Full Text
HIGH COURT OF DELHI
Date of Decision: 24th May, 2018
BRIJESH KUMAR VERMA ..... Appellant
Through: Mr. Jatin Kumar, Advocate
Through: Mr. R.K. Nain, Advocate
JUDGMENT
1. The Commissioner, Employees’ Compensation awarded compensation of Rs.10,69,008/- along with interest @ 12% per annum w.e.f. 6th April, 2012 to respondent No.1 which has been upheld by this Court vide judgment dated 20th December, 2017.
2. The appellant deposited Rs.10,69,008/- with the Commissioner, Employees’ Compensation on 14th July, 2016. The appellant deposited further amount of Rs.5,48,270/- with the Commissioner, Employees’ Compensation on 12th March, 2018.
3. The question has arisen for consideration as to whether the amounts deposited by the appellant have to be adjusted first towards the interest or towards the principal award amount.
4. In Gurpreet Singh v. Union of India, (2006) 8 SCC 457, the Constitution Bench of the Supreme Court held that the payment made by the judgment debtor to decree holder has to be appropriated first towards the interest and costs and then, towards the principal. 2018:DHC:3485
5. In the subsequent case of Bharat Heavy Electricals Ltd. v. R.S. Avtar Singh, (2013) 1 SCC 243, the Supreme Court summarized the principles laid down by the Constitution Bench in Gurpreet Singh (supra). The Supreme Court held that if the payment made by the judgment-debtor falls short of the decreed 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. The relevant part of the judgment is as under:- “31. From what has been stated in the said decision, the following principles emerge:
31.1. 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 adjustments be made firstly towards payment of interest and costs and thereafter towards payment of the principal amount subject, of course, to any agreement between the parties.
31.2. The legislative intent in enacting sub-rules (4) and (5) is a clear pointer 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
31.3. If the payment made by the judgment-debtor falls short of the decreed 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.
31.4. 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 interest on that part of the principal sum will cease to run thereafter.
31.5. In cases where there is a shortfall in deposit of the principal amount, the decree-holder would be entitled to adjust interest and costs first and the 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 reappropriation.” (Emphasis supplied)
6. In V. Kala Bharathi v. Oriental Insurance Company Ltd., Branch Chitoor, (2014) 5 SCC 577, the question as to whether the amount deposited by the judgment debtor has to be first adjusted towards interest or towards principal decretal amount, again arose before the Supreme Court. Three- Judges bench of the Supreme Court, following the Constitution Bench judgment in Gurpreet Singh (supra), held that the amount deposited by the judgment debtor has to be first appropriated towards interest, then towards cost and subsequently towards principal amount. If there is a shortfall after adjustment of the amount against interest, the interest would accrue on the balance principal amount. The relevant portion of the said judgment is as under: “1. The short question to be answered in this appeal is whether the amount deposited by the judgment debtor in a decree is to be adjusted first towards interest or towards principal 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, 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 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 @ 12% p.a. from the date of the petition, i.e., 25.10.1993 till the date of realization, apart from costs quantified at Rs.99,443/-.
3. 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 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.
4. 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/-, which claim was denied by the respondent – Insurance Company on the ground that its liability to pay interest gets discharged when it deposits the award amount in full. 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.
5. 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 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.
6. 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. The appellants herein also filed Civil Revision Petition NO. 6108/2004 thereby challenging that the 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. xxx xxx xxx
13. Now, before we proceed to decide the legality or 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: “ORDER XXI EXECUTION OF DECREES AND ORDERS PAYMENT UNDER DECREE
1. Modes of paying money under decree. – (1) All money, payable under a decree, shall be paid as follows, namely – (a) by deposit into the Court whose duty it is to execute the decree, or sent to that Court by postal money order or through a bank; or (b) out of Court, to the decree-holder by postal money order or through a bank or by any other mode wherein payment is evidenced in writing; or
(c) 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 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 decreeholder 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 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 the manner in which the money deposited to be appropriated. Subrule (1)(c) of Rule 1 indicates the money deposited 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. Sub-rules (2) to (5) of Rule 1 indicate the procedure to be followed when 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 decreeholder.
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.
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 appropriation by appropriating the amount first towards interest, then towards costs and subsequently towards principal amount due under the decree; we are of the opinion that the appellants herein are entitled to the amount awarded by the Executing Court, as the amounts 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.”
7. In United India Insurance Co. v. Kanwar Lal, Review Pet.391/2013 in MAC.APP.385/2007 decided on 30th May, 2014, this Court following the principles laid down in Gurpreet Singh (supra) and R.S. Avtar Singh (supra) held that the amount deposited by the insurance company shall be first adjusted towards interest and thereafter, towards the principal. Relevant portion of the said judgment is as under:- “2. The accident dated 17th October, 1998 resulted in death of Praveen Kumar aged 18 years who was survived by his parents (respondents no. 1 and 2) who filed the claim petition before the Claims Tribunal. The Claims Tribunal awarded compensation of Rs. 10,00,000/- to respondents no. 1 and 2 which was challenged by the appellant before this Court.
3. Vide order dated 14th October, 2009, this Court directed the appellant to deposit Rs.10,00,000/- with UCO Bank within 30 days, in pursuance to which the appellant deposited Rs.9,50,000/- on 10th November, 2009 which was kept in fixed deposit with UCO Bank. The interest on the said fixed deposits was released to respondents no.1 and 2. The original fixed deposit has been released to the respondents in terms of the judgment dated 27th April, 2012.
