Execution, Decree, Interest, Deposit, Order XXI Rule 1(4) CPC, High Court Rules, Sale proceeds, Realization, Judgment debtor, Decree holder
 07 Jul, 2026
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M/s Pardeep Kumar Kuldeep Kumar and another Vs. M/s Shiv Lal Raj Kumar & Commission Agent and others

  Punjab & Haryana High Court CR No.3191 of 2025 (O&M)
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Case Background

As per case facts, both petitioners and Respondent No.1 were decree-holders against common respondents. After Respondent No.1’s decree was executed through the sale of properties, the petitioners sought to adjust ...

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Document Text Version

CR No.3191 of 2025 (O&M) 1

IN THE HIGH COURT OF PUNJAB AND HARYANA

AT CHANDIGARH

Reserved on 8

th

of April, 2026

Pronounced on 7

th

of July, 2026

Uploaded on 7

th

of July, 2026

Whether only operative part of the judgment is pronounced? No

Whether full judgment is pronounced? Yes

CR No.3191 of 2025 (O&M)

M/s Pardeep Kumar Kuldeep Kumar and another ....Petitioners

Versus

M/s Shiv Lal Raj Kumar & Commission Agent and others ...Respondents

CORAM: HON'BLE MR. JUSTICE PANKAJ JAIN

Present : Mr. Ashish Aggarwal, Senior Advocate with

Mr. Saket Bhandari, Advocate,

Mr. Vishal Pundir, Advocate and

Mr. Anmol Rattan Singh, Advocate for the petitioners.

Mr. Vijay Kumar Jindal, Senior Advocate with

Mr. Sushil Jain, Advoate and

Mr. Abhishek Shukla, Advocate for respondent No.1.

PANKAJ JAIN, J.

Instant revision petition is directed against order dated

11.03.2025 passed by Additional Civil Judge (Senior Division), Safidon.

2. The contesting parties are decree-holders against defendants

No.2 to 6. Respondent No.1 filed a Civil Suit No.81 of 2015 against

respondents No.2 to 6 seeking recovery of Rs.56,25,817/-. The suit was

CR No.3191 of 2025 (O&M) 2

decreed by Civil Judge (Junior Division), Safidon vide judgment and decree

dated 05.01.2018. The petitioners filed Civil Suit No.156 of 03.03.2015

seeking recovery of Rs.1,59,60,040/- against respondents No.2 to 6. The

suit was decreed by District Judge, Kaithal vide judgment and decree dated

25.03.2019.

3. Respondent No.1 filed execution application bearing No.EXE/

45/2018 to execute decree dated 05.01.2018 before Executing Court at

Safidon. Petitioners herein filed execution application bearing No.418 of

2020 before Executing Court at Kaithal. To execute the decree in favour of

respondent No.1, Executing Court sold two properties belonging to

respondents No.2 to 6 by way of auction. The properties belonging to

judgment debtors, i.e., respondents No.2 to 6 were sold in auction and the

amount fetched therefrom and the date of deposit of the sale amount before

the Executing Court, is tabulated as under:

Shop No. Amount Date of deposit of sale

amount in court

65 Rs.66,11,000/- 27.11.2018

58 Rs.65,00,000/- 23.01.2019

4. The petitioner(s) filed an application before the Executing Court

at Kaithal seeking directions that the residual amount after satisfying decree

in favour of respondent No.1 be adjusted to satisfy the decree in favour of

the petitioner. Executing Court, Kaithal allowed the application vide order

dated 03.09.2021. Warrant of attachment was issued against the excess

CR No.3191 of 2025 (O&M) 3

amount of JDs lying before the Executing Court at Safidon. Vide order

dated 24.09.2021, Executing Court, Safidon held respondent No.1 entitled

for an amount of Rs.1,24,60,074/- till 07.10.2021.

4.1. The present petitioner filed application seeking permission to

object to the calculation of the decretal amount payable to respondent No.1.

4.2. The application was contested.

4.3. The Executing Court vide order dated 27.10.2022 dismissed the

objections filed by the petitioner against the calculation and held the same to

be not maintainable.

