Barclay vs Mt. Dhandei and another

Jwala Prasad, J.—This appeal arises out of an order passed by the Subordinate Judge of Muzafferpore, dated the 8th June 1921. The judgment-debtor filed an application under Order XXI, rule 2 of the Civil Procedure Code, stating that the entire decree was satisfied and that there was nothing due under the decree to the decree-holders. The decree holders opposed the application and submitted an account stating that Rs. 258-6-11 was still due to them. The learned Subordinate Judge held that Rs. 248-8-3 was still due to the decree-holders, and to that extent he refused the application of the judgment-debtor. The judgment debtor has now, therefore, come to this Court in appeal.

The decree in question was a mortgage decree and was passed in terms of a compromise petition filed by the parties. Under the turns which were incorporated into the decree, the entire decretal amount was fixed at Rs. 9,625, out of which Rs. 4,000 was to be paid to the plaintiffs the decree-holders, by the defendant 1st-party appellant within two months from the date of the decree. This sum was paid off and we are not concerned with it. As to the balance of Rs. 5,625 which was stated as being due by the defendant 2nd party to the defendant 1st party, the terms settled were as follows:-

The defendant 1st party will see that the said sum is deposited in Court by the defendant and party in the name of the plaintiffs in satisfaction of a portion of the decretal amount in this suit within one month from this date (the date of the decree) and on failure of the defendant 1st party to deposit as aforesaid the said amount of Rs. 5,625 within the said period of one month, the defendant 1st party will himself pay the said amount to the plaintiffs within the said period of 2 months from this date.

The compromise decree is dated the 30th March, 1920. The defendant 2nd party did not deposit the amount within the period mentioned above, and therefore under the aforesaid clause defendant 1st party was liable to pay to the plaintiffs, the decree-holders, the said sum Rs. 5,625 within the period of two months from the date of the decree. On the 30th of September 1920, the defendant 1st party paid to the plaintiffs, the decree-holder, Rs. 4,841-5-1 and on the 21st of February, 1921, he paid Rs. 784. These two payments make up Rs. 5,625 which was payable by the judgment-debtor appellant within two months from the date of the decree. The decree-holders, however, claim interest at the rate of one rupee per cent per mensem from the date of default after the expiry of two months of the date of the decree within which period the entire amount had to be paid. The judgment-debtor disputes the right of the decree-holders to claim interest. The question for determination, therefore, is whether the decree-holders are entitled to any interest, Now, the 5th of the compromise petition runs as follows:-

That until the payment of the entire decretal amount the said annuity will remain attached. That if any portion of the decretal amount remains unpaid at the expiry of the said period of two months it will be open to the plaintiffs to execute the decree for the unrealized amount with interest at the rate of Re. 1 per cent per month from after the date of expiry of the said period of two months.

Now, there was a fixed date within which the full amount of Rs. 9,625 was to be paid. This was not done. The decree-holders are, therefore, entitled to compensation for the loss caused to them on account of the default of the judgment-debtor in the payment of the said amount within the time fixed for payment Under the 5th clause of the compromise petition quoted above, it is clear that the decree-holders were entitled to execute the decree after two months of the expiry of the date of the decree, with interest at the rate of Re 1 per cent per mensem, if the entire sum was not paid off. There was clearly the intention of the parties that the unpaid balance after two months will carry interest at the rate aforesaid. The execution is a mode of realization and. the failure to execute does not disentitle the plaintiff to get interest from the date of default. The fact that the decree-holders accepted amounts paid to them in part payment of their decree does not show that they waived their right to claim interest after the default made by the judgment-debtor. From the account submitted by them it appears that they appropriated the payments first towards interest due on date of payment and the balance towards principal. There is nothing to show that they waived their right to interest. They did not even tile satisfaction petition in the Court, apparently because they thought that they were entitled to interest. They kept their right to the interest alive after the date of default. The authorities quoted by the learned Vakil on behalf of the appellant are not on all fours with the present case. (sic) Pokkar v. Ramchanara Shenoy [1914] 16 M.L.T. 478: 26 I.C. 124; Chhagan Chunilal v. Suka Valad Barku [1911] 35 Bom. 511: 13 Bom. L.R. 891: 12 I.C. 384; Mumford v. Peal [1880] 2 All. 857; Sekhawat Hussain v. Gajadhar Prasad [1906] 28 All. 622: 3 A.L.J. 469 and Radha Prasad v. Bhagwan Rai [1883] 5 All 289: 3 A.W.N. 33. On the other hand, the modified decree passed by the High Court of Allahabad in the case of Sekhawat Hussain v. Gajadhar Prasad [1906] 28 All. 622: 3 A.L.J. 469 shows that interest was allowed to the decree-holder on two kists in respect of which default had occurred from the date fixed for payment of the same. The case seems to be governed by the principle deducible from the following authorities;-Murlidhar v. Mulchand [1919] 52 I.C 953 (955) Malayappaiyar v. Pichai Asari [1915] 2 L.W. 236: (1915) M.W.N. 208: 28 I.C. 195 and Ghamandi Lal v. Kanhaya Lal [1919] 52 I.C. 320. The principle seems to be that when a date is fixed for payment of a sum the creditor is entitled to interest by way of compensation even if there is no express agreement to pay interest from the date of default under the Interest Act, and from the 5th clause of the compromise petition quoted above it is clear that there was in the present case a clear intention to charge interest at the rate of Re. 1. The charge of Re. 1 per cent per menseem is not unreasonable compensation with regard to the circumstances of the case as was observed in the case of Murlidhar v. Mulchand [1919] 52 I.C 953 (955). The decree holders had a right under clause 5 of the compromise petition to realize it summarily by execution of the decree instead of by a separate suit or any other proceeding, and consequently they had a right to appropriate part payments after the due date first towards interest and the balance, if any, towards principal. This is the general rule of appropriation; Vide Parr''s Banking Company, Ltd. v. Yates, [1898] 2 Q.B.D. 460 (466). The rule had been adopted in India from the earliest time. Vide Goverdhan Das v. Wariz Ali [1821] 4 Sal. Rep. 330; Bamundass v. Omesh Chander, [1856] 6 M.I.A. 289, Luchmeshwar Singh v. Syed Lutf Ali [1871] 8 B.L.R. 110 Guroo Das Dutt v. Ooma Charan [1874] 22 W.R. 525 Maharaja of Benares v. Har Narain Singh [1905] 28 All. 25: 25 A.W.N. 167: 2 A.L.J. 585; Biswaanth Bhattchargee v. Someswar Sarma [1917] 21 C.W.N. 1055: 41 I.C. 348 AIR 1922 233 (Privy Council) and Seth Nemichand v Seth Radha Kishen [1922] P.C. 26 C.W.N. 153: 30 M.L.T. 39: (1921) M.W.N. 411: 14 L.W. 391: 63 I.C. 904 (P.C.) and Sections 60 and 61 of the Indian Contract Act. This is so whether the decree be an ordinary decree or an instalment decree, as in the present case, provided the interest is payable under the decree. We have already seen that under the terms of the decree interest was payable though the right for realizing it by execution proceedings was mentioned in the decree for the benefit of the decree-holders.

There is no substance also in the contention of the appellant that the calculation of interest is unreasonable or that compound interest was charged in the account. Such a calculation was upheld in the aforesaid case of Biswanth Bhattacharjee v. Someswar Sarma [1917] 21 C.W.N. 1055: 41 I.C. 348.

For all these reasons we dismiss the appeal with costs.

Ross, J.

I agree.