Kerala High Court
Elamgulam Service Co Operative Bank ... vs P.S.Mohanan Nair on 7 April, 2022
IN THE HIGH COURT OF KERALA AT ERNAKULAM
PRESENT
THE HONOURABLE MR. JUSTICE A. BADHARUDEEN
THURSDAY, THE 7TH DAY OF APRIL 2022 / 17TH CHAITHRA, 1944
OP(C) NO. 1279 OF 2021
AGAINST THE ORDER IN E.P 80/12 IN AP 32/2001 DATED 19/7/21 ON
THE FILE OF THE SUB COURT, PALA
PETITIONER/JUDGMENT DEBTOR:
ELAMGULAM SERVICE CO-OPERATIVE BANK LIMITED
NO.3576,
KOORALI P.O, PIN 686 522, REPRESENTED BY ITS
SECRETARY.
BY ADV K.P.SREEKUMAR
RESPONDENT/DECREE HOLDER:
P.S.MOHANAN NAIR,
AGED 73 YEARS,
S/O SANKARAN NAIR, CHILANKA HOUSE, PONKUNNAM,
KOTTAYAM, PIN - 686 506.
BY ADV K.G.BALASUBRAMANIAN
THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 31.03.2022,
THE COURT ON 07.04.2022 DELIVERED THE FOLLOWING:
O.P(C).No.1279/2021 2
A. BADHARUDEEN, J.
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O.P(C). No.1279 of 2021
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Dated this the 7th day of April, 2022
JUDGMENT
A pertinent question requires answer is; what is the mode of adjustment of decree debt when principal amount with interest is claimed by the decree-holder?
2. Elamgulam Service Co-operative Bank Ltd., Koorali, the judgment debtor in E.P.No.80/2012, on the file of the Sub Court, Pala, is the petitioner herein. The petitioner has filed this Original Petition seeking the following reliefs:
"i) set aside Ext.P9 order of the court below;
and
ii) issue such orders or directions which this Hon'ble Court may deem it fit and proper to issue in the facts and circumstances of the case."
3. Heard the learned counsel for the petitioner Advocate O.P(C).No.1279/2021 3 K.P.Sreekumar and Advocate K.G.Balasubramanian, appearing for the respondent/decree holder.
4. I shall refer the parties to this Original Petition as decree- holder and judgment-debtor, for easy reference.
5. Decree-holder, who obtained award in A.P.No.32/2001 dated 19.07.2021 when put the said award for execution in the year 2012, the judgment debtor had periodically approached this Court. O.P(C).Nos.2302/2015, 1841/2017 and 684/2020 are the previous litigation between the parties before this Court. Now Ext.P9 order passed by the execution court is under challenge in this Original Petition. As per the impugned order dated 19.07.2021, the execution court fixed the balance amount due to the decree holder as Rs.92,58,975/-, the same includes Rs.37,97,905/- towards the principal amount and Rs.54,61,070/- towards interest @ 14.5% per annum for 9 years and 11 months, ie., from 19.08.2011 to 19.07.2021.
6. The learned counsel for the judgment debtor submitted O.P(C).No.1279/2021 4 that Rs.88 lakh was paid by the judgment-debtor and it was directed to remit the said sum towards the principal amount and not towards the interest amount. But, the decree holder adjusted the same towards interest as against the said direction and, therefore, the decree holder is claiming more amount. The learned counsel for the judgment debtor submitted that since Rs.88 lakh already paid and amount if adjusted towards the principal, no amount is due to the decree holder.
7. Disspelling this argument, the learned counsel for the decree holder produced a statement of account in detail showing the amount in a format, viz., amount received, balance amount due, interest thereof and accordingly, as on 08.03.2022, the balance amount comes to Rs.96,59,347/-.