5. Aggrieved of the order dated 27.10.2022 passed by the

Executing Court, Safidon, the petitioners approached this Court by way of

CR No.5329 of 2022. In the meantime, respondent No.1 also preferred CR

No.3311 of 2022 impugning order dated 03.09.2021 passed by Executing

Court, Kaithal whereby the residual amount lying before the Executing

Court at Safidon was ordered to be attached.

6. Both the revision petitions were heard together. The revision

petitions were disposed off by this Court vide order dated 28.10.2024

observing as under:

“xxx xxx xxx

5. Counsel for the parties are ad idem that the present petitions

can be disposed off with the direction to the Executing Court to

calculate the exact amount recoverable under the first decree under

execution within a period of 12 weeks from the date of receipt of

certified copy of the order.

CR No.3191 of 2025 (O&M) 4

6. The aforesaid exercise be first carried out by the Court

which is seized off execution prior in time i.e. Executing Court at

Safido. On calculating the aforesaid amount, the Court shall pass

an order whether there is any residual amount to be adjusted in

execution of the subsequent decree or not.

7. Needless to observe no objection to the calculation made by

the Court shall be entertained at the behest of any of the parties as

both the parties are entitled to be heard while effecting the

aforesaid exercise.

8. The aforesaid order is being passed with the consent of the

parties.

9. Parties to appear before the Executing Court at Safido on

07.11.2024.

10. Disposed off, accordingly.

xxx xxx xxx”

7. Pursuant to the aforesaid directions issued by this Court, the

petitioner moved an application before the Executing Court, Safidon.

Deciding the aforesaid application and in deference of the directions issued

by this Court, impugned order dated 11.03.2025 has been passed by the

Executing Court, Safidon.

8. The main grievance of the petitioners is that the Executing

Court while passing the impugned order erred and wrongly calculated the

excess residual amount of Rs.1,82,597.60/- as on 10.03.2025. Learned

Senior Counsel representing the petitioners submits that the interest ought to

have been calculated only till the date of deposit, i.e., 23.01.2019 and not till

the date the amount shall be withdrawn by the decree-holder. He submits

that once the amount has been deposited into the Court executing the decree,

CR No.3191 of 2025 (O&M) 5

the interest shall cease to run from the date of service of the notice referred

to under Order XXI Rule 1(2) of the Code of Civil Procedure, 1908. Mr.

Aggarwal places reliance upon ratio of law laid down by Supreme Court in

the case of ‘K.L. Suneja and another vs. Dr. (Mrs.) Manjeet Kaur

Monga (D) Through Her Lr and another’, (2023)6 SCC 722.

9. Per contra, Mr. Jindal would submit that as per mandate of

Order XXI Rule 1 CPC, the interest shall cease to run from the date of

service of the notice referred to in sub-rule (2). In the present case, there

being no notice to the respondent No.1 w.r.t. deposit of the money with the

Executing Court, interest shall continue to incur as per decree. He submits

that the amount can be said to have been realized only when it is paid to the

decree-holder. In order to hammer-forth his contention, he relies upon ratio

of law laid down in the case of ‘Gurpreet Singh vs. Union of India’,

(2006) 8 SCC 457, ‘Delhi Development Authority vs. Bhai Sardar Singh

and Sons’, 2010(8) RCR (Civil) 1460, M/s Cobra Instalaciones Y

Servicios Vs. Haryana Vidyut Prasaran Nigam Ltd.(Hvpnl), 2023 SCC

Online Del 5439, Daulat Shetkari Sahakari Sakhar Karkhana Ltd. vs.

The State of Maharashtra and others, 2025(5) MhLJ 151, Union of

India vs. M/s Parishudh Machines Pvt. Ltd, 2024 NCDHC 9953, Mohit

Minerals Pvt. Ltd. vs. Maharashtra Small Scale Industries Development

Corporation Limited - Chamber Summons No.287 of 2017 in

Commercial Execution Application No.94 of 2017. D/d. 20.12.2023 and

CR No.3191 of 2025 (O&M) 6

K.L. Suneja and another vs. Dr. (Mrs.) Manjeet Kaur Monga (D)

Through Her Lr and another, (2023)6 SCC 722.

10. I have heard counsel for the parties and have carefully gone

through records of the case.

11. In the absence of any serious dispute w.r.t. the facts, this Court

finds that the following two issues arise in the present revision petition for

consideration of this Court:

(i) Whether the deposit of the decretal amount with the Executing

Court amounts to realization or not?

