High Court of KeralaSingle Judge2016-08-09Disposed of with directions

Bimal T. and Bhanumathi vs Muthoot Vehicle & Asset Finance Ltd.

Case / Petition Number:OP(C).No. 1588 of 2016 (O)

Case Details & Bench

Court: High Court of Kerala
Hon'ble Judges: K. Ramakrishnan
Judgment Date: 2016-08-09
Court Decision / Holding: As on 03.08.2016, a sum of Rs. 2,26,407/- was due to the decree holder. The court directed three months’ time to pay the amount in three equal instalments: first instalment on or before 31.08.2016; the balance on the 25th of each succeeding month; the last by 09.11.2016. If paid within the period, no further interest would be payable; if any instalment is delayed, the decree holder is entitled to realize the amount with interest as per the award. The execution was directed to remain in abeyance during the period. The petition was disposed of with these directions and a communication to the court below.
Final Disposition: Disposed of with directions

Parties to the Case

Appellants / Petitioners

Bimal T., s/o Thyagarajan
Bhanumathi, w/o Thyagarajan

Respondents

Muthoot Vehicle & Asset Finance Ltd.

Legal Representation & Advocates

Counsels for Petitioners

• Sri S. Saju
• Sri P. M. Shameer
• Sri Bobby Lal

Counsels for Respondents

• Sri Sabu S. Kallaramoola

Case Synopsis & Summary

This is an Original Petition under Article 227 challenging Ext. P7 order in E.P. 59/2012 in AR 771/2011 of the II nd Additional District Court, Palakkad. The petitioners, judgment debtors, had obtained a loan from the respondent Muthoot Vehicle & Asset Finance Ltd. After default, the dispute was referred to arbitration and an award was passed. The respondent filed execution for realisation of the amount. The petitioners sought time to pay and the court granted three weeks to pay; later, Ext. P7 was issued by the lower court. The petitioners and the decree holder each filed calculation statements, with the petitioners contending that once amounts were deposited, interest should not accrue on the reduced principal and that, applying the appropriate rule, payments should first be set off against the principal. They relied on Gurupreet Singh v Union of India (2006) 8 SCC 457. The respondent argued that the calculation followed the Supreme Court's dictum, that amounts must be appropriated first to interest and costs, and then to principal. The High Court examined the records, found both calculations in line with the decision, and held that Rs. 2,26,407 due as on 03.08.2016, and granted three months’ time to pay in three equal instalments, with stay of execution. If timely paid, no further interest; otherwise, interest as per the award.

Provisions of Law Cited

Article 227 of the Constitution of India

Legal Doctrines & Maxims

Appropriation of payments — first towards interest and costs, then towards principal
No interest can be charged on the interest portion of the amount

Submissions & Arguments

Contentions of Appellants / Petitioners

The petitioners contend that the decree holder’s calculation of dues is incorrect because, after the judgment debtors had deposited amounts, the amounts ought to be set off first against the principal debt. As a result, no interest should accrue on the principal once it has been reduced, and no interest should be payable on the assessed portion of the debt. They rely on Gurupreet Singh v Union of India (2006) 8 SCC 457 to support their position, arguing that if there is no explicit direction in the judgment about appropriation, the law requires that payments be applied first to interest and costs, and only the balance to principal; and that interest cannot be charged on the interest portion. They submitted calculation statements showing a lower due amount (Rs. 1,66,703) than claimed by the decree holder, and urged the court to revise Ext.P7 accordingly, while granting a short period to satisfy the admitted amount. They requested stay of further proceedings until the due amount was settled.

Contentions of Respondents

The respondents submitted that the calculation was made in accordance with the principle in Gurupreet Singh that amounts should be appropriated first to interest and costs, then to principal; the decree holder’s statement reflects that approach and should be accepted. They argued that the court should follow this dictum, and that the calculation is proper; they sought no substantive alteration of the order but supported time to pay. They also contended that, if default occurs, execution can proceed with interest as per the award.

Cited Precedents (1)

Case Name	Citation	Treatment	Explanation
Gurupreet Singh v Union of India	2006 (8) SCC 457	Positive	The Supreme Court held that when there is no explicit direction on appropriation, payments must be applied first to interest and costs and then to principal; interest cannot be charged on the interest portion. The present judgment adopts this doctrine and finds the decree holder’s calculation consistent with it.

Diagnostic Tool

Beta

Does this judgment govern your specific facts?

Don't risk relying on a distinguishable precedent. Enter your facts or proposition below. We will test it against Bimal T. and Bhanumathi vs Muthoot Vehicle & Asset Finance Ltd. and instantly map out authorities that support, challenge, or govern your position.

Extracted Judgment Text

Exact text extracted from official judgment records.

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MR. JUSTICE K.RAMAKRISHNAN** **TUESDAY, THE 9TH DAY OF AUGUST 2016/18TH SRAVANA, 1938** **OP(C).No. 1588 of 2016 (O) ---------------------------** ## **EP.59/2012 IN AR.771/2011 OF DISTRICT COURT, PALAKKAD -------------** ## **PETITIONER(S):** **-------------** **1. BIMAL T., S/O.THYAGARAJAN, KOKILAM, ODANNUR, PARLI, PALAKKAD DISTRICT, 678 612. 2. BHANUMATHI, W/O.THYAGARAJAN, KOKILAM, ODANNUR, PARLI, PALAKKAD DISTRICT, 678 612. BY ADVS.SRI.S.SAJU SRI.P.M.SHAMEER SRI.BOBBY LAL RESPONDENT(S): -------------MUTHOOT VEHICLE & ASSET FINANCE LTD. [FORMERLY MUTHOOT LEASING AND FINANCE LTD, MUTHOOT CHAMBERS, KURIAN TOWERS, BANERJI ROAD, KOCHI 682 018, REPRESENTED BY ITS POWER OF ATTORNEY HOLDER AND MANAGER, A.K.SASIKUMAR, SATHYASAIKRIPA, CHITTUR, PALAKKAD.** **BY ADV. SRI.SABU S.KALLARAMOOLA** **THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 09-08-2016, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **PJ** ## **OP(C).No. 1588 of 2016 (O) ---------------------------** ## **APPENDIX** |**PETITIONER(S)'**|**EXHIBITS**| |---|---| |**-----------------------**|| |**EXHIBIT P1.**| **COPY OF THE ARBITRATION REFERENCE NO.771 OF 2011**| ||**DATED 31.12.11 PASSED BY THE SALE ARBITRATOR.**| |**EXHIBIT P2.**| **COPY OF THE EXECUTION PETITION EP 59/12 IN AR 771**| ||**OF 2011 DATED 16.3.12.**| |**EXHIBIT P3.**| **COPY OF THE JUDGMENT IN OPC 4442/2013 DATED**| ||**25.2.16.**| |**EXHIBIT P4.**| **COPY OF THE CALCULATION STATEMENT FILED BY THE**| ||**RESPONDENT/DECREE HOLDER IN EP 59/12 IN AR 771/11**| ||**DATED 1.4.16.**| |**EXHIBIT P5.**| **COPY OF THE CALCULATION STATEMENT AS PER THE**| ||**EXHIBIT P1 AWARD SUBMITTED BY THE**| ||**PETITIONERS/JUDGMENT DEBTORS.**| |**EXHIBIT P6.**| **COPY OF THE OBJECTION FILED BY THE**| ||**PETITIONERS/JUDGMENT DEBTORS IN EP 59/12 IN AR**| ||**771/11 DATED 9.6.16.**| |**EXHIBIT P7.**| **COPY OF THE ORDER DATED 14.6.16 IN EP 59/12 IN AR**| ||**771/11 PASSED BY THE HONOURABLE 2ND ADDITIONAL**| ||**DISTRICT COURT, PALAKKAD DATED 14.6.16.**| |**RESPONDENT(S)'**|**EXHIBITS**| |**-----------------------**|| ||**NIL.**| **/ TRUE COPY /** **P.S. TO JUDGE** **PJ** ## K.RAMAKRISHNAN, J. =================== O.P.(C). No.1588 of 2016 ======================= Dated this the 9[th] day of August, 2016 ## JUDGMENT This is an application filed by the petitioners challenging Ext.P7 order in E.P. 59 of 2012 in A.R.771 of 2011 of the II nd Additional District Court, Palakkad under Article 227 of the Constitution of India. 2. It is alleged in the petition that the petitioners are the judgment debtors in the above execution petition and he had taken a loan from the respondent and since there was default committed, the matter was referred to Arbitration and Arbitration award was passed. The respondent filed Ext.P2, execution petition as E.P.59 of 2012 in AR. No.771 of 2011 of II nd Additional District Court, Palakkad for executing the award for realization of the amount. The petitioners filed O.P.(C) No.4442 of 2013 before this Court seeking time to pay the amount and this O.P.(C). No.1588 of 2016 -2- Court has granted three weeks time to pay the amount and otherwise respondents was permitted to prosecute the execution petition. Thereafter, Ext.P4 calculation statement was filed by the respondent decree holder before the court below and petitioners filed Ext.P5 calculation statement and also filed Ext.P6 objections to the calculation statement filed by the decree holder as they have disputed the amount payable. The learned Additional District Judge came to the conclusion that an amount of Rs.2,42,228/- was due as on 09.06.2016, after considering all the objections specified by the judgment debtor and passed Ext.P7 order. This was challenged by the petitioners by filing this Original Petition. 3. As directed by this Court, both the parties filed their calculation statements. As per calculation statement filed by the petitioners, only an amount of Rs.1,66,703/alone was due. As per the calculation statement filed by the decree holder, respondent, an amount of Rs.2,26,407/- is due. 4. Heard both sides. O.P.(C). No.1588 of 2016 -3- 5. According to the Counsel for the petitioners, the decree holder is not entitled to calculate interest once they had deposited the amounts and amount is deducted from the principal first, then no interest will run on the principal amount. He had relied on the decisions reported in Gurupreet Singh v Union of India [(2006) 8 Supreme Court Cases 457] in support of his case. 6. On the other hand, the Counsel for the respondent submitted that even as per the decision, the amount will have to be deducted first towards interest and cost and thereafter towards the principal amount. The calculation was made on that basis only. 7. I have gone through the calculation statements filed by both the parties. Even in the decision reported in Gurupreet Singh's Case (supra), the Supreme Court has only held that when there is no direction as to how the amount will have to be appropriated mentioned in the judgment, then, the amount paid will have to be first appropriated towards interest and cost and thereafter, any balance O.P.(C). No.1588 of 2016 -4- amount is there, it will have to be deducted towards principal amount and thereafter no interest can be run on the interest portion of the amount. In this case, I have gone through the statement filed by the decree holder. The calculations shows that they had deducted the amounts paid by the judgment debtors on the respective dates and the calculations made appears to be in tune with the judgment in Gurupreet Singh's Case (supra). So the court below was perfectly justified in coming to the conclusion that the calculations made by the decree holder is proper. Further, as per the calculations statement now before this Court submitted by the decree holder, an amount of Rs.2,26, 407/- is due as on 03.08.2016 and that amount appears to be the correct amount in tune with the dictum laid down by the Supreme Court in the above case. When this was pointed out, the Counsel for the petitioners submitted that if some time is granted for payment, he will pay the amount. 8. Considering the circumstances, this Court feels O.P.(C). No.1588 of 2016 -5- that three months time can be granted to the petitioners to pay the amount in three equal monthly instalments and if they fail to pay any one of the instalments, then the respondent is entitled to realise the amount due with interest as per the award. If they pays the amount within three instalments as directed, then he need to pay only Rs.2,26,407/- as the amount quantified as on 03.08.2016. So the petition is disposed of as follows:- As on 03.08.2016, an amount of Rs.2,26,407/- is due to the decree holder from the judgment debtors and they are given three months time to pay the amount in three equal instalments first of which will have to be paid on or before 31.08.2016. The balance amounts will have to be paid on the 25[th] of succeeding months and the last payment will have to be paid on or before 9.11.2016. If the amount is paid within this time then, no further interest will have to be paid by the petitioners herein. If any default is committed by the petitioners herein, then they will not be entitled to the benefit and the decree holder is entitled to realise the amount with interest on balance amount as per the award. Till then, the court below is directed to keep the execution in abeyance. If any default is committed, court below is at liberty to proceed with execution from the stage at which it was posted. O.P.(C). No.1588 of 2016 -6- With the above directions and observations, the petition is disposed of. Office is directed to communicate this judgment to the court below at the earliest. Sd/K.RAMAKRISHNAN, JUDGE SKV