8. The crux of the dispute is confined as to whether the contention raised by the judgment debtor to the effect that there was an agreement in between the decree holder and the judgment debtor to adjust the amount paid by the judgment debtor towards O.P(C).No.1279/2021 5 the principal sum instead of adjusting the same towards the interest, is sustainable? Ext.P10, the objection filed by the judgment-debtor on 25.11.2013, is given much emphasis by the learned counsel for the judgment debtor in this regard. He also submitted that when the judgment debtor filed affidavit in lieu of chief examination, the judgment-debtor asserted the said fact, but he was not cross examined by the decree holder and therefore, it has to be held that there is an agreement between the judgment debtor and decree holder to adjust the amount paid towards the principal sum. In this connection, 2 decisions of the Apex Court dealing with adjustment of decree debt required to be referred:
9. In [AIR 1999 SC 1036], Industrial Credit and Development Syndicate v. Smithaben H.Patel, the Supreme Court has held as follows:
"We hold that the general rule of appropriation of payments towards a decretal amount is that such an amount is to be adjusted firstly, strictly in accordance with the directions contained in the decree and in the absence of such direction, adjustments be made firstly in O.P(C).No.1279/2021 6 payment of interest and costs and thereafter in payment of the principal amount. Such a principle is, however, subject to one exception, i.e., that the parties may agree to the adjustment of the payment in any other manner despite the decree. As and when such an agreement is pleaded, the onus of proving is always upon the person pleading the agreement contrary to the general rule or the terms of the, decree schedule."
10. In [AIR 2013 SC 252], Bharat Heavy Electricals Limited v. Avtar Singh, after referring to the Constitution Bench decision in Gurpreet Singh v. Union of India : (2006) 8 SCC 457, the principles regarding appropriation of amount have been stated as follows:
"The general rule of appropriation towards a decretal amount was that such an amount was to be adjusted strictly in accordance with the directions contained in the decree and in the absence of such directions adjustments be made firstly towards payment of interest and cost and thereafter towards payment of the principal amount subject, of courts, to any agreement between the parties. .... If the payment made by the judgment-debtor falls short of the decreed amount, the decree-holder will be entitled to apply the general rule of appropriation by appropriating the amount deposited towards the interest, then towards cost and finally towards the principal amount due under the decree. Thereafter, no further interest would run on the sum appropriated towards the principal. In other words if a part of the principal amount has been paid along with interest due thereon as on the date of issuance of notice of deposit interest on that part of the principal sum will cease O.P(C).No.1279/2021 7 to run thereafter. In cases where there is a short fall in deposit of the principal amount, the decree holder would be entitled to adjust interest and cost first and the balance towards the principal and beyond that the decree-holder cannot seek to re-open the entire transaction and to proceed to recalculate the interest on the whole of the principal amount and seek for re-appropriation."
Thus the appropriation of payments towards decree debt can be summarised holding that decree holder would be entitled to adjust interest and cost first and the balance towards the principal and beyond that the decree-holder cannot seek to re-open the entire transaction and to proceed to recalculate the interest on the whole of the principal amount and seek for re-appropriation.
11. It was after relying on the said judgment, this Court directed the court below in O.P(C).No.684/2020 to fix the balance amount and, accordingly, the court below fixed the balance amount as per the impugned order.
12. Repelling this contention, the learned counsel for the decree-holder would submit that the decree-holder, who has been suffering from carcinoma, never entered into such an agreement O.P(C).No.1279/2021 8 which runs against his interest and the contention of the decree- holder in this regard cannot be countenanced. He also submitted that Order 21 Rule 2 of the Code of Civil Procedure provides the procedure for payment, and going by the said provisions, decree amount shall be adjusted by the court and the court shall record the same accordingly. In view of this contention, Order 21 Rule 2 is extracted hereunder:
"2. Payment out of Court to decree-holder:-- (1) Where any money payable under a decree of any kind is paid out of Court, [or the decree of any kind is otherwise adjusted] in whole or in part to the satisfaction of the decree-holder, the decree-holder shall certify such payment of adjustment to the Court whose duty it is to execute the decree, and the Court shall record the same accordingly.
