{"id":175587,"date":"1995-04-25T00:00:00","date_gmt":"1995-04-24T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/mathunni-mathai-vs-ms-hindustan-organic-chemicals-on-25-april-1995"},"modified":"2017-07-31T23:50:15","modified_gmt":"2017-07-31T18:20:15","slug":"mathunni-mathai-vs-ms-hindustan-organic-chemicals-on-25-april-1995","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/mathunni-mathai-vs-ms-hindustan-organic-chemicals-on-25-april-1995","title":{"rendered":"Mathunni Mathai vs M\/S. Hindustan Organic Chemicals &#8230; on 25 April, 1995"},"content":{"rendered":"<div class=\"docsource_main\">Supreme Court of India<\/div>\n<div class=\"doc_title\">Mathunni Mathai vs M\/S. Hindustan Organic Chemicals &#8230; on 25 April, 1995<\/div>\n<div class=\"doc_bench\">Bench: R.M. Sahai, N.P. Singh<\/div>\n<pre>           CASE NO.:\nAppeal (civil)  5117 of 1995\n\nPETITIONER:\nMATHUNNI MATHAI\n\nRESPONDENT:\nM\/S. HINDUSTAN ORGANIC CHEMICALS LTD. AND ANR.\n\nDATE OF JUDGMENT: 25\/04\/1995\n\nBENCH:\nR.M. SAHAI &amp; N.P. SINGH\n\nJUDGMENT:\n<\/pre>\n<p>JUDGMENT<\/p>\n<p>1995 (3) SCR 765<\/p>\n<p>The Judgment of the Court was delivered by<\/p>\n<p>R.M. SAHAI, J. The question of law that arises for consideration in these<br \/>\nappeals directed against the judgment and order of the High Court of Kerala<br \/>\nis whether the decretal amount deposited by the judgment-debtor in<br \/>\npursuance of an order passed by this Court is to be adjusted towards the<br \/>\nprincipal amount due first or against interest and other charges.\n<\/p>\n<p>The amounts due under the Land Acquisition Award passed by the Court in<br \/>\n1985 comprised of enhanced market value, solatium at 15% and interest at 4%<br \/>\non the additional amount. In cross appeal filed by the appellant, the State<br \/>\nand the company the enhancement of market value was affirmed but the<br \/>\nappellant was further granted solatium at 30% of the entire market value,<br \/>\nadditional compensation under Section 23(1-A) of the Land Acquisition<br \/>\n(Amendment) Act, 1984 and interest under the amended Section 28 at 9% for<br \/>\nthe first year and 15% for the subsequent years. The company challenged the<br \/>\norder of the High Court by way of Special Leave Petition in this Court in<br \/>\nwhich an order was passed to the following effect:\n<\/p>\n<p>&#8220;Issue notice confined to the question of admissibility of enhanced<br \/>\ncompensation with reference to the provisions of the Amended Act, 1984. The<br \/>\nlearned Attorney General assured us that the compensation as made in the<br \/>\naward has either been paid or will be paid and to consider the tenability<br \/>\nof adoption of uniform rate of compensation notwithstanding the extent of<br \/>\nland acquired.&#8221;\n<\/p>\n<p>Later on, the Court granted the stay order which read as under :-\n<\/p>\n<p>&#8220;The collections of the enhanced compensation, solatium and interest<br \/>\npayable by the Petitioner herein pursuant to the judgment and order dated<br \/>\nthe 1st August, 1986, of the High Court of Kerala at Ernakulam in L.A.A.<br \/>\nNos. referred to above be and is hereby stayed&#8221;.\n<\/p>\n<p>As a result of the stay order granted by this Court, the respondent did not<br \/>\ndeposit any amount. Therefore, the appellant filed an application for<br \/>\nclarification of the order which was disposed of on 7th December, 1987 with<br \/>\nfollowing observations:\n<\/p>\n<p>&#8220;Heard learned counsel for the parties. Our order does not grant any stay<br \/>\nof claims of compensation as awarded by the Land Acquisition Officer and as<br \/>\nenhanced by the reference Court under Section 20 of the Kerala Land<br \/>\nAcquisition Act. What has been actually stayed is disbursement of the<br \/>\ncompensation to the extent it has been escalated by referring to the<br \/>\nAmending Act, 1984 by the High Court. The entire compensation not covered<br \/>\nby our present clarification shall be paid within six weeks without<br \/>\ndemanding any security. C.M.P. is disposed of&#8221;.\n<\/p>\n<p>After the Order was clarified on 7th December, 1987, the respondent<br \/>\ndeposited the amount on 9th January, 1988. The appeal was dismissed on 12th<br \/>\nSeptember 1989. After the dismissal of appeal, the appellant put the decree<br \/>\nin execution in October, 1989 and claimed that after deducting the amount<br \/>\ndeposited by the respondent towards amount due, they were liable to be paid<br \/>\nthe balance with interest as directed by the court. It was objected as the<br \/>\nrespondent having deposited the decretal amount it was liable to pay only<br \/>\nthe amount which was stayed by this Court, namely, the escalation by the<br \/>\nAmending Act of 1984 and the interest thereon. Both the appellant and<br \/>\nrespondent filed statement showing calculations of the figure arrived at by<br \/>\nthem. The executing court allowed the application on the ratio laid down by<br \/>\nthis Court in <a