MONEY DECREE, APPEAL & RELEASE OF DECRETAL AMOUNT: LAW DISCUSSED

MONEY DECREE, Appeal & release of decretal amount: Law discussed

 

Section 96 of Code of Civil Procedure deals with filing of Regular First appeal against judgment and appeal passed by the trial Court. If the courts of Junior division/ civil judge passed a judgment and decree, the same shall be appealable before District Judge and in case the judgment and decree is passed by the District Judge /Additional District Judge, the same shall be appealable before the concerned High Court. If the defendant/judgment debtor challenges the judgment and decree passed in a money suit, the stay under Order 41 Rule 5 of Code of Civil Procedure could be sought against execution of decree or money decree. It is the decree, which is appealable. However, if stay id grated against operation of money decree, the appellate court generally grants stay upon deposit of decretal amount in the first instance. The stay is sometime also granted , by directing deposit of  50% or 75% of decretal amount. The percentage of orders of deposits in appeal as a condition precedent of admitting appeal in money decree may depends on facts and circumstances of each case. The underlying object of seeking deposit in money decree as condition precedent to secure a decree holder, who has succeeded in a suit before the trial court.

The malaise of a decree holder is succinctly narrated by the hon’ble Supreme Court in Messer Griesheim GmbH (Now called air Liquide Deutschl and GmbH Vs Goyal MG Gases Pvt Ltd (Civil Appeal No. 521 of 2022 in para no.3. The same are reproduced as under:

3. It is an old saying that the difficulties of the litigant in India begin when he has obtained a decree. The evil was noticed as far back in 1972 by the privy Council in relation to the difficulties faced by the decree holder in execution of the decree. After more than a century, there has been no improvement and still the decree holder faces the same problem what was being faced in the past. A litigant coming to court seeking relief is not interested in receiving a paper decree when he succeeds in establishing his case. What he primarily wants from the courts of justice is the relief and if it is a money decree he wants that money he is entitled for in terms of the decree must be satisfied by the judgment debtor at the earliest possible. without fail keeping in view the reasonable restrictions/rights which are available to the judgment debtor under the provisions of the statute or the code as the case may be”.

 

 

We also know that first appellate courts shall be the appellate courts on facts and law both. This means the evidence before the trial court could be re-appreciated by the appellate courts. Given, the heavy dockets in courts, the decision in first appeal entails time and there may be delay or inordinate delay in adjudicating such appeals. No doubt, as referred to above, the deposits of decretal amount or substantive part of it seeks to secure the decree holder and its interest. However, it is also true that decree holder may feel undone by the delay in decision in appeal and could realistically be prevented from reaping the fruit of decree, more so, in the event decree holder succeeds in appeal preferred by the judgment debtor, then too, the time consumed in deciding the appeal may leave a decree holder disappointed. In this backdrop, what is to be ascertained is whether the decree holder could seek recovery of deposited amount by the judgment debtor in the appellate courts, during the pendency of the appeal and if so, what are the circumstances available to the decree holder for seeking such release of deposited decretal amount pending the disposal of appeal and whether any conditions could be fastened on the decree holder, while permitting release of deposited amount to the decree holder. The endeavour herein is to delve on the aforesaid aspect.

After judgment and decree is passed in a suit, the decree holder may refer execution petition seeking enforcement of decree. The contents of Order XXI of Code of Civil Procedure is reproduced herein for ready reference:

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 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 -

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.”

While judgment debtor/ aggrieved party files an appeal against judgment and decree, generally pre-deposit is sought by the appellate court as a pre-condition to admitting the appeal. It may be noted that the Code of Civil Procedure does not prescribe pre-deposit on filing of appeal, unlike several other acts such as Consumer Protection act 2019. In SHASHI BHUSHAN LAL DAS  VERSUS DEPAK RATHORE & ANR. CM(M) No. 1085/2014 it is held by Delhi High Court as under :

3. There is no provision in the Code of Civil Procedure, 1908 (CPC), including in Order XLI CPC, whereby for consideration of appeals against judgments passing money decrees, decretal amount has to be deposited. It is only pursuant to Order XLI Rule 5 CPC when an appellant in the first appeal seeks interim orders to stay execution of the money decree then direction can be issued for deposit of the decretal amount. There is no statutory provision which provides deposit of the decretal amount as a condition precedent for hearing of the appeal. This is not provided even under Order XLI Rules 6 and 10 CPC, and which provisions have been relied upon by the appellate court.

4. In view of the above the present petition is allowed and the impugned order is set aside. It is made clear that in case the petitioner/appellant in the first appeal, applies for interim orders seeking stay of execution of the impugned judgment and decree passed by the trial court or any other interim orders, the first appellate court at that stage will be entitled to pass appropriate orders in accordance with law for deposit of the decretal amount or security etc”

The courts may permit release of decretal amount or such percentage of decretal amount deposited by the judgment debtor while appeal is admitted to the decree holder during the pendency of the appeal.

