Sundeep Industries vs Collector Of Customs & Another
2008 Latest Caselaw 1042 Del

*               IN THE HIGH COURT OF DELHI AT NEW DELHI


+                        Ex.P. 313/2003

%                              Date of decision : 16.07.2008


SUNDEEP INDUSTRIES                             ....... Decree Holder
                Through:             Mr Sharad K Aggarwal, Advocate


                                  Versus


COLLECTOR OF CUSTOMS & ANOTHER ....... Judgment Debtors
                Through : Mr Satish Aggarwal, Advocate.


CORAM :-
HON'BLE MR. JUSTICE RAJIV SAHAI ENDLAW

     1.

 Whether reporters of Local papers may        YES
        be allowed to see the judgment?

     2. To be referred to the reporter or not?       YES

     3. Whether the judgment should be reported      YES
        in the Digest?


RAJIV SAHAI ENDLAW, J

1. The only surviving issue in this execution petition is as to

whether out of the amount of Rs 1,84,904.52 deposited by the

judgment debtor in this court, the decree holder is entitled to a sum

of Rs 66,578.17 only as contended by the judgment debtor or to the

entire amount as contended by the decree holder. The answer to the

said issue depends upon whether the deposits made by the judgment

debtor in the court after filing of the execution petition are to be

appropriated first towards interest as contended by the decree holder

or first towards the principal amount as contended by the judgment

debtor. If the appropriation is towards the interest first, then the

Ex.P.313/2008 Page no. 1 of 5 decree holder is entitled to the release of the entire sum of Rs

1,84,904.52. However, if the appropriation is towards the principal

first then the decree holder is entitled to the release of Rs 66,578.17

only.

2. An ex parte decree dated 22nd August, 2003 was passed in

favour of the decree holder for recovery of Rs 22,64,564/- together

with pendente lite and future interest @ 9% per annum from the date

of institution of the suit till the date of realization. Costs of Rs

35,653.57 were also awarded to the decree holder. The decree

holder filed this execution stating that as on 16th October, 2003 a sum

of Rs 41,00,545.95 was due under the decree. The judgment debtor,

on notice of the execution being issued, first deposited a sum of Rs

22,64,564/- in this court as recorded in the order dated 21st May,

2004 in the execution . This amount was the exact amount of which

the decree was passed besides interests and costs. However, on 21 st

May, 2004 when it was informed that the said amount had been

deposited, it was not stated that the deposit was under any particular

head. The order dated 21st May, 2004 itself directs the judgment

debtor to deposit the balance decretal amount. Thereafter, a further

sum of Rs 18,35,982/- was deposited by the judgment debtor in the

court. On the submissions of the decree holder that the sum of Rs

1,84,904.54 remains outstanding on the decree, warrants of

attachment for the said amount were issued towards the same. The

amount was deposited by the judgment debtor in the court subject to

the determination instant. The counsel for the judgment debtor has

urged that upon the judgment debtor depositing the entire principal

Ex.P.313/2008 Page no. 2 of 5 amount of Rs 22,64,564/- before the court on 12th February, 2004,

notwithstanding the judgment debtor having not deposited the

remaining decretal amount which was towards interest and costs

only, further interest ought to stop running and as such besides the

amount mentioned in the decree only the sum of Rs 66,578.17 more

was due to the decree holder towards interest till the date of deposit.

Reliance in this regard is placed on Nandi Investments and

Enterprises v L.M. Saravamangala AIR 2004 SC 4765. However,

the said judgment after recording the submissions of the parties

remanded the matter to the High Court for fresh adjudication and is

of no help to the judgment debtor. The counsel for the decree holder

has on the other hand placed reliance on Gurpreet Singh v Union

of India (2006) 8 SCC 457, Mathunni Mathai v Hindustan

Organic Chemicals Ltd (1995) 4 SCC 26 and Meghraj & Ors v

Mst. Bayabai & Ors AIR 1970 SC 161.

3. At first blush it appears that reference in Order 21 Rule 1

and Order 24 CPC to "deposit" has to be reference to deposit of

principal amount only since interest runs on the same only and

question of cessation of interest on deposit of interest amount, which

does not incur any further interest, does not arise. However, a Five

Judges Bench of the Apex Court in Gurpreet Singh (supra) has

extensively analyzed the provisions of Order 21 Rule 1 and Order 24

of the CPC and have held in para 26 as under:

"26. Thus, in cases of execution of money decrees or award decrees, or rather, decrees other than mortgage decrees, interest ceases to run on the amount deposited, to the extent of the deposit. It is true that if the amount falls short, the decree holder may be entitled to apply the rule of appropriation by

Ex.P.313/2008 Page no. 3 of 5 appropriating the amount first towards the interest, then towards the costs and then towards the principal amount due under the decree."

The Apex Court in para 53 of the judgment even made the above rule

subject to an exception - where deposit is indicated towards specified

heads by judgment debtor while making the deposit intimating the

decree-holder of his intention.

4. I have already noted above that the judgment debtor, in the

present case, though first depositing the exact principal amount, at no

stage intimated to the decree holder that the deposit was being made

towards principal. I may notice that a Single Bench of this Court in

Moolji v Indian Railway Construction Company Limited 89

(2001) DLT 766 has also held that if the amounts were allowed to be

adjusted towards the principal amount first, it would not only be

against the provisions of law but would also be against the public

policy inasmuch as the judgment debtor would then after depositing

the principal amount delay the payment of the amount decreed

towards interest and on which the decree holder would not be entitled

to future interest. The same view has also been taken in Tosh and

Sons India Limited v N.N. Khanna 131 (2006) DLT 599 and

Bengal Silk Trading Company v D.S. Bhalla 65 (1997) DLT 219.

5. Thus, the amount of Rs 22,64,564/- deposited by the judgment

debtor on 12th February, 2004 would not cease the running of interest.

The said deposit will be adjusted in interest and costs first, due on

that date and the balance principal amount shall continue to incur

Ex.P.313/2008 Page no. 4 of 5 interest.

6. In view of the above, the decree holder is entitled to the entire

amount of Rs 1,84,904.52 lying deposited in this court. The said

amount was ordered to be kept in a fixed deposit. The decree holder

would also be entitled to the interest earned on the said deposit.

The execution petition, accordingly, stands disposed of.

                                               RAJIV SAHAI ENDLAW
                                                    (JUDGE)

July 16, 2008
M




Ex.P.313/2008                                             Page no. 5 of 5