Raichand Amulakh vs Najmuddin Ismailji

Shah, C.J.—The question in this appeal, which arises out of execution proceedings, is whether interest eases to run on money deposited into Court under Order 21, Rule 1(1)(a), CPC on date of that payment or on the date when the decree-holder receives notice thereof. The Appellant judgment-debtor deposited into Court the decretal amount on 2-5-1951 and it appears that the Court directed a notice to issue to the Plaintiff decree-holder. However, the notice was not actually issued and the reasons thereof are not known. The decree-holder had taken out execution 011 12-1-1952; the judgment-debtor contended that he had already deposited the decretal amount and the decree-holder was not entitled to interest as from the date of the deposit. The executing Court accepted the judgment-debtor''s contention, but on appeal the learned District Judge held that the decree-holder was entitled to claim interest since no notice of the deposit had been given to him and it is against this order that the judgment-debtor has come in appeal.

Under Order 21, Rule 1(1), Code of Civil Procedure, all money payable under a decree is to be paid in one of the three ways, namely, into the Court whose duty it is to execute the decree, or out of Court to the decree-holder, or otherwise as the Court which made the decree directs, and under Rule 1(2) where any payment is made into the Court notice of such payment shall be given to the decree-holder; so that where a payment is made into Court the rule requires a notice to be given to the decree- holder. These two provisions require to be read together, and so reading them, they obviously indicate that the payment into Court becomes effective on the notice thereof being given to the decree- holder. Where the judgment-debtor chooses the mode of paying into Court, the requirement of the notice under Sub-clause (2) arises and payment by that mode would be effective only when the decree-holder has notice and not earlier.

There is no doubt a divergence of judicial opinion on the point, the Nagpur High Court holding that interest ceases to run from the date of the payment into Court and the High Courts of Madras, Calcutta and Bombay holding that it continues to run till the notice of the deposit is given to the decree-holder. The Nagpur High Court has taken the abovesaid view in - Laxminarayan v. Ghasiram AIR 1939 Nag 191 (A), following a decision of the Privy Council in - Md. Rahim-tulla v. Esmail AIR 1924 PC 133 (B).

In the Privy Council case, a conditional decree was passed in a suit to set aside a sale the, condition being that the Plaintiffs should pay a certain sum within a certain time and if they did so they would recover possession of the land in suit, but if they did not then the suit would stand dismissed. The Plaintiffs'' mortgagee who was not a party to the suit made the payment into Court and the question was whether the condition was fulfilled. One of the contentions urged by the Appellant before the Privy Council was that on a sound construction of the decree the sum that was provided to be paid by the Plaintiffs in that suit fell to be paid to the Appellant. With reference to this it was observed:

Their Lordships are clearly of opinion that while the condition would have been satisfied by a payment to the Appellant in person, which he accepted it was equally satisfied by a payment into Court, and that the latter was, in the circumstances, the appropriate mode of satisfying the condition.

The second contention urged namely that the deposit made by a person who was not a party to the suit did not satisfy the condition was also rejected by their Lordships. The decision of the Privy Council, so far as is material to the present case, only says that a payment made into Court is as good as a payment made to the decree-holder himself for satisfying the condition. Clause (2) of Order 21, Rule 1 was not referred to and the question of notice of the deposit to the decree-holder and whether interest would cease to run from the date of the deposit or otherwise has not been specifically considered in the Privy Council case and the decision was one upon the fact of the particular case. In Laxminarayan''s case, no doubt it was "observed that if interest runs until payment and payment into Court is payment; then it is difficult to see why interest should run thereafter, but even here Order 21, Rule 1, Cl. (2) was not specifically considered.

The contrary view, namely, that interest would cease to run on the date the decree-holder receives notice has been taken in - Ramaraya Shanbogue v. Venkatramanayya AIR 1919 Mad 445 (C). It is true that the above Privy Council case was not there referred to, but the Privy Council decision is distinguishable as said above. Sheshagiri Ayyar J., has taken the analogy of Order 24, Rule 3 of the Code which says that interest on the deposit would cease to run from the date of the notice to the Defendant and has held that although the said rule governs payment in the course of the hearing of a suit, the principle thereof could be applied to payments in the course of execution proceedings, especially so as Order 21, Rule 1(1)(a) does not say that by the payment satisfaction of the claim of the decree-holder is ipso- facto to be entered. Sheshagiri Ayyar J. also held that the provision for notice in Order 21, Rule 1(2) of the Code rather indicates that the decree- holder''s rights should be affected only after he was informed that the decretal amount was available for him and that he could draw it out of Court, and the learned Judge''s judgment is also based on this view.

Ramaraya Shanbogue''s case was followed by the Madras High Court in - The South Indian Railway Company, Limited Vs. M.C. Mayilvahanan, and the above Nagpur case was dissented from. ''AIR 1924 PC 133 (B)'' was taken as a decision upon the facts of the particular case and it. was stated that their Lordships of the Privy Council were not to be taken as laying down any general principle to be applied to all kinds of deposits in all kinds of circumstances, and that the said ruling cannot be utilized as an authority overruling - ''AIR 1919 Mad 445 (C)''. The Calcutta High Court has held in - Rangpur Raiyat Bank Ltd. Vs. Hesabuddin, , following - ''AIR 1919 Mad 445 (C)'', that when a decretal amount is paid into Court under Order 21, Rule 1(1)(a), the decree- holder is entitled to interest for the period subsequent to such payment until he gets notice of the deposit. It is true - ''AIR 1924 PC 133 (B)'' was not referred to in that case also, but as shown above that does not affect the correctness of the Calcutta decision.

The question was considered by the Bombay High Court in - Special Land Acquisition Officer, Special Land Acquisition Officer Vs. Ambalal Trikamlal, ), where all the above rulings were referred to. The learned Judge preferred the view of the Madras High Court to that of the Nagpur High Court and held that Order 21, Rule 1(1)(a) and Rule 1(2) should be read together, and that reading the two together it was clear that the decree-holder would be entitled to claim interest until he has notice of the payment of the docretal amount into Court As the learned Judge pointed out, this construction is in consonance with considerations of equity because where the judgment-debtor adopts the course of making the payment into Court the decree-holder is not likely to know it and it will indeed be a hardship to him that interest should cease to run soon as the deposit is made, of which deposit he is unaware. But apart from considerations of equity, the provisions of Order 21, Rule 1(2) indicate that the payment into Court becomes payment for the purpose of satisfying the decree only when notice is given to the decree-holder. Agreeing with the view of the Madras, Calcutta and the Bombay High Courts therefore, I hold that the interest did not cease to run in this case till the decree-holder had notice of the deposit into Court made by the judgment-debtor.

Mr. Oza for the Respondent referred to Order 21, Rule 1(2) as amended by this High Court, which provides that:

Where any payment is made under Clause (a) of Sub-rule (1), a notice of such payment shall be given to the decree-holder either by the judgment-debtor or at his instance by the Court; and upon proof of such notice, interest, if any, on the decretal amount shall cease to run from the date of service of the notice.

The amendment was made on 1-3-1952, whereas the money was paid into Court by the Appellant on 2-5-1951. Mr. Oza urged that the rule as amended has retrospective effect and will apply to this case. In the view I am taking of the rule as it stood before the amendment, the point raised by Mr. Oza does not arise and need not be considered in this case.

In the result the appeal fails and is dismissed with costs.