This case examines the cessation of interest on a decretal amount deposited by the judgment debtor in an appellate court, rather than the executing court. The petitioner contended that interest should continue accruing until the actual payment is made, even if the amount is deposited in an appellate court. The Bombay High Court, guided by precedents, held that mere deposit in a court other than the executing court, without fulfilling procedural conditions like notice to the decree holder, does not stop the accrual of interest.

The court quashed the lower court's order, stating that the liability for interest persists until compliance with Order XXI, Rule 1 CPC requirements, which mandate unconditional payment in the executing court or direct facilitation of withdrawal by the decree holder.

1. Key Issue

The primary question was whether interest stops accruing when the decretal amount is deposited in an appellate court instead of the executing court.

2. Petitioner's Contention

The petitioner argued that interest accrues until actual payment is made and cited precedents, including Delhi Development Authority v. Bhai Sardar Singh & Sons.

3. Respondents’ Defense

The respondents claimed that the deposit in the appellate court satisfied the decree and negated further accrual of interest.

4. Legal Framework Discussed

• Order XXI, Rule 1 of CPC: Specifies the modes of payment under a decree and conditions for cessation of interest.
• Supreme Court Precedents: Highlighted the requirement of notice to the decree holder and unconditional payment in the executing court.

5. High Court's Analysis

The court relied on precedents to assert that:

• Depositing the decretal amount in a non-executing court is insufficient to cease interest.
• Notice under Order XXI, Rule 1(2) is mandatory for cessation of interest.

6. Decision

The court quashed the district court's rejection of the petitioner's application for additional interest, restoring the application for recalculation based on Order XXI, Rule 1 of CPC.

Ratio Decidendi:

Interest on a decretal amount does not cease unless the judgment debtor fulfills the dual requirements of depositing the amount in the executing court and giving notice to the decree holder under Order XXI, Rule 1 CPC. Mere deposit in a non-executing court or conditional payment does not suffice.

Acts and Sections Discussed:

1. Order XXI, Rule 1 of CPC (Civil Procedure Code, 1908)

   • Modes of payment of money under decree.
   • Sub-rules (4) and (5) govern cessation of interest.

2. Arbitration and Conciliation Act, 1996

   • Sections 34 and 37: Provisions for setting aside arbitral awards and appeals.

Subjects:

#InterestAccrual #CPCOrderXXI #JudgmentDebtor #ExecutingCourt #ArbitrationLaw