(ii) Whether the decree-holder shall be entitled to interest even

after the decretal amount stands deposited with the Executing

Court?

12. Before adverting to the factual merits of the case, it will be apt

to peruse the bare provisions of law. Section 51 CPC deals with Powers of

Court to enforce execution. The same reads as under:

“51. Powers of Court to enforce execution.—Subject to

such conditions and limitations as may be prescribed, the Court

may, on the application of the decree-holder, order execution of the

decree—

(a) by delivery of any property specifically decreed;

(b) by attachment and sale or by the sale without

attachment of any property;

(c) by arrest and detention in prison 3 [for such period

not exceeding the period specified in section 58,

CR No.3191 of 2025 (O&M) 7

where arrest and detention is permissible under that

section];

(d) by appointing a receiver; or

(e) in such other manner as the nature of the relief

granted may require:

[Provided that, where the decree is for the payment of

money, execution by detention in prison shall not be ordered

unless, after giving the judgment-debtor an opportunity of showing

cause why he should not be committed to prison, the Court, for

reasons recorded in writing, is satisfied—

(a) that the judgment-debtor, with the object or effect of

obstructing or delaying the execution of the decree,

(i) is likely to abscond or leave the local

limits of the jurisdiction of the Court, or

(ii) has, after the institution of the suit in

which the decree was passed, dishonestly

transferred, concealed, or removed any part

of his property, or committed any other act of

bad faith in relation to his property, or

(b) that the judgment-debtor has, or has had since the

date of the decree, the means to pay the amount of

the decree or some substantial part thereof and

refuses or neglects or has refused or neglected to

pay the same, or

(c) that the decree is for a sum for which the judgment-

debtor was bound in a fiduciary capacity to account.

Explanation. —In the calculation of the means of the

judgment-debtor for the purposes of clause (b), there shall be left

out of account any property which, by or under any law or custom

having the force of law for the time being in force, is exempt from

attachment in execution of the decree.]”

CR No.3191 of 2025 (O&M) 8

13. It is a matter of record that the decrees in the present case in

favour of the petitioner and respondent No.1 against respondents No.2 to 6

are money decrees. In the execution of decree passed in favour of

respondent No.1, the properties of JDs have been sold. Order XXI Rule 41

reads under:

“41. Examination of judgment-debtor as to his

property.— [(1)] Where a decree is for the payment of money the

decree-holder may apply to the Court for an order that—

(a) the judgment-debtor, or

(b) [where the judgment-debtor is a corporation], any

officer thereof, or

(c) any other person,

be orally examined as to whether any or what debts are owing to

the judgment-debtor and whether the judgment-debtor has any

and what other property or means of satisfying the decree; and the

Court may make an order for the attendance and examination of

such judgment-debtor, or officer or other person, and for the

production of any books or documents.

[(2) Where a decree for the payment of money has

remained unsatisfied for a period of thirty days, the Court may, on

the application of the decree-holder and without prejudice to its

power under sub-rule (1), by order require the judgment-debtor or

where the judgment-debtor is a corporation, any officer thereof, to

make an affidavit stating the particulars of the assets of the

judgment-debtor.

(3) In case of disobedience of any order made under sub-

rule (2), the Court making the order, or any Court to which the

proceeding is transferred, may direct that the person disobeying

the order be detained in the civil prison for a term not exceeding

three months unless before the expiry of such term the Court

directs his release.]”

CR No.3191 of 2025 (O&M) 9

14. Order XXI Rule 64 CPC deals with Power of the Executing

Court to order property attached to be sold and proceeds to be paid to the

person entitled. The same reads as under:

“64. Power to order property attached to be sold and

proceeds to be paid to person entitled.—Any Court executing a

decree may order that any property attached by it and liable to sale,

or such portion thereof as may see necessary to satisfy the decree,

shall be sold, and that the proceeds of such sale, or a sufficient

portion thereof, shall be paid to the party entitled under the decree

to receive the same.”

15. The deposit by purchaser of an immoveable property in

execution is governed by Order XXI Rule 84 CPC which reads as under:

“84. Deposit by purchaser and re-sale on default.—(1)

On every sale of immovable property the person declared to be the

purchaser shall pay immediately after such declaration a deposit of

twenty-five per cent. on the amount of his purchase-money to the

officer or other person conducting the sale, and in default of such

deposit, the property shall forthwith be re-sold.

