers of a Civil Court in the
execution of a decree under the Code of Civil
Procedure, 1908, as if the award were a
decree for the payment of money passed by
such Court in a Civil Suit.”
The above-said Rule indicates that the award passed
by the Claims Tribunal is to be treated as if the
decree for the payment of money passed by the Civil
Court
in
a
civil
suit.
Hence,
in
view
of
the
specific provision contained in the A.P.M.V. Rules,
the award passed by the Claims Tribunal is to be
treated as a money decree.
Transport
held
that
Corporation,
in
executing
In Rajasthan State Road
Jaipur
the
(supra),
award
of
this
the
Court
Claims
Tribunal, Executing Court is competent to invoke the
beneficial provision under Order 21 Rule 1 of C.P.C.
-
17.
The Privy Council in Venkatadri Appa Rao Vs.
Parthasarathi
Appa
Rao
AIR
1922
PC
233,
held
as
follows:
“The question then remains as to how,
apart from any specific appropriation, these

sums ought to be dealt with. There is a debt
due that carries interest. There are 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

deposited by the judgment debtor, either in the Court
or paid outside, towards interest and other expenses
is founded both on fairness and necessity.
It was
observed that the courts and the law have not looked
upon favourably where the judgment debtor does not
pay or deposit the decretal amount within the time
granted as one cannot be permitted to take advantage
of his own default.
Therefore, the normal rule that
is followed is to allow the deposit or payment, if it
is in part, to be adjusted towards the interest due,
etc.
20. In Industrial Credit and Development Syndicate
(supra), it has been held that in cases where the
trial court has not prescribed any mode for payment
of decretal amount, except fixing the instalments, in
the
absence
of
agreement
between
the
parties,
regarding the mode of payment of decretal amount, the
-
general
rule
of
appropriation
of
payments
towards
decretal amount is that the said amount is to be
adjusted
firstly
strictly
in
accordance
with
the
directions contained in the decree and in the absence

of
such
towards
direction,
interest
and
principal amount.
exception
it
is
to
costs
be
and
adjusted firstly
thereafter towards
This is, of course, subject to the
that
the
parties
can
agree
to
the
adjustment of payment in any other manner despite the
decree.
In
that
case,
the
Supreme
Court
had
an
occasion to consider the method of appropriation and
after
noticing
various
decisions
of
the
English
Courts and the Privy Council, followed the judgment
in Meghraj’s case (supra).
21. We may also notice that in Prem Nath Kapur & Anr.
Vs. National Fertilizers Corporation, 1996 SCC (2)
71, while differing with the view taken in Mathunni
Mathai (supra), it was held that the normal rule of
appropriation contained in Order XXI Rule 1 of the
CPC relating to execution of decrees for recovery of
money stands excluded by Sections 28 and 34 of the -
Land
Acquisition
Act,
1894
and
the
principles
contained therein could not be extended to execution
of award decrees under the said Act.

The relevant

para of the said judgment, being portion of para 14,
reads as under:
•
• “14.
Equally,
the
right
to
make
appropriation is indicated by necessary
implication, by the award itself as the
award or decree clearly mentions each of
the items.
When the deposit is made
towards
the
specified
amounts,
the
claimant/owner is not entitled to deduct
from the amount 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
principle
of
execution
of 
appropriation
money
and its
decree,
the
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
appropriation
decretal
rule of
towards a
amount
was
that

b)
such an amount was to be
adjusted
strictly
in
accordance with the
directions contained in
the
decree
and
absence
in
of
the
such
directions, adjustment be
made
firstly
towards
payment of
interest
costs and
towards payment
and
thereafter
of
the
principle amount subject,
of
course,
any
between 
agreement
to the
parties.
c)
The legislative intent in
enacting
sub
rules
(4)
and (5) is clear to the
points
that
should
the
cease
interest
deposit
judgment
notice
to
made
by
debtor
given
amount
run
or
being
on
the
and
on
the
tendered
outside the Court in the
manner provided in Order
21 Rule 1 sub clause (D).
d)
If
the