The position of law in this regard is well settled. The Supreme Court in the case of P.S.L. Ramanathan Chettiar and Ors. Vs. O.Rm.P.Rm. Ramanathan Chettiar, AIR 1968 SC 1047 has held as under:

"12. On principle, it appears to us that the facts of a judgment- debtor's depositing a sum in court to purchase peace by way of stay of execution of the decree on terms that the decree- holder can draw it out on furnishing security, does not pass title to the money to the decree- holder. He can if he likes take the money out in terms of the order; but so long as he does not do it, there is nothing to prevent the judgment- debtor from taking it out by furnishing other security, say, of immovable property,' if the court allows him to do so and on his losing the appeal putting the decretal amount in court in terms of Order 21 rule 1 C.P.C. in satisfaction of the decree.

 

13. The real effect of deposit of money in court as was done in this case is to put the money beyond the reach of the parties pending the disposal of the appeal. The decree- holder could only take it out on furnishing security which means that the payment was not in satisfaction of the decree and the security could be proceeded against by the judgment debtor in case of his success in the appeal Pending. The determination of the same, it was beyond the reach of the judgment-debtor. question of the stoppage of interest after the deposit.

 

                   The Delhi High Court in EX.P. 287/2012 M/S. DEWAN CHAND versus               

 

           UNION OF INDIA & ANR in para 10 and 11 has held as under:  

 

10. Even Delhi High Court in the case of South Delhi Municipal Corporation Vs. Radhey Shyam Through its Proprietor Sh. Radhey Shyam has held as under:

 

"17. In our view, the act of making payment to the decree holder under Rule 1 of Order XXI CPC would require a positive act on the part of the judgment debtor of either depositing into the Court whose duty it is to execute the decree‖ or to make payment out of court to the decree holder through a postal money or through a bank or by any other mode wherein payment is evidenced in writing, unless the Court which made the decree otherwise directs. The payment made under a decree, to fall within the ambit of Order XXI Rule 1 CPC has therefore, necessarily, to be an unconditional payment by the judgment debtor to the decree holder either directly, or indirectly through the medium of the Court whose duty is to execute the decree. Mere deposit of the decretal amount in a Court, other than an executing Court can never amount to payment‖ and even where the decretal amount is deposited in the executing court, the judgment debtors liability to pay interest does not cease until notice contemplated by subrule(2) of Rule 1 of Order XXI is given. This is evident from sub-rule(4) above. Order XXI Rule 1 CPC does not contemplate the decree holder having to chase the judgment debtor to realize the decretal amount by seeking attachment of one or the other accounts of the judgment debtor or the properties of the judgment debtor. If resort to the execution process of the Court is required to be made by the decree holder, and the decretal amount is recovered in pursuance of the order of attachment of the accounts of the judgment debtor, and/or sale of assets of the judgment debtor, such realization of the decretal amount would not amount to payment of the decretal amount under Rule 1 of Order XXI".

11. When this Court had granted permission on March 04, 2004 to the judgment debtor to deposit the awarded amount in the Court, and pursuant thereto, the amount was deposited, the Court had two options either to continue the deposit in the Court or in the alternative permitting the petitioner to withdraw the amount. The Court decided to resort to the latter option in order to balance the equities, inasmuch as in the eventuality the judgment debtor succeeds in the objections and the award of the Arbitrator is set aside, the judgment debtor would be entitled to the amount to be released to the petitioner. To safeguard the interest of the judgment debtor, the Court had directed the decree holder herein to give the bank guarantee on the amount released. As per the statement, the amount was released pursuant to the order of the Joint Registrar dated May 25, 2005, but, the said payment cannot be construed as payment towards the decree. If that be so, the bank guarantee charges, surely, are not towards the payment in satisfaction of the decree/award under Order 22 Rule 1 CPC. This is what has been held by the Division Bench of this Court in the case of Engineering Projects (India) Ltd. (supra). The relevant observation in para 18, wherein, a claim for charges incurred for furnishing bank guarantee was made, are "the respondent cannot charge the bank guarantee charges which bank guarantee was furnished to withdraw the amount, but the payment cannot be construed as a payment towards the decree".

In earlier cases reported as Union Of India (Uoi) vs Smt. Sheela Devi And Anr. AIR 1963 P &H 111 (Punjab & Haryana High Court) the Union of India filed a regular first appeal against the decision of the arbitrator before the Punjab & Haryana High Court and the appeal was still pending. In the appeal, the appellant made an application for the stay of the execution proceedings filed by the respondent. The following order was passed by a learned Single Judge of the Court-

"Execution will go on, but the decretal amount will only be paid to the decree-holder on her furnishing security to the satisfaction of the executing Court for restitution. The security will only be accepted after notice to the Union of India."

