BHARAT HEAVY ELECTRICALS LTD. versus R.S. AVTAR SINGH & CO.

Citation: [2012] 10 S.C.R. 701 · Decided: 05-10-2012 · Supreme Court of India · Bench: B.S. CHAUHAN · Disposal: Dismissed

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Judgment (excerpt)

[2012) 10 S.C.R. 701 
BHARAT HEAVY ELECTRICALS LTD. 
v. 
R.S. A VTAR SINGH & CO. 
(Civil Appeal No. 7239 of 2012) 
OCTOBER 5, 2012 
[DR. B.S. CHAUHAN AND FAKKIR MOHAMED 
IBRAHIM KALIFULLA, JJ.] 
A 
B 
Code of Civil Procedure, 1908 - Or.21, r.1 and s.34 -
Execution of decree - Amount payable under a decree -
C 
Connotation of - Decree of Court making award passed by 
the arbitrator its rule - Part-payment of decretal amount by 
judgment debtor - Applicability of the rule of appropriation -
Payment of interest - Manner of calculation - Held: In stricto 
sensu, it is the decree which has to be applied in letter and 
D 
spirit in order to find out whether the stipulations contained 
therein were duly fulfilled by the judgment debtor - On facts, 
both the arbitral award as well as the Rule of the Court made 
a clear distinction between the award amount and the interest 
payable and it cannot be stated that the award amount and 
E 
the interest mentioned in the award should be merged 
together -
Respondent-decree holder was entitled to 
appropriate payments made by the appellant-judgment debtor 
in the first instance to the interest part of it which was due and 
payable on the date of the first payment while adjusting 
whatever balance remained towards principal and calculating 
the interest payable on the remaining principal amount till the 
next date of payment. 
F 
The respondent had undertaken some contract work 
with the appellant in respect of which dispute arose as 
G 
regards the payment to be made by the appellant. The 
dispute went before the sole Arbitrator who passed an 
award on 15-3-1982 which was made the Rule of Court 
after protracted litigation in judgment dated 31-5-1985. 
701 
H 
702 
SUPREME COURT REPORTS 
[2012] 10 S.C.R. 
A The award became final and conclusive. Part payments 
were effected by the appellant (judgment debtor) after the 
date of the decree i.e. 31-5-1985 on 18-10-1985 and 
thereafter on 13-12-2000. The respondent (decree holder) 
filed Execution Petition contending that the appellant did 
B not furnish the award amount in its entirety. The appellant 
while resisting the Execution Petition, also filed 
application under Section 47 CPC by taking the stand 
that entire award amount had been fully paid and, 
therefore, there was nothing to be granted in the 
c Execution Petition. A Single Judge of High Court 
dismissed the objections and ordered execution. The 
order was affirmed by the Division Bench of the High 
Court and therefore the instant appeal. 
By referring to Order XXI Rule 1(1), (4) and (5) of CPC, 
D the appellant submitted that after passing of the award 
by the Arbitrator on 1·5-3-1982 and it was made as a Rule 
of the Court in the order dated 31-05-1985, substantial 
payment towards the decretal amount was made by 18-
10-1985 and, that, by virtue of the payments made dated 
E 18-10-1985 and subsequently on 13-12-2000 the payment 
of entire decretal amount was fully satisfied and nothing 
more remained payable; and that interest, if any, 
mandatorily ceased to run i.e. on and after 13-12-2000 and 
the conclusion to the contrary made by the Single Judge 
F of the High Court and the confirmation of the same by the 
Division Bench in the impugned order were liable to be 
set aside. According to the appellant, by 13-12-2000 the 
entire decretal amount was fully paid and the award of 
further interest based on the claim of the respondent by 
G the Single Judge as well as by the Division Bench of the 
High Court was not justified. The appellant also submitted 
that by virtue of Section 3(3)(c) of the Interest Act and 
Section 34 of CPC, the Court has no power to award 
interest upon interest. 
H 
BHARAT HEAVY ELECTRICALS LTD. v. R.S. AVTAR SINGH 703 
& co. 
The issue in question in the instant appeal, therefore, 
A 
centered around the interpretation of Order XXI Rules 
1 (1 ), (4) and (5) of CPC read with Section 34 CPC and 
Section 3(3)(c) of the Interest Act. 
Dismissing the appeal, the Court 
B 
HELD: 1.1. A plain reading of Order XXI, CPC is to the 
effect that on payment of the amounts payable under a 
decree, as provided under sub-rule (1) of rule 1, the 
calculation of interest on such amount payable under the 
decree would cease to operate from the date of service 
C 
of notice as stipulated under sub-rule (2) of Order XXI. 
The words used in sub-rule (1) in different expressions 
means whatever money that is due and payable under a 
decree, which could be paid in the man

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