the
payment
judgment
made
by
debtors

falls
short
decree
the
amount, 
decretal
of the
holder
entitled
to
will
be
apply
general
the
rule
of
appropriation
by
appropriating
the
amount
deposited towards
interest, then
the
towards
costs and finally towards
the principal amount due
under the decree.
e)
Thereafter,
no
further
interest would run on the
sum
appropriated
the principal.
towards
In other
words, if a -
f)
part
of
amount
along
the
has
principal
paid
interest 
with
been due
thereon as on the date of
issuance
deposit
of
of
interest 
of
notice on
the part of the principal
sum
will
cease
to
run
thereafter.
g)
In case where there is a
shortfall
in
deposit
of
the principal amount, the

decree
holder
entitled
would
to
be
adjust
interest and costs first
and then balance towards
the principal and beyond
that
the
decree
holder
cannot seek to reopen the
entire
transaction
proceed
to
and
recalculate
the interest on the whole
of
and
the
principal
seek
amount
for
re-
appropriation.
23. In the judgment referred to by the High Court in
the
impugned
judgment,
this
Court
and
the
Privy
Council consistently have taken a view that in case
of appropriation of amount unless the decree contains
a
specific
provision,
the
amounts
have
to
be
appropriated as contemplated under Order 21 Rule 1.
If there is a shortfall in deposit, the amount has to
be adjusted towards interest and costs, then it has
to be adjusted towards principal.
The High Court has
-
failed to appreciate this fact and misdirected itself
in observing that these judgments are prior to the

amendment to Order 21 Rule 1. In our considered view,
as far as this aspect is considered, there is no much
difference in the provisions prior to or subsequent
to the amendment, because in the objects and reasons
for amendment to Order XXI Rule 1, as observed by the
Constitution bench in Gurpreet Singh the legislative
intent
in
enacting
sub-rules
(4)
and
(5)
is
that
interest should cease on the deposit being made and
notice given or on the amount being tendered outside
the court in the manner provided.
The intent of the
rule making authority is to leave no room for any
frivolous pleas of payment of money due under a money
decree.
24.
We may add that the High Court 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
arise.
interest
on
the
decretal
amount
does
not
Unfortunately, the High Court proceeded on the
assumption that it amounts to interest on interest
which is prohibited under Section 3(3)(c) of Interest
Act, 1978 (for short, ‘the Interest Act’).
This is
not so, as in the facts and circumstances of the

present case, the decree passed by the trial Court or
-
the appellate Court does not contain the mode of
appropriation
and
direction, the
appropriate the
in
debtor
first
the
absence
decree-holder
amount
is
deposited
towards
of
such
entitled
by
interest,
any
the
then
to
judgment
cost
and
thereafter towards principal.
26.
In view of above and more particularly keeping
in view the ratio of the Constitution Bench judgment
in
Gurpreet
Singh
(supra),
where
considering
an
identical question in respect of Order XXI Rule 1 of
the CPC, it was held that if the amount deposited by
the
judgment
debtor
falls
short
of
the
decretal
amount, the decree-holder is entitled to apply the
rule
of
first
appropriation
towards
by
interest,
appropriating the
then costs
towards
amount
and
subsequently towards principal amount due under the
decree; we are of the opinion that the appellants
herein
are
Executing
entitled
Court,
as
to
the
the
amount
amounts
awarded by the
deposited by the
judgment debtor fell short of the decretal amount.

After
such
appropriation,
the
decree-holder
is
entitled to interest only to the extent of unpaid -
principal amount.
Hence, interest be calculated on
the unpaid principal amount.
27.
We, therefore, allow the appeal, set aside the
impugned judgment dated 29.07.2005 passed by the High
Court and restore that of the Executing Court dated
18.08.2004.
28. No orders as to costs.
.................C.J.I.
(P. SATHASIVAM)
.....................J.
(RANJAN GOGOI)
New Delhi,
April 01, 2014.

.....................J.
(N.V. RAMANA)