href=\"\/doc\/1595943\/\">Meghraj &amp; Ors. v. Mst. Bayabal &amp; Ors., AIR<\/a> (1970) SC 161. In<br \/>\nrevision filed by the respondent the order was set aside. The High Court<br \/>\nheld that even though Order XXI Rule 1 of the Civil Procedure Code was<br \/>\namended in 1976, yet the principle laid down by this Court on the unamended<br \/>\nprovisions still applied where the judgment-debtor did not specify as to<br \/>\nhow the amount deposited was to be appropriated. But that principle was<br \/>\nheld not to be available, in this case, as this Court having directed the<br \/>\nrespondent to deposit the amount as awarded by the reference court and what<br \/>\nwas stayed was the enhancement made by the High Court, the deposit made by<br \/>\nthe respondent on 9th January, 1988 was in satisfaction of both the<br \/>\nprincipal and interest along with cost as granted by the reference court.<br \/>\nThe court held that where deposit is made in pursuance of an order passed<br \/>\nby the court, it was not necessary for the judgment-debtor to specify the<br \/>\nmanner in which the amount should be appropriated. Reliance was placed on<br \/>\nThe Central Warehousing Corporation, Berhampur v. M\/s. Govinda Choudhury<br \/>\nand Sons, AIR (1989) Orissa 90 and Improve-ment Trust, Jind v. Narinder<br \/>\nKumar, AIR (1990) P&amp;H 326.\n<\/p>\n<p>The right of the decree-holder to appropriate the amount deposited by the<br \/>\njudgment-debtor, either in court or paid outside, towards interest and<br \/>\nother expenses is founded both on fairness and necessity. The courts and<br \/>\nthe law have not looked upon favourably where the judgment-debtor does not<br \/>\npay or deposit the decretal amount within the time granted as one cannot be<br \/>\npermitted to take advantage of his own default. Therefore, the normal rule<br \/>\nthat is followed is to allow the deposit or payment if it is in part to be<br \/>\nadjusted towards the interest due etc. In Meka Venkatadri Appa Rao Bahadur<br \/>\nZamindar Garu &amp; Ors. v. Raja Parthsarathy Appa Rao Bahadur Zamindar Garu,<br \/>\nAIR (1922) PC 233 the rationale was explained thus:-\n<\/p>\n<p>&#8220;There are moneys that are received without a definite appropriation on the<br \/>\none side or on the other, and the rule which is well-established in<br \/>\nordinary cases is that in those circumstances the money is first applied in<br \/>\npayment of interest and then when that is satisfied in payment of the<br \/>\ncapital&#8221;.\n<\/p>\n<p>But the law or even the agreement entered between the parties may provide<br \/>\nfor adjustment of payment in a particular manner. Section 60 of the<br \/>\nContract Act provides that,<\/p>\n<p>&#8220;where the debtor has omitted to intimate and there are no other<br \/>\ncircumstances indicating to which debt the payment is to be applied, the<br \/>\ncreditor may apply it, at his discretion to any lawful debt, actually due<br \/>\nand payable to him from the debtor, whether its recovery is or is not<br \/>\nbarred by the law in force for the time being as to the limitation of<br \/>\nsuits&#8221;.\n<\/p>\n<p>The words of the Section are clear. It has been construed broadly by the<br \/>\ncourts. The right of the creditor was further explained judicially in Rai<br \/>\nBahadur Seth Nemichand v. Seth Radha Kishan &amp; Ors., AIR (1922) PC 76 and it<br \/>\nwas held that the creditor was not bound to accept a payment on condition<br \/>\nof the judgment-debtor. For the decrees passed by courts, the provision was<br \/>\nmade in unamended Order XXI Rule 1 prior to 1976 and it was provided that<br \/>\nthe amount be deposited in the court whose duty it was to execute the<br \/>\ndecree. It was further provided by sub-rule 2 that where any payment was<br \/>\nmade under clause (a) of sub-rule (1) notice of such payment was to be<br \/>\ngiven to the decree-holder. It was this rule which was construed in<br \/>\nMeghraj&#8217;s case (supra). The court held that even though the judgment-debtor<br \/>\nwhile depositing decretal amount from time to time stated that payments<br \/>\nwere being made towards the principal due but in absence e of any evidence<br \/>\nthat the decree-holder was informed about the nature of deposit or the<br \/>\ndecree-holder appropriated it towards the principal, the ordinary rule<br \/>\napplied and the payments by the judgment-debtor could be appropriated<br \/>\ntowards interest and cost as held in Meka Venkatadri case (supra). It may<br \/>\nnow be seen if the principle laid down in this decision stands diluted by<br \/>\namendment of Rule 1. The relevant portion of the amended Rule reads as<br \/>\nunder:-\n<\/p>\n<p>&#8220;O.XXI. R.1.- Modes of paying money under decree:-\n<\/p>\n<p>(1)  All money, payable under a decree shall be paid as follows, namely:-\n<\/p>\n<p>(a)   by deposit into the Court whose duty it is to execute the decree, or<br \/>\nsent to that Court by postal money order or through a bank; or<\/p>\n<p>(b)   out of Court, to the decree-holder by postal money order or through a<br \/>\nbank or by any other mode wherein payment is evidenced in writing; or<\/p>\n<p>(c)    otherwise, as the Court which made the decree, directs.