(2) The judgment-debtor [or any person who has become surety for the judgment-debtor] also may inform the Court of such payment or adjustment, and apply to the Court to issue a notice to the decree-holder to show cause, on a day to be fixed by the Court, why such payment or adjustment should not be recorded as certified; and if, after service of such notice, the decree-holder fails to show cause why the payment or adjustment should not be recorded as certified, the Court shall record the same accordingly."
13. The learned counsel for the judgment-debtor placed a decision reported in [AIR 1999 SC 1441], Vidhyadhar v. O.P(C).No.1279/2021 9 Mankikrao, to contend that when one party to a Suit did not enter into witness box, an adverse inference against him shall be drawn. This decision is highlighted on the context that the decree-holder has not mounted the witness box in this case.
14. He has placed a decision reported in [ILR 2016(3) Kerala 98], Abraham K.J v. Mariamma Itty, to contend that court has a duty to afford an opportunity to the parties to adduce proper evidence which is essential to decide the case and if there is no cross examination on the relevant facts brought into by way of chief examination, those facts are deemed to be admitted.
15. Another decision reported in [1995(1) KLT 437], Abdul Majeed v. Ummerkunhi, also placed to highlight the mode of debt payment. Para.10 of the judgment is as under:
"10. The words "other circumstances indicating to which debt the payment is to be applied" in Section 60 of the Contract Act cannot be squeezed into a straight jacket as no fixed meaning can be given to the word. Nor can we catalogue an exhaustive list of the circumstances (vide Bansidhar v. Akhay Rani - (1890) All.W.N.61). As section 59 used the word "under circumstances implying", the section envisages a O.P(C).No.1279/2021 10 positive feature that there must be express intimation from the debtor or at least there must be circumstances for drawing the inference that debtor wished to have the amount applied for discharging a particular debt when there are more than one debt due from him. Though Section 60 refers to a negative aspect, i.e., absence of circumstances, it also denotes the liability of the creditor that appropriation at his option can be made only if there was omission to make the intimation or only in the absence of circumstances indicating to which among the debt the payment is to be applied. In other words, if the indication is gatherable from any circumstances as to how the payment should be applied, then the creditor has no discretion, but the debtor has the right to have the payment appropriated in the way he wanted. The jurisprudential idea is apparent from the provision that when a debtor makes repayment he must have the upper hand to direct the modes of appropriation. As the legal position is the above, even when the debtor says in court that he intended the payment to have been applied to a particular debt the court would be justified in drawing a factual presumption in favour of the debtor. Of course, the creditor can rebut the presumption by showing that a different intention was indicated or that there was complete absence of any indication regarding appropriation."
16. He also placed another decision reported in ILR 1993(2) 593], New India Assurance Company Ltd. v. M. Ramakrishnan & Ors., to contend that the law of pleading requires specific pleas to be raised with the intent of getting the parties a fair trial, and to ensure that they are not prejudiced or surprised by new pleas O.P(C).No.1279/2021 11 thrown up at the trial. The very basis of the law is that the parties should have sufficient notice of the pleas raised by either side, thereby providing them sufficient opportunity to adduce evidence on the points arising for consideration. Therefore, if the pleadings are sufficient to put the opposite party on notice of the contentions raised, a plea of absence of pleadings cannot be countenanced. The pleading of the appellant is definite that their liability is limited to the terms and conditions of the policy and to the relevant provisions and exceptions of the Motor Vehicles Act. In other words, they are categoric that their liability is limited. The policy are before court to be examined. The provisions of the Motor Vehicles Act are also known. In this case, it has been held that the pleadings are sufficient and that the third respondent's contention on the score of absence of pleadings has only to be overruled.
17. The crucial question to be decided is as to whether there is an agreement in between the parties to adjust the principal amount first and interest thereafter. In this connection, the crucial O.P(C).No.1279/2021 12 evidence is the objection filed by the decree-holder and also the affidavit filed by the judgment-debtor.