(2) Where the decree-holder is the purchaser and is entitled

to set-off the purchase-money under rule 72, the Court may

dispense with the requirements of this rule. ”

16. Order XXI Rule 92 CPC provides for when sale becomes

absolute and reads as under:

“92. Sale when to become absolute or be set aside.—(1)

Where no application is made under rule 89, rule 90 or rule 91, or

CR No.3191 of 2025 (O&M) 10

where such application is made and disallowed, the Court shall

make an order confirming the sale, and thereupon the sale shall

become absolute:

[Provided that, where any property is sold in execution of a

decree pending the final disposal of any claim to, or any objection

to the attachment of, such property, the Court shall not confirm

such sale until the final disposal of such claim or objection.]

(2) Where such application is made and allowed, and

where, in the case of an application-under rule 89, the deposit

required by that rule is made within [sixty days] from the date of

sale, [or in cases where the amount deposited under rule 89 is

found to be deficient owing to any clerical or arithmetical mistake

on the part of the depositor and such deficiency has been made

good within such time as may be fixed by the Court, the Court

shall make an order setting aside the sale]:

Provided that no order shall be made unless notice of the

application has been given to all persons affected thereby:

[Provided further that the deposit under this sub-rule may

be made within sixty days in all such cases where the period of

thirty days, within which the deposit had to be made, has not

expired before the commencement of the Code of Civil Procedure

(Amendment) Act, 2002.

(3) No suit to set aside an order made under this rule shall

be brought by any person against whom such order is made.

[(4) Where a third party challenges the judgment-debtor’s

title by filing a suit against the auction-purchaser, the decree-

holder and the judgment-debtor shall be necessary parties to the

suit.

(5) If the suit referred to in sub-rule (4) is decreed, the

Court shall direct the decree-holder to refund the money to the

auction-purchaser, and where such an order is passed the execution

proceeding in which the sale had been held shall, unless the Court

otherwise directs, be revived at the stage at which the sale was

ordered].”

CR No.3191 of 2025 (O&M) 11

17. In aid of the provisions under the Code of Civil Procedure,

Punjab and Haryana High Court framed High Court Rules and Orders.

Volume 1, Chapter-12, Part-L thereof deals with sale of property and

delivery to purchaser. Rule 12 deals with payment of purchase money to

decree-holder or its refund. The same reads as under:

“12. Purchase money: its payment to decree-holder or

its refund - Refund of commission. - Purchase money deposited

in Court upon the sale of immoveable property shall be retained by

the Court until the expiry of a period of fifteen days from the date

of the order confirming the sales If no notice of an appeal having

been presented by the party seeking to set the sale aside, be given

to the Court within that period, the purchase money less the sum

which has to be credited to Government or paid to the Court

Auctioneer as commission on the sale (see paragraph 22)may be

paid on the demand of the decree-holder. If such notice be given

within the prescribed period, the purchase money shall be retained

in deposit until the appeal is decided, unless the party at the time

entitled to receive it gives security, to the satisfaction of the Court

to repay it at any time when he may be required by the Court, so to

do.”

18. Modes of paying money under decree are governed by Order

XXI Rule 1 CPC, which reads as under:

“1. Modes of paying money under decree.—(1) All

money, payable under a decree shall be paid as follows, namely:—

(a) by deposit into the court whose duty it is to execute

the decree, or sent to that Court by postal money

order or through a bank; or

CR No.3191 of 2025 (O&M) 12

(b) out of Court, to the decree-holder by postal money

order or through a bank or by any other mode

wherein payment is evidenced in writing; or

(c) otherwise, as the Court which made the decree,

directs.

(2) Where any payments is made under clause (a) or clause

(c) of sub-rule (1), the judgment-debtor shall give notice thereof to

the decree-holder either through the Court or directly to him by

registered post, acknowledgment due.

