The method of appropriation of payments made by judgment-debtors should be first towards costs and interest payable under the decree and then towards discharge of the principal amount.

( 1 ) THE Life Insurance Corporation of India is the appellant in both these appeals which are filed against the orders of the Civil Judge, Bangalore. The appellant filed two execution petitions before the lower Court for realising the decretal amounts due under two separate mortgage decrees against two different sets of judgment-debtors, and in both the cases the lower Court held that the decrees had been satisfied. Aggrieved by the order of the lower Court, the appellant has filed these appeals. Since the question of law raised in both these cases is common, we find it convenient to dispose of these appeals by this common judgment.

( 2 ) THE question of law involved in these two appeals relates to the mode of appropriation of payments made by the judgmenti-debtors. The contention of the judgment-debtors is that if adjustment is made after allowing counter-interest at the rate prescribed by the decree on all the sums paid by them from time to time the decrees in both the cases must be held to have been fully satisfied. Agreeing with the above contention of the judgment-debtors the Court below has held that the decrees in question are fullly satisfied.

( 3 ) SRI M. Chinnaswamy, the learned Counsel for the appellant contends that the orders of the Court below are erroneous and that if calculation is made by first, appropriating the sums paid by the judgment-debtors towards interest and costs payable under the decree and the balance towards the principal amounts due under the decrees and interest is calculated only on the outstanding principal after each adjustment, the judgment-debtor's would still be liable to pay a certain amount in each case. In support cf his case, Sri Chinnaswamy relied upon the decision in Meghrai v. Mst. Bayabai, AIR. 1970 SC. 161. and the decision of this Court in life Insurance Corporation of India v. Manegar Patel Nanjunda Setty, ESA. 81|67 dt. 17-9-1970.

( 4 ) IN Megharaj's case (1),the Supreme Court held that the normal rule in the case of a debt due with interest was that any payment made by the debtor was in the first instance to be applied towards the satisfaction of interest and thereafter towards the principal unless there was an agreement or decretal order to the conrary.

( 5 ) WHILE doing so, the Supreme Court approved the view expressed by the Privy Council in Venkatadri Appa Rao v. Parthasarathi Appa Rao, AIR, 1922 PC, 233, in LIC. 's cose (2), relied upon by the appellant, Narayana Pai, cj. following the decision of the Supreme Court in Meghraj's case (1), directed the appropriation of sums paid by the judgment-debtor towards the outstanding interest at the first instance. The same rule has to be followed in these appeals also.

( 6 ) WE are aware of the long standing practice in some of the subordinate civil Court's in this State where calculation of the balance of decretal amount is made by following the method relied upon by the judgment- debtor. While the said method may not adversely affect the decree holder when the entire sum claimed by the decree-holder carried interest, the result would be different when the decretal amount due includes costs and interest which do not carry interest. In the latter case, if calculation is made by deducting the entire decretal amount by the sums paid by the judgment-debtor from time to time with counter-interest thereon from the date of each payment, it would adversely affect the decree-holder. It is to be seen that in that case when all the sums paid by the debtor would be carrying counter-interest, a certain portion of the decretal amount relating to costs and curenti interest would not be carrying any interest at all fence, in order to avoid an incorrect result which is likely to ensue the proper method that should be adopted is to appropriate the payments made by the judgment-debtor first towards costs and interest payable under the decree and if any balance remains after such appropriation towards discharge of the principal amo