18. Whereas the decree-holder emphatically denied such an agreement.
19. In this context, it is relevant to refer Section 10 of the Indian Contract Act, 1872 in Chapter II. Section 10 defines what agreements are contracts. All agreements are contracts if they are made by a free consent of parties competent to contract, for a lawful consideration and with a lawful object, and are not hereby expressly declared to be void. Similarly, the essentials to form a concluded contract is `offer' and `acceptance'. Mere offer by itself shall not create a concluded contract unless the other side accept the contract. In the decision reported in [AIR 1994 SC 1414], Steel Authority of India Ltd. & Ors. v. Salem Stainless Steel Suppliers & Ors., the Apex Court held that in order to constitute a concluded contract, both the parties must consent to the agreement. Thus it appears that in order to constitute a contract, there should be offer O.P(C).No.1279/2021 13 and acceptance.
19. In this particular case, after paying Rs.88 lakh towards the decree debt, the judgment-debtor filed objection stating that it was specifically directed to the decree-holder that the said amount shall be adjusted towards principal amount. Later, the judgment- debtor given affidavit also in that line. I do not think that such a unilateral action at the instance of the judgment-debtor shall not create an agreement, as defined in the decision of the Apex Court referred above. To the contrary, same to be treated as an `offer'. But no evidence available herein to see that the said offer was accepted or acted upon by the decree holder. No notice under Order 21 Rule 2 also given to decree holder in this regard. Ultimately, it has to be held that no concluded contract or agreement, in between the decree holder and judgment debtor to adjust the sum paid towards principal amount first. Therefore, the contention raised by the judgment-debtor taking the view that since Rs.88 lakh already paid and if the same adjusted towards principal O.P(C).No.1279/2021 14 amount first and then towards interest portion no decree debt is outstanding, cannot be sustained. Resultantly, the calculation made by the decree-holder, after adjusting the amount paid towards interest and keeping the balance towards the principal sum, is the correct way of calculation. The execution court also correctly calculated the same as per the impugned order and, therefore, the impugned order does not suffer from any arbitrariness, perversity or illegality to have interference by invoking the powers under Article 227 of the Constitution of India. In view of the matter, the order impugned shall stand confirmed.
In the result, this Original Petition fails and is accordingly dismissed.
Sd/-
(A. BADHARUDEEN, JUDGE)
rtr/
O.P(C).No.1279/2021 15
APPENDIX OF OP(C) 1279/2021
PETITIONER'S EXHIBITS
Exhibit P1 TRUE COPY OF THE JUDGMENT DATED
3.12.2015 IN O.P.(C) NO. 2302/2015 (O)
OF THIS HON'BLE COURT.
Exhibit P2 TRUE COPY OF THE JUDGMENT DATED
06.01.2020 IN O.P(C) NO. 1841/2017 (O)
OF THIS HONBLE COURT.
Exhibit P3 TRUE COPY OF THE ARC NO. 1031/2016
PENDING BEFORE THE JOINT REGISTRAR OF
CO-OPERATIVE SOCIETIES, KOTTAYAM.
Exhibit P4 TRUE COPY OF THE CALCULATION STATEMENT
DATED 22.02.2020.
Exhibit P5 TRUE COPY OF THE DETAILED OBJECTION
DATED 26.02.2020 TO THE CALCULATION
STATEMENT.
Exhibit P6 TRUE COPY OF THE JUDGMENT OF THIS
HON'BLE COURT IN OP(C) NO. 684/2020
DATED 01.12.2020.
Exhibit P7 TRUE COPY OF THE ORAL EVIDENCE OF DWI
DATED 04.01.2021.
Exhibit P8 TRUE COPY OF THE AFFIDAVIT IN SUPPORT
OF THE PETITION PRODUCING DOCUMENTS BY
THE PETITIONER ON 30.06.2016.
Exhibit P9 TRUE COPY OF THE ORDER IN E.P. NO.
80/2012 IN A.P. NO. 32/2001 OF THE SUB
COURT, PALA, DATED 19.07.2021.
Exhibit P10 TRUE COPY OF THE OBJECTION DATED
25/11/2013 ALONG WITH DECISION
NO.7/1997-98 (IX), DATED 30/07/1997.