(3) Where money is paid by postal money order or through

a bank under clause (a) or clause (b) of sub-rule (1), the money

order or payment through bank, as the case may be, shall

accurately state the following particulars, namely:—

(a) the number of the original suit;

(b) the names of the parties or where there are more

than two plaintiffs or more than two defendants, as

the case may be, the names of the first two plaintiffs

and the first two defendants;

(c) how the money remitted is to be adjusted, that is to

say, whether it is towards the principal, interest or

costs;

(d) the number of the execution case of the Court,

where such case is pending; and

(e) the name and address of the payer.

(4) On any amount paid under clause (a) or clause (c) of

sub-rule (1), interest, if any, shall cease to run from the date of

service of the notice referred to in sub-rule (2).

(5) On any amount paid under clause (b) of sub-rule (1),

interest, if any, shall cease to run from the date of such payment:

Provided that, where the decree-holder refuses to accept the

postal money order or payment through a bank, interest shall cease

to run from the date on which the money was tendered to him, or

where he avoids acceptance of the postal money order or payment

through bank, interest shall cease to run from the date on which the

CR No.3191 of 2025 (O&M) 13

money would have been tendered to him in the ordinary course of

business of the postal authorities or the bank, as the case may be.]”

19. The aforesaid provision has been interpreted by Supreme Court

in K.L. Suneja’s case (supra), observing as under:

“xxx xxx xxx

30. The rule was explained in another decision of this court, in

V. Kala Bharathi & Ors. v. The Oriental Insurance Company Ltd

2014 (5) SCC 577, dated 1st April 1947 :

"A bare perusal of the aforesaid provisions makes it amply

clear that the scope of Order XXI Rule 1 of the Code of

Civil Procedure is that the judgment debtor is required to

pay the decretal amount in one of the modes specified in

Subrule (1) thereof. Sub-rule (2) of Rule 1 provides that

once payment is made Under Sub-rule (1), it is the duty of

the judgment debtor to give notice to the decree-holder

through the Court or directly to him by registered post

acknowledgement due. Sub-rule (3) of Rule 1 merely

indicates that in case money is paid by postal money order

or through a bank under Clause (a) or Clause (b) of Sub-

rule (1) thereof, certain particulars are required to be

accurately incorporated while making such payment. Sub-

rules (4) and (5) of Rule 1 states from which date, interest

shall cease to run-in case amount is paid under Clause (a) or

(c) of Sub-rule (1), interest shall cease to run from the date

of service of notice as indicated Under Sub-rule (2); while

in case of out of court payment to the decree-holder by way

of any of the modes mentioned under Clause (b) of Sub-rule

(1), interest shall cease to run from the date of such

payment."

CR No.3191 of 2025 (O&M) 14

31. The provisions of Order XXI are applicable to decrees of

civil court. However, they embody a sound policy principle, that if

the amount is deposited, or paid to the decree holder or person

entitled to it, the person entitled to the amount cannot later seek

interest on it. This is a rule of prudence, inasmuch as the debtor, or

person required to pay or refund the amount, is under an obligation

to ensure that the amount payable is placed at the disposal of the

person entitled to receive it. Once that is complete (in the form of

payment, through different modes, including tendering a Banker's

Cheque, or Pay Order or Demand Draft, all of which require the

account holder / debtor to pay the bank, which would then issue

the instrument) the tender, or `payment' is complete.

xxx xxx xxx”

20. In the present case, decree in favour of respondent No.1 reads

as under:

"This suit coming on 5th day of January 2018 for final disposal

before me (Kapil), Civil Judge (Jr. Divn.), Safidon, in the presence

of Shri M.P. Jain, Advocate for plaintiff and Shri J.S. Malik,

Advocate for defendants no.1 to 3 whereas defendants no.4 and 5

already proceeded against exparte. It is ordered that suit of the

plaintiff succeeds and is hereby decreed with cost and the plaintiff

bank is held entitled to recover Rs.56,25,817/- from the defendants

along with interest @18% per annum from the date of filing of the

present suit till its realization. The defendants are directed to make

the payment of the decretal amount within a period of three

months."

21. Respondent No.1 filed execution application on 02.04.2018. In

execution of the aforesaid decree, two shops belonging to respondents No.2

CR No.3191 of 2025 (O&M) 15

to 6 were attached. First shop i.e., No.65 was auctioned on 31.10.2018 for

an amount of Rs.66,11,000/-. On 16.11.2018, challan for deposit of total

amount was received in Executing Court.

