Order XXI CPC Liability to pay interest on money deposited by judgment debtor-f the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it This is a rule of prudence, inasmuch as the debtor
K.L. Suneja v. Manjeet Kaur Monga
CA 1401/19 31/01/23
DOUBLE BENCH CORUM [HON’BLE JUSTICE M.R. SHAH & HONBLE JUSTICE S. RAVINDRA BHAT ] [ SUPREME COURT ]
• Order XXI CPC Liability to pay interest on money deposited by judgment debtor-f the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation to ensure that the amount payable is placed at the disposal of the person entitled to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker’s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or ‘payment’ is complete.
Relevant Paras:
30. The rule was explained in another decision of this court, in V. Kala Bharathi & Ors. vs The Oriental Insurance Company Ltd:9
“A bare perusal of the aforesaid provisions makes it amply clear that the scope of Order XXI Rule 1 of the Code of Civil Procedure is that the judgment debtor is required to pay the decretal amount in one of the modes specified in Sub-rule (1) thereof. Sub-rule (2) of Rule 1 provides that once payment is made Under Sub-rule (1), it is the duty of the judgment debtor to give notice to the decree-holder through the Court or directly to him by registered post acknowledgement due. Sub-rule (3) of Rule 1 merely indicates that in case money is paid by postal money order or through a bank under Clause (a) or Clause (b) of Sub-rule (1) thereof, certain particulars are required to be accurately incorporated while making such payment. Sub-rules (4) and (5) of Rule 1 states from which date, interest shall cease to run-in case amount is paid under Clause (a) or (c) of Sub-rule (1), interest shall cease to run from the date of service of notice as indicated Under Sub-rule (2); while in case of out of court payment to the decree-holder by way of any of the modes mentioned under Clause (b) of Sub-rule (1), interest shall cease to run from the date of such payment.”
31. The provisions of Order XXI are applicable to decrees of civil court. However, they embody a sound policy principle, that if the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it. This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation
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9 V. Kala Bharathi & Ors. vs The Oriental Insurance Company Ltd., 2014 (5) SCC 577, dated 1st April 1947.
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to ensure that the amount payable is placed at the disposal of the person entitled
to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker’s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or ‘payment’ is complete.
32. In the present case, the complainant was aware that the Pay Order had been tendered by the developer to her; nevertheless she filed the original Pay Order with her complaint, and did not seek any order from the MRTP Commission at the relevant time. The pleadings in the complaint did not disclose that the Pay Order was filed in the Commission, to enable the developer to respond appropriately. In these circumstances, the developer’s argument that the rule embodied in Order XXI, Rule 4 CPC, is applicable, is merited. The developer cannot be fastened with any legal liability to pay interest on the sum of ₹ 4,53,750/- after 30th April 2005.
33. This court is also of the opinion that the complainant’s argument that on account of the omission of the developer, she was wronged, and was thus entitled to receive interest, cannot prevail. The records nowhere disclose any fault on the part of the developer; on the other hand, the complainant did not take steps to protect her interests. It has been held by this court, in Sailen Krishna Majumdar v Malik Labhu Masih10 that in such cases, even if equities are equal, the court should not intervene:
10 Sailen Krishna Majumdar vs. Malik Labhu Masih, 1989 (1) SCR 817, dated 21st February 1989.
“Equity is being claimed by both the parties. Under the circumstances we have no other alternative but to let the loss lie where it falls. As the maxim is, ‘in aequali jure melior est conditio possidentis’. Where the equities are equal, the law should prevail. The respondent’s right to purchase must, therefore, prevail.”
In the present case too, the complainant cannot claim interest from the developer, who had returned the Pay Order. As discussed, at the time of filing of the complaint, she could have chosen one among the various options to ensure that the amount presented to her was kept in an interest-bearing account, without prejudice to her rights to claim interest later. In these circumstances, no equities can be extended to her aid.
34. As regards the complainant’s appeal, the contention is that the impugned order is in error, because the Tribunal ought to have directed that the developer ought to have been directed to pay interest on the sum of ₹ 4,53,750/- from 4th October 1993 till the date of its realization i.e., 7th May 2016. This plea is plainly untenable, because the interest payable for the past period was concluded in the previous proceedings. The complainant did not point to any rule or binding legal principle which obliged the developer to pay such interest, or justify the direction in the impugned order, by showing how such liability arose in the facts and circumstances of this case.
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