The Union of India deposited the decretal amount in the treasury, but the same was paid to the respondent-decree-holder one month after the said deposit when decree holder furnished the required security, as directed by the Court.

It was held that the decree-holder was entitled to the said interest for the period of one month, after the deposit of the amount in the treasury and actual withdrawal by the decree holder.

Yet another aspect is that a Judgment-debtor cannot be allowed to deprive the decree-holder of the fruits of his decree if he is unable to arrange for an adequate security for restitution. As aptly remarked by Mochett and Shahabuddin JJ. In Perlakaruppan Chettiar v. Veerappa Chettiar, AIR 1944 Mad 46,

"it would, as I have indicated before, weigh very heavily on an impecunious decree-holder if at the instance of a well-to-do judgment-debtor he should be put in the position of losing interest on the amount of decree which might ultimately be due to him for no other reason except that he had not the means to furnish security to enable him to draw it out."

A similar point came up for decision in Mupka Naicker Vs A.K Venkatasami Naidu AIR 1950 Mad 807, where it was held as under-

"The judgment-debtor-appellant as a condition of obtaining stay of execution of the decree under appeal was asked by the High Court to make a deposit of the amount of the decree of the Court below, which deposit the decree-holder-respondent was directed to take out on his furnishing security. The respondent, however, could not furnish security and did not take out the money, in the execution of the decree after the disposal of the appeal, the judgment-debtor contended that the Interest, had ceased to run with the deposit of the decretal amount as this was not a case of mere voluntary payment.

"(Held) that since the order of the Court under which he made the deposit, was one which was made on his invitation, the contention could not be sustained and the failure of the decree-holder to draw out the deposit did not disentitle him to Interest on the deposit."

The moot point is whether the money deposited by the judgment-debtor deposited in Court shall became the property of the decree-holder and, that being so, it would be considered that the decretal amount was paid to the decree-holder and interest ceased to run thereon from that date. The Division Bench of the Bombay High Court in Keshavlal Manilal Vs Chandulal Balabhai  AIR 1935 Bom 200, wherein has held-

" A judgment-debtor, who had appealed from the lower Court's decree was granted stay on his depositing the decretal amount. The decree-holder was allowed to withdraw the sum on furnishing security, but he did not do so. Thereupon, on the application of the judgment-debtor the amount was Invested in the Government promissory notes and by the time the decree was passed, the investment had appreciated in value and the decree-holder claimed the same:

(Held) that all that the decree-holder can claim was the sum found due under the decree with interest and that no more can be given to him, while the profit must go to the person who made the deposit."

The fait accompli is the money was paid into Court to give security to the decree-holders that in the event of their succeeding in the appeal they should obtain the fruits of their success. Thus, such deposit should be construed as a deposit of security rather than a deposit of the decretal debt, and the decree-holder cannot claim it as his own, unless the judgment-debtor fails to satisfy the decree by the payment of the money due under decree.

In Gurpreet Singh Vs. Union of India 2006 (8) SCC 457 the Constitution Bench of Supreme 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:

 The general rule of appropriation towards a decretal amount was that -

a) 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 -

e) 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.

f) 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 V. KALA BHARATHI & ORS.THE ORIENTAL INS. CO. LTD., BR. CHITOOR                                 CIVIL APPEAL NO. 3056 OF 2008 the Supreme Court has held as under:

“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.”

From the above discussion it is crystlalised that the decree holder in civil cases even after succeeding has to wait for longer duration in order to reap the benefit of the decree in its favour in as much as appeal shall be deemed to be continuation of suit and the first appellate court being the courts of appeal both on facts and law shall have to re-appreciate the evidence and that may entail time. In that backdrop, when interim order as regards stay against the operation of judgment and decree impugned in appeal is prayed for by the judgment decree, the appellate court as a convention grants stay only after ordering pre-deposit of full or part of the decretal amount in money decree so as to balance equity. As narrated above, unlike other enactments, Civil Procedure code does not have specific provision of Pre-deposit, but when relief/stay under Order LXI Rule 5 of the Code is prayed for, invariably , the pre-deposit order is made. Further , in order to balance the equity, decree holder may be permitted to withdraw the deposited amount pending disposal of appeal, provided condition laid down in this regard, such as upon furnishing security in an event the decision in appeal is passed against the decree holder. The claim of interest and costs by the decree holder shall also depend on facts and the dicta of courts as illustrated above shall answer such aspects.

 

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Anil K Khaware

Founder & Senior Associate

Societylawandjustice.com