22. Second shop i.e., No.58 was sold in auction on 16.01.2019 for

an amount of Rs.65,00,000/-. On 23.01.2019 total balance amount was

deposited in the Court. Order dated 23.01.2019 passed by the Executing

Court reads as under:

“M/s Shiv Lal Versus M/s Sidhi Vinayak etc.

Present : Shri M.P. Jain, Advocate for DH

Shri Vikas Kundu, Advocate for Auction Purchaser Anshul

Jindal

Heard. Perusal of warrant of sale shows that same has been duly

executed. Thereafter, power of attorney and an application for permission to

deposit balance sale consideration of Rs.4,87,5000/- by way of demand draft

filed by Shri Vikas Kundu, Advocate. Heard. Allowed. Now, the case is

adjourned to 8.2.2019 for further proceedings.

(Kapil)

CJ(JD), Safidon,

UID: HR0407”

23. From above, it is thus clear that on the day the total sale

consideration was deposited, i.e., on 23.01.2019, decree-holder participated

in the proceedings through his counsel and was aware of the fact that the

amount stands deposited.

23.1. In terms of Rule 12 of the High Court Rules and Orders,

purchase money deposited in the Court upon the sale of immovable property

CR No.3191 of 2025 (O&M) 16

can be retained by the Court until the expiry of a period of fifteen days from

the date of the order confirming the sale. Thus, the Executing Court was

under an obligation to pay the decretal amount in terms of the decree to the

decree-holder. The decree-holder should have sought payment of the

decretal amount immediately after the sale was confirmed.

24. In view of the aforesaid facts, this Court finds that the

impugned order passed by the Executing Court cannot be sustained and

deserves to be set aside.

25. In cases where the Executing Court orders execution of money

decree by way of sale, the purchaser is an under obligation to deposit 25% of

the amount of purchase money to the officer or the person conducting the

sale in terms of Order XXI Rule 84 CPC. The full amount has to be paid by

the purchaser in the Court before the Court closes on the fifteenth day from

the sale of property in terms of Order XXI Rule 85 CPC. In terms of Order

XXI Rule 92 CPC where no application is made under Order XXI Rule 89,

Rule 90 or Rule 91 challenging sale, the Court is to pass an order confirming

the sale. Since the limitation for filing application challenging the sale in

terms of Article 127 of the Limitation Act, 1963 is ‘60 days’, the Court is

required to pass an order confirming the sale on the 61

st

day from the date of

sale on deposit of purchase money. Thereafter, the Court has to wait for

fifteen days in terms of Rule 12 of the High Court Rules and Order. On

expiry of fifteenth day the amount becomes payable to be paid to the decree-

holder. In these circumstances, the amount payable to respondent No.1 in

CR No.3191 of 2025 (O&M) 17

execution of decree dated 05.01.2018 in his favour has to be treated as

under:

(i) Amount of Rs.66,11,000/-

The purchase amount of Rs.66,11,000/- qua the shop bearing No.65

was deposited on 27.11.2018

Remarks:

First the amount shall be adjusted towards interest payable to

respondent No.1 in terms of decree, up to 27.11.2018 and thereafter

towards principal.

The residual principal (if any) has to be realized from sale proceeds

of Shop No.58 which is the second property sold in execution.

(ii) Amount of Rs.65,00,000/-

The entire purchase money qua the second Shop bearing No.58, i.e.,

Rs.65,00,000/- was deposited on 23.01.2019.

Remarks:

The said amount has to be utilized for payment of residual principal

along with interest payable on residual principal from 27.11.2018 till

23.01.2019.

The residual amount shall remain with the Executing Court. The

same can be utilized to satisfy decree in favour of the petitioners

against respondents No.2 to 6.

CR No.3191 of 2025 (O&M) 18

26. Since the amount of sale proceeds of auction were deposited by

the purchaser in the presence of counsel representing the decree-holder, i.e.,

respondent No.1, the interest shall cease to run from the date of such deposit

in terms of Order XXI Rule 1(4) CPC.

27. The revision petition is allowed in the aforesaid terms.

28. However, this Court will be failing in its duty without referring

to following directions issued by Supreme Court in K.L. Suneja’s case

(supra) :

“35. Before parting with this case, this court is of the opinion that

all courts and judicial forums should frame guidelines in cases

where amounts