V. KALA BHARATHI & ORS. versus THE ORIENTAL INS. CO. LTD., BR. CHITOOR

Citation: [2014] 5 S.C.R. 1 · Decided: 01-04-2014 · Supreme Court of India · Bench: P. SATHASIVAM · Disposal: Appeal(s) allowed
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Judgment (excerpt)

[2014] 5 S.C.R. 1 
V. KALA BHARATHI & ORS. 
V. 
THE ORIENTAL INS. CO. LTD., BR. CHITOOR 
(Civil Appeal No. 3056 of 2008) 
APRIL 01, 2014 
[P. SATHASIVAM, CJI., RANJAN GOGOi AND 
N.V. RAMANA, JJ.] 
A 
B 
Code of Civil Procedure, 1908 - Or. 21, r. 1 - Motor 
accident claim - Compensation - Grant of - Award passed C 
under the Motor Vehicles Act comprising of principal amount 
alongwith interest and costs -Amounts deposited by judgment 
debtor falling short of the decretal amount - Whether amount 
deposited by judgment debtor to be adjusted first towards 
interest or towards principal decretal amount - Held: On facts, o 
the decree passed by the trial Court or the appellate Court 
did not contain the mode of appropriation and in the absence 
of any such direction, the decree-holder is entitled to 
appropriate the amount deposited by the judgment debtor first 
towards interest, then cost and thereafter towards principal -
E 
After such appropriation, decree-holder entitled to interest only 
to the extent of unpaid principal amount - Hence, interest be 
calculated on the unpaid principal amount - Motor Vehicles 
Act, 1988 - Decree. 
On account of demise of an Engineering Graduate, 
F 
in a road accident, his legal heirs, i.e., the appellants filed 
claim petition before the Motor Accident Claims Tribunal 
claiming compensation to the tune of Rs.2 crores. The 
vehicle involved in the said accident-was insured by the 
respondent - Insurance Company. The Tribunal vide its G 
Award dated 29.04.1997 awarded an amount of 
Rs.98,40,500/- as compensation with interest @ 12% p.a. 
from the date of the petition, .i.e., 25.10.1993 till the date 
of realization, apart from costs quantified at Rs.99,443/-. 
1 
H 
2 
SUPREME COURT REPORTS 
[2014] 5 S.C.R. 
A Respondent - Insurance Company filed appeal under 
Section 173 of the Motor Vehicles Act, 1988 and to comply 
with the provisions contained therein, deposited a sum 
of Rs.25,000/-. The High Court granted stay of execution 
of the Award dated 29.04.1997 subject to the condition of 
B depositing a sum of Rs.30 lakhs and Rs.99,443/- costs, 
which amounts were deposited. The said order was 
subsequently made absolute subject to the condition of 
depositing a further sum of Rs.30 lakhs, which was also 
complied with. The High Court ultimately partly allowed 
c the appeal thereby reducing the compensation amount 
from Rs.98,40,500/- to Rs.56,40,000/-, however, the 
interest rate of 12% p.a. was retained. The respondent -
Insurance Company thereafter deposited a further sum 
of Rs.23,27,635/- claiming to be full and final satisfaction 
0 of the award. 
The appellants filed Execution Petition before the 
Executing Court I Tribunal claiming an amount of 
Rs.20,16,700/-, which claim was denied by the respondent 
- Insurance Company on the ground that its liability to 
E pay interest gets discharged when it deposits the award 
amount in full. Thus, relying on the principle of accrual 
method, the respondent - Insurance Company claimed 
that since it satisfied the award amount in full, no more 
interest was payable and as per its calculation, only a 
F sum of Rs.36,650/- was liable to be paid, which too was 
deposited. The Executing Court took a view that the 
amounts deposited by the respondent - 1·nsurance 
Company from time to time were liable to be adjusted 
towards the component of interest first and thereafter to 
G the portion of the decretal amount. After taking into 
consideration the amounts deposited by the respondent 
- Insurance Company on different dates, its liability was 
fixed to the extent of Rs.17,70,657/- together with interest 
@ 12% p.a. from the date of filing of the Execution 
H Petition till the date of realization. 
V. KALA BHARATHI & ORS. v. THE ORIENTAL INS. 
3 
CO. LTD., BR. CHITOOR 
The respondent - Insurance Company assailed the 
A 
aforesaid calculation I order of the Executing Court in 
Civil Revision Petition. The appellants also filed Civil 
Revision Petition thereby challenging that the Executing 
Court could not have adjusted the amount paid as costs 
towards the decretal amount. The High Court allowed 
B 
both the Civil Revision Petitions while holding that (i) the 
part payments deserve to be adjusted towards the 
principal decretal amount and not any component of · 
interest accrued upto that date; and (ii) the amount 
deposited towards costs, in pursuance of the directions c 
of the court, must be adjusted towards that, and not 
towards payment of the
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