\n<\/p>\n<p>(2) Where any payment is made under clause (a) or clause (c) of sub-rule<br \/>\n(1), the judgment-debtor shall give notice thereof to the decree-holder<br \/>\neither through the Court or directly to him by registered post,<br \/>\nacknowledgment due.\n<\/p>\n<p>(3)&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;&#8230;..\n<\/p>\n<p>(4) On any amount paid under clause (a) or clause (c) of sub-rule (1),<br \/>\ninterest, if any, shall cease to run from the date of service of the notice<br \/>\nreferred to in sub-rule (2).&#8221;\n<\/p>\n<p>The amended sub-rule (2) removes the doubt if there was any that the<br \/>\njudgment-debtor is not absolved of the obligation of informing the decree-<br \/>\nholder by written notice even in respect of deposit in court either<br \/>\ndirectly or by registered post. The purpose of addition of the expression,<br \/>\n&#8216;either through court directly or by registered post acknowledgment due&#8217; is<br \/>\nthat the judgment-debtor should not only give notice of payment but he must<br \/>\nensure that the decree holder has been served with the notice. The ratio<br \/>\nlaid down in Meghraj case (supra) applies now with greater rigour. The<br \/>\nreason for the rule both in the unamended and amended provision appears to<br \/>\nbe that if the judgment debtor intends that the running of interest should<br \/>\ncease then he must intimate in writing and ensure that it is served on the<br \/>\ndecree-holder. Sub-rules (4) and (5) added in 1976 to protect the judgment-<br \/>\ndebtor provide for ceasure of interest from the date of deposit or payment.<br \/>\nBut the cessation of interest under sub-rule (4) takes place not by payment<br \/>\nalone but from the date of service of the notice referred to in sub-rule<br \/>\n(2). It is not necessary for purposes of this case to decide whether the<br \/>\ncreditor was bound to appropriate the amount towards principal once<\/p>\n<p>it was deposited in court and intimation of the deposit was served on the<br \/>\ndecree-holder as it does not appear that the respondent ever served any<br \/>\nnotice on the appellant about the deposit. It is true that the amount was<br \/>\ndeposited in January, 1988. But in absence of any intimation as required by<br \/>\nsub-rule (2) and indication of manner of appropriation, the payment could<br \/>\nnot be deemed to have been appropriated towards principal unless the<br \/>\ndecree-holder admits it to be so. The reasoning of the High Court that<br \/>\nsince the deposit was made in pursuance of order of this Court it would be<br \/>\ndeemed that the deposit was towards principal does not appear to be<br \/>\ncorrect. Factually, there was no direction to deposit. The court only<br \/>\ngranted an interim order in respect of escalation. Therefore, the judgment-<br \/>\ndebtor was bound to deposit the decretal amount in accordance with law. And<br \/>\nthat is provided for by Order XXI, Rule I of the Civil Procedure Code. But<br \/>\nmere deposit in absence of any notice and intimation that it was being<br \/>\ndeposited towards principal it was for the decree holder to appropriate it<br \/>\ntowards the dues. That is what was laid down in Meghraj case (supra).\n<\/p>\n<p>There is yet another reason for setting aside the order of the High Court.<br \/>\nOnce the appeal was decided and it was held that the amount awarded under<br \/>\nthe amended Act, 1984 did not suffer from any error of law except the<br \/>\namount under Section 23 (1-A), the parties were relegated to the same<br \/>\nposition as they were on the date when the interim order was granted. In<br \/>\nother words, the amount due was to be paid on the principal amount and it<br \/>\ncannot be urged that since the respondent had deposited the amount the<br \/>\nprincipal stood paid and, therefore, no interest or solatium could be<br \/>\ncalculated on the principal amount.\n<\/p>\n<p>In the result, these appeals succeed and are allowed. The Order passed by<br \/>\nthe High Court is set aside and that of the Executing Court is restored.<br \/>\nThe appellant shall be entitled to his cost.\n<\/p>\n<p>Appeal allowed.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Supreme Court of India Mathunni Mathai vs M\/S. Hindustan Organic Chemicals &#8230; on 25 April, 1995 Bench: R.M. Sahai, N.P. Singh CASE NO.: Appeal (civil) 5117 of 1995 PETITIONER: MATHUNNI MATHAI RESPONDENT: M\/S. HINDUSTAN ORGANIC CHEMICALS LTD. AND ANR. DATE OF JUDGMENT: 25\/04\/1995 BENCH: R.M. SAHAI &amp; N.P. SINGH JUDGMENT: JUDGMENT 1995 (3) SCR 765 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-175587","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Mathunni Mathai vs M\/S. 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