18/04/2025
Decree or Award by Courts: Satisfaction/Apportionment on receipt of amount whether first to be adjusted against Principal amount or Interest
The question is often faced by lawyers and litigants that if the judgment debtor (a person who is to pay amount) pays the amounts in installment then how that amount is to be adjusted against the total amount due as per decree. The Judgment debtor says that the amount should be adjusted from Principal amount due and the Decree Holder (the person who is entitled to receive the amount) says that the amount should be adjusted towards interest first. The issue was decided long back by the Hon'ble Supreme Court of India by a bench presided over by 5 Hon'ble Judges (called as Constitution Bench) on a reference by a bench. The issue involved in the said case was with regard to the appropriation in ex*****on of money decree especially in the land acquisition cases. The Hon'ble Constitution bench in para no. 53 held as under:
"Thus, on the whole, we are satisfied that the essential ratio in the Prem Nath Kapur (Supra) on appropriation being at different sages is justified though if at a particular state there is a shortfall, the awardee decree holder would be entitled to appropriate the same on the general principles of appropriation, first towards interest, then towards costs and then towards the principal, unless, of course, the deposit intimating the decree-holder of his intention. We, thus, approve the ratio of Prem Nath Kapur (Supra) on the aspect of appropriation"
In Prem Nath Kapur vs National Fertilizers Corporation of India Limited and Ors the Hon'ble Supreme Court of India was also dealing with compensation under land acquisition Act and its appropriation due to deposit of amount in installments. Thus the Hon'ble Court applied the principle to first appropriate the amount in the interest then to costs and then to Principal amount.
Though the judgment passed by The Constitution Bench dealt with Land acquisition cases but they also took into account provisions contained in section 34 of Civil Procedure Code, Order 21 rule 1, 4 and 5 and Order 24
As stated earlier the above cases were with regard to Land Acquisition Act but the judgment passed by The Constitution bench can very well apply to other cases of ex*****on of money decree. Therefore in another case of Bharat Heavy Electrical Ltd vs R. S. Avtar Singh and Cothe Hon'ble Court while placing reliance on the judgment of the Constitution Bench of Hon'ble Supreme Court took into consideration the provisions of section 34 of Civil Procedure Code, Order 21 rule 1, 4 and 5 and section 3(3) (c) of Interest Act held that subject to the directions in the decree, if the amount falls short, the decree holder may be entitled to apply the rule of appropriation by appropriating the amount first towards the interest, then towards the costs and then towards the Principal amount due under the decree.
References:
1. Gurpreet Singh vs Union of India Civil Appeal no. 4570 of 2006 decided on 19.10.2006 equivalent citation (2008) 2 RCR(Civil) 207.
2. Prem Nath Kapur & Anr vs National Fertilizer Corporation of India and Ors 1996 2 SCC71; 1995 Supp. 5 SCR 790.
3. Bharat Heavy Electricals Ltd vs R. S. Avtar Singh and Co. 2013(1)SCC 243; 2013 (1) R.C.R. (Civil)252.
# apportionment
