In execution proceedings, absent specific directions for appropriation, payments should be applied to interest first, then principal.

Order :

RAKESH MOHAN PANDEY, J.

1. The petitioner has challenged the order passed by the learned Executing Court/District Judge, Bilaspur dated 18.04.2018, in Execution Case No. 111/2004, whereby the learned Executing Court has appropriated 50% amount deposited by the respondent/judgment debtor contrary to the law laid down by the Hon’ble Supreme Court in the matter of Bharat Heavy Electricals Limited vs. R.S. Avtar Singh and company reported in (2013) 1 SCC 243: (2013) 1 SCC (Civ) 230 : 2013 SCC OnLine SC 838.

2. Learned counsel for the petitioner would submit that an award was passed by the arbitrator on 07.07.2004, whereby, the respondent was directed to make payment of Rs. 74,40,000/- with interest at the rate of 12% from 01.01.2000 till the date of its realization. He would further submit that a petition under Section 34 of the Arbitration and Conciliation Act, 1996 (hereinafter referred to as Act, 1966) was preferred by the respondent and it was dismissed, and thereafter, an appeal preferred under Section 37 of the Act, 1966 was also dismissed, and subsequently, the SLP was dismissed by the Hon’ble Supreme Court. He would further submit that in M.A. No. 254 of 2006, the respondent was directed to deposit 50% of the award amount and the rest of the award was stayed vide order dated 28.02.2006. He would also submit that the respondent deposited 50% of the award amount with the learned Executing Court. He would contend that the learned Executing Court adjusted 50% of the deposit against the principal amount and 50% against the interest part and thus the approach of the learned Executing Court is contrary to the law laid down by the Hon’ble Supreme Court in the matter of R.S. Avtar Singh (supra). He would refer to para 31.1 of the judgment and would submit that where there is no specific indication/direction for the appropriation of the decretal amount, the adjustments be made firstly towards payment of interest and costs and thereafter towards payment of the principal amount. He would pray to set aside the order passed by the learned Executing Court dated 18.04.2018. He would further argue that a direction may be issued to the concerned Court to pass appropriate orders strictly in accordance with the law laid down by the Hon’ble Supreme Court.

3. On the other hand, Mr. H.B. Agrawal, Senior Advocate would oppose. He would submit that pursuant to the interim order passed in MA No. 254 of 2006 dated 28.02.2006, 50% of the award amount was deposited with the Executing Court. He would further submit that the learned Executing Court rightly adjusted 50% of the deposit with the principal amount and 50% against the interest part. He would also submit that the learned Executing Court has passed a well reasoned order pursuant to directions issued in the award as well as the interim order passed in MA No. 254 of 2006. He would contend that the instant petition deserves to be dismissed.

4. I have heard learned counsel appearing for the parties and perused the documents placed on the record.

5. Admittedly, an award was passed by the arbitrator on 07.07.2004, whereby, the respondent was directed to make payment of Rs. 74,40,000/- with interest at the rate of 12% from 01.01.2000 till the date of its realization. The petition preferred by the respondent under Section 34 and the appeal under Section 37 of the Act, 1996 were dismissed, even the SLP was dismissed by the Hon’ble Supreme Court. In MA No. 254 of 2006, an interim order was passed and the respondent was directed to deposit 5