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