12. Applying the aforesaid decisions of the Supreme Court to the present case, it is clear that the amount of Rs. 9,50,000/deposited by the appellant on 10th November, 2009 in terms of the order dated 14th October, 2009 has to be adjusted first towards the interest on that date i.e. Rs. 6,73,822/- and the balance amount of Rs. 2,76,178/- has to be adjusted towards the principal. As a result, the balance principal amount on 10th November, 2009 would be Rs. 6,73,822/- (Rs.9,50,000 – 2,76,178/-). The appellant shall be liable to pay interest @ 7% per annum on the balance principal amount of Rs. 6,73,822/from 11th November, 2009 upto the date of payment. As on date i.e. 30th May, 2014, the amount of interest on balance principal amount of Rs. 6,73,822/- would be Rs. 2,14,709/-.”
8. Summary of principles laid down in the above judgments The general rule of appropriation of the decretal amount is that the amount deposited by the judgment debtor shall be first adjusted towards interest and costs, and thereafter towards the principal amount.
9. Applying the principles laid down by the Supreme Court, Rs.10,69,008/- deposited by the appellant on 14th July, 2016 is appropriated first towards interest and thereafter, towards principal. As per the calculation done by the Accounts Officer of this Court, the interest liability as on 14th July, 2016 was Rs.5,48,005.71 and the aforesaid amount is appropriated towards interest out of Rs.10,69,008/- deposited by the appellant. The balance amount of Rs.5,21,002.29 is appropriated towards principal and the balance outstanding principal amount as on 14th July, 2016 would be Rs.5,48,005.71.
10. Rs.5,48,270/- deposited by the appellant on 12th March, 2018 is adjusted first towards interest and thereafter towards principal. On 12th March, 2018, interest of Rs.1,08,985.55 had accrued on balance principal award amount of Rs.5,48,005.71 and therefore, Rs.1,08,985.55 is appropriated towards interest and the balance amount of Rs.4,39,284.45 is appropriated towards principal. The balance principal award amount as on 12th March, 2018 would be Rs.1,08,721.26.
11. The present position is that after adjusting both the amounts deposited by the appellant, the principal outstanding amount is Rs.1,08,721.26 on which Rs.2,567.[6] (i.e. Rs.35.74 per day approx.) interest has accrued as on today i.e. Rs.1,11,288.86.
12. The aforesaid computation in a tabulated format is as under: 12.[1] Principal award amount Rs.10,69,008/- 12.[2] Amount deposited by the appellant on 14.07.2016 Rs.10,69,008/- 12.[3] Interest on the principal amount of Rs.10,69,008/- @12% per annum w.e.f. 06.04.2012 till date of deposit i.e. 14.07.2016 Rs.5,48,005.71 Appropriation of Rs.10,69,008/- deposited by the appellant on 14.07.2016 12.[4] Appropriation towards interest on Rs.10,69,008/from 06.04.2012 to 14.07.2016 Rs.5,48,005.71 12.[5] Appropriation towards principal amount of Rs. Rs.10,69,008/- Rs.5,21,002.29 12.[6] Outstanding principal amount as on 14.07.2016 Rs.5,48,005.71 Appropriation of Rs.5,48,270/-deposited by the appellant on 12.03.2018 12.[7] Appropriation towards interest on the unadjusted principal amount of Rs.5,48,005.71 from 15.07.2016 to 12.03.2018 Rs.1,08,985.55 12.[8] Appropriation towards balance principal amount of Rs.5,48,005.71 Rs.4,39,284.45 12.[9] Outstanding principal amount as on 12.03.2018 Rs.1,08,721.26 Outstanding Amount as on 12.03.2018
12.10 Outstanding principal amount Rs.1,08,721.26
12.11 Interest on the principal amount of Rs.1,08,721.26 @ 12% per annum w.e.f. 13th March, 2018 to 24th May, 2018 Rs.2,567.[6] (Rs.35.74 per day approx.) Total outstanding amount as on 24.05.2018 Rs.1,11,288.86
13. The appellant is directed to deposit Rs.1,08,721.26 along with interest @ 12% per annum w.e.f. 13th March, 2018 upto the date of deposit with the
14. List for disbursement on 10th July, 2018.
15. Learned counsel for respondent No.1 submits that the amount of Rs.5,48,270/- deposited by the appellant on 12th March, 2018 has not yet been disbursed to respondent No.1 in terms of the order dated 29th January,
2018.
16. The Commissioner, Employees’ Compensation is directed disburse the interest amount forthwith and send the particulars of the disbursement before the next date.
17. With respect to show cause notice issued to the appellant under Section 340 Cr.PC., the Supreme Court has set aside the show cause notice issued to appellant. In that view of the matter, the proceedings relating to show cause notice under Section 340 Cr.PC. is hereby closed. Post script
18. This Court is of the view that the principles relating to the appropriation of the amount deposited by the judgment debtor first towards the interest and then towards the principal are of great importance.
19. Before closing an execution case, the Civil Court/Commissioners Employees’ Compensation/MACT/ Recovery officers (SDMs) should record a finding as to whether the amount paid/deposited by the Judgment Debtor has been appropriated first towards the interest and then towards the principal in terms of the well settled principles recorded above and the computation in tabular form (as in para 12 above) should be incorporated in the order.
20. Copy of this judgement be sent to the Principal District and Sessions Judge who shall circulate to all the Civil Courts and Motor Accident Claims Tribunals. Copy of this judgement be sent to the Secretary (Labour) who will circulate to all Commissioners, Employees’ Compensation and Recovery Officers (SDMs).
21. Copy of this judgement be given dasti under the signature of the Court Master to Mr. Sanjoy Ghose, learned Additional Standing Counsel who shall send the same to the Secretary Labour, Govt. of NCT of Delhi for being circulated to all Commissioners, Employees’ Compensation as well as Recovery Officers.
22. Copy of this judgement be given dasti to counsel for the parties under the signature of the Court Master. MAY 24, 2018 J.R.MIDHA, J. dk