C. R. No. 1671 of 2010 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : C. R. No. 1671 of 2010 (O&M) Date of Decision : April 07, 2010 Punjab State and another .... Petitioners Vs. Rajiv Ahuja .... Respondent CORAM : HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Mr. Vivek Chauhan, Advocate for the petitioners. * * * L. N. MITTAL, J. (Oral) : C. M. No. 8862-C-II of 2010 : Application is allowed and Annexure P-8 (which was Annexure D-1 in the trial court) is taken on record, subject to all just exceptions. Main Case : Learned counsel for the petitioners states that the petitioners had paid due amount of Rs.40,03,848/- mostly before the passing of the decree dated 29.08.2002 and the remaining amount some time after the passing of the decree and so, the same was required to be adjusted towards principal amount and the petitioners are ready to pay the interest thereon, after adjusting the interest amount already paid. Notice of motion. Mr. Anurag Jain, Advocate accepts notice on behalf of C. R. No. 1671 of 2010 (O&M) 2 respondent. Punjab State and Senior Superintendent of Police, Jalandhar (judgment debtors – JDs) have filed the instant revision petition under Article 227 of the Constitution of India, impugning order dated 16.01.2010 (Annexure P-1) passed by the Executing Court i.e. learned Civil Judge (Senior Division), Jalandhar. Respondent Rajiv Ahuja filed suit against the petitioners for recovery of Rs.71,02,795.57 paise. The petitioners herein admitted that a sum of Rs.40,03,848/- was due from the petitioners to the respondent, as detailed in Annexure D-1 filed with the written statement (Annexure P-8 in the instant revision petition). The respondent-plaintiff moved application under Order 12 Rule 6 of the Code of Civil Procedure (in short – CPC) for passing decree regarding the said admitted amount. Accordingly, learned Civil Judge (Senior Division), Jalandhar, vide order and decree dated 29.08.2002 (Annexure P-2), decreed the suit for recovery of admitted amount of Rs.40,03,848/-, with proportionate costs, by directing that amount already paid shall be adjusted and deducted therefrom. The suit, however, remained pending for the balance amount claimed by the plaintiff- respondent. The suit was ultimately decreed vide judgment and decree dated 13.09.2004 (Annexure P-3) for the principal amount of Rs.40,03,848/, which had already been granted vide earlier decree dated 29.08.2002. However, in final decree dated 13.09.2004, the plaintiff- respondent was also awarded interest @ 6% per annum from the date of filing of suit till payment of principal amount, regarding which decree had already been passed on 29.08.2002. Both parties preferred appeals against judgment and decree dated 13.09.2004. Learned Additional District Judge (Ad hoc), Jalandhar, vide common judgment dated 02.06.2008 (Annexure P-5) and separate decree-sheets of even date, disposed of both the said appeals, thereby awarding interest @ 17½% per annum from the date of issuance of bills till realization. In second appeal bearing R. S. A. No. 478 C. R. No. 1671 of 2010 (O&M) 3 of 2009 preferred by the defendants, this Court, vide judgment and decree dated 15.05.2009 (Annexure P-6), reduced the rate of interest to 12% per annum. Respondent decree-holder (DH) filed execution petition. The question arose regarding appropriation of payments made by JDs. Respondent DH asserted that the payments were first appropriated towards interest and cost and then towards principal amount, but the JDs asserted that the payments were made towards principal amount and were to be appropriated accordingly. Learned Executing Court, vide impugned order dated 16.01.2010 (Annexure P-1), dismissed the objections of the JDs, observing that the amount paid by JDs is to be adjusted firstly towards interest and then towards principal amount. Feeling aggrieved, the instant revision petition has been preferred by the JDs. I have heard learned counsel for the parties and perused the case file. Learned counsel for the petitioners vehemently contended that some payments were made before passing of initial decree dated 29.08.2002 for the admitted principal amount and some payments were made subsequent to passing of the said decree, but long before the passing of final decree dated 13.09.2004, and therefore, the payments made prior thereto, were made towards principal amount, as decreed vide decree dated 29.08.2002. On the other hand, learned counsel for respondent-DH vehemently contended that in view of Section 60 of the Indian Contract Act, 1872 (in short – the Contract Act), the respondent appropriated the payments firstly towards cost, then towards interest and then towards principal amount and the respondent is entitled to do so in view of Section 60 of the Contract Act. Reliance in support of this contention has been placed on a judgment of Hon'ble Apex Court in the case of M/s Industrial C. R. No. 1671 of 2010 (O&M) 4 Credit and Development Syndicate, now called I. C. D. S. Ltd. vs. Smt. Smithaben H. Patel reported as 1999 (2) R. C. R. (Civil) 45. I have carefully considered the rival contentions. As noticed herein before, when JDs made payments before passing of final decree dated 13.09.2004, no interest liability had been determined as payable by them. On the other hand, vide decree dated 29.08.2002, the defendants were to pay the principal amount of Rs.40,03,848/- with proportionate costs. Consequently, the question of appropriating the payments made before 13.09.2004 towards interest could not arise when no liability of the JDs to pay interest had been determined nor any direction had been issued to the defendants to pay any interest. On the other hand, as per decree dated 29.08.2002, the defendants were to pay principal amount of Rs.40,03,848/- with proportionate costs. Consequently, the payments made prior or pursuant to decree dated 29.08.2002 could be adjusted only towards proportionate cost amount and principal amount of Rs.40,03,848/-. The liability to pay interest arose only after passing of decree dated 13.09.2004 and therefore, prior thereto, the payments made by the defendants could not be adjusted towards interest. On the other hand, the said payments were obviously made towards principal amount and proportionate cost, as per interim decree dated 29.08.2002. In this view of the matter, the question of applicability of Section 60 of the Indian Contract Act and the proposition of law laid down in the judgment of Hon'ble Apex Court in the case of M/s Industrial Credit and Development Syndicate, now called I. C. D. S. Ltd. (supra) would not arise. However, the respondent DH would be entitled to adjust the payment towards proportionate cost as awarded by decree dated 29.08.2002 and towards the principal amount and thereafter towards cost of first appellate court and then interest. The Executing Court shall determine the balance amount due accordingly after hearing both the parties. For the reasons recorded above, the instant revision petition is C. R. No. 1671 of 2010 (O&M) 5 allowed and impugned order dated 16.01.2010 (Annexure P-1) passed by the Executing Court stands modified as indicated in the preceding paragraph. Once the balance amount due is determined by the Executing Court, the JDs shall pay the same within three months thereof, without prejudice to their right to challenge the correctness thereof. April 07, 2010 ( L. N. MITTAL ) monika JUDGE