By Aaryan Dhar
Published on: April 19, 2022 at 09:10 IST
Introduction
When a citizen obtains a judicial order against another person, the next move is to get the order fulfilled. Those proceedings by which he moves the Court for the satisfaction of the said decree is called as execution proceedings
Execution is how a decree holder binds the judgment-debtor to carry out the decree’s or order’s command, depending upon the judgement of the Court. It allows the decree holder to recover his/her losses, through the result given by the judgement.
When the judgment-creditor or decree-holder receives money or other property as a result of the judgment, decree, or order, the execution is complete. As such, the decrees are required to be executed with force, so that the Decree Holder having a document containing declaration of his rights may not feel cheated or helpless having earned no fruits of the case which got settled by him from the Court even after spending decades on the matter at hand.
One such method for the execution of the decree by the court of law includes asking for a fixed deposit to ensure the other party does not incur losses.
Order 21 Rule 1 CPC: Method of adjustment in money decree –
The modes of payment for the money decree are defined in Order 21 Rule 1 of the CPC. The Court should first allocate the funds to interest, then to expenses, and finally to the principal, unless the judgment debtor states otherwise when making the deposit and reminding the decree holder of his purpose.
This Order also defines the way decrees of particular results, perpetual injunction, restoration of conjugal rights and custody, and other related decrees are enforced and enacted.
In the case of Gurpreet Singh Vs. Union of India,[1]it was held by the Hon’ble Supreme Court:
“In cases of execution of money decrees or award decrees, or other certain decrees other than mortgage decrees, interest stops to run on the sum paid, to the degree of the deposit. “
“Thus, if the balance is insufficient, the decree holder might be allowed to apply the appropriation clause, allocating the funds first to interest, then to expenses, and finally to the principal amount due under the decree.”
“However, no further interest is owed to the decree holder on the deposit, and there is no chance of the decree holder seeking re-appropriation if it is learned that further sums are due to him and are then deposited by the judgment debtor.”
In other words, the scheme does not provide for the pleasure to be reopened to the degree that it has been caused by the deposit. On the amount appropriated to the principal, no further interest will be paid.
Illustration-
Consider the following scenario.
If the trial court issues a decree for Rs.7,000/- plus interest and fees, the judgment debtor shall deposit the money and inform the decree holder either by contacting the executing court under Order XXI Rule 2 of the Code or by depositing the money in the execution carried out by the decree holder under Order XXI Rule 1 of the Code. The decree holder is dissatisfied with the trial court’s decision.
He files an appeal, and the appeals court lifts the amount of the decree to Rs.10,000/-, plus interest and fees.
The provision under Order XXI Rule 1 as it is today, in the context of Order XXIV, is that the judgment debtor’s only further duty is to deposit the extra balance of Rs. 10,000/- decreed by the appellate court, plus interest from the date the interest is due and the costs of the appeal.
The decree holder will not be eligible to assert extra interest on the amounts of Rs.3,000/- decreed by the trial court and deposited by the judgment debtor prior to the appellate court’s improvement of the amount, or that he can restore the deal and reappropriate interest first on Rs.10,000/-, fees, and then the principal and claim interest on the latter.
If there is a shortfall of deposit at any time, the decree holder will be allowed to apply the deposit first to interest. That is not to assume that, after depositing the sums ordered by the trial court, the judgment debtor will also be responsible for interest on the whole principal sum if the appeals court increases the amount and grants interest on the increased amount.
In light of Act 104 of 1976’s amendments to Order XXI Rule 1, the situation about the execution of money decrees has now become apparent.
The contention that the amount stated by the appellate court is the amount that should have been awarded by the trial court, and that once the whole principal is paid, the decree holder will be entitled to interest on the amount awarded by the appellate court, and thus he will seek to make a re-appropriation by first crediting the amount deposited by the judgment debtor pursuant to a re-appropriation order.
The theory seems to be that if a portion of the principal, as well as any interest owed thereon, has been paid as of the date of issuance of the note of deposit, interest on that portion of the principal amount would cease to run after that date.
In other words, the judgment debtor is not obligated to incur interest on the percentage of the principal that he has either paid or invested.
Deposit to be provided for a bail application
The Court has the authority to enforce restrictions on bail under Section 437 of the Code of Criminal Procedure. As reported in Hazarilal vs. Rameshwar Prasad[2], a Court can order an individual to surrender his passport while granting bail. Any requirement that is not reasonable or fair cannot be put on the accused.
It is the Court’s duty to ensure that the requirement put on the accused is fair and in accordance with the purpose and conditions of the clauses.
Under Section 437(3), “the Court has the authority to enforce certain requirements on an individual accused or suspected of committing an offence punishable by imprisonment, such as: (a) that such person attends in accordance with the terms of the bond executed; and (b) that such person does not commit an offence similar to the one of which he is accused or suspected.”
In the interests of justice, the Court can also enforce any other requirements it deems appropriate. Similarly, requesting a bail deposit and signing a bond will be achieved to give assurance that the individual will appear for his trial.
The High Court of Delhi had ordered the Bail Applicant to deposit Rupees 1,00,00,000/- (One Crore) in a fixed deposit in the name of the petitioner in a nationalized bank and to retain the FDR with the Investigating Officer, but the Supreme Court overturned the decision.
While deciding on the reasonableness of the proposed bail conditions in the case of Sheikh Ayub vs. State of Madhya Pradesh[3], the Hon’ble Supreme Court observed, “The Appellant was granted bail and ordered to deposit Rs.2,50,000/-, which is alleged to be the sum obtained by the Petitioner, by the order dated. There was also a provision to have a Rupees. 50,000/- surety bond. In the circumstances of the prosecution, a path to deposit Rs. 2,50,000/- as part of the bail conditions was not warranted.”
The Court has the duty to consider all of the evidence and situations of the case before imposing bail conditions.
In the case of Ramathal and others vs. Inspector of Police and Others[4], the Supreme Court held that the High Court of Punjab and Haryana had not properly considered the whole facts of the case before adjudicating, because the High Court’s conditions requiring the applicant to deposit a sum of Rupees. 32,00,000 were unreasonable and onerous, and beyond the scope of the law.
Thus, from the case laws above it can be seen that the main purpose of a bail is to get the accused to attend the trial proceedings and ensure that justice takes place.
A bond with a security deposit can be asked by the court of law, but as seen in the cases above as well as the conditions set in the sections, the amount should be reasonable, pertaining to the nature of the offence and the amount of money that is at dispute in the present matter.
Conclusion
As seen above, the court can ask for a security deposit to be paid in several instances, for fulfilment of a decree, for mortgaged property, for other assets at dispute, for a bail application/hearing etc.
This security deposit is a way for the court to ensure that one party does not dupe another party, by not paying any money, after settling the particular matter in the court of law. This security deposit acts as a safeguard, so that the winning party does not incur on any more losses and so that the ends of justice can be met.
References
- Order 21 Rule 1 CPC 1860
- Section 437 of the Code of Criminal Procedure 1908
- Gurpreet Singh V. Union of India, (2006) 8 SCC 457 ↑
- Hazarilal vs. Rameshwar Prasad 1972 AIR 484 ↑
- Sheikh Ayub vs. State of Madhya Pradesh (2004) 13 SCC 457 ↑
- Ramathal and others vs. Inspector of Police and Others (2009) 12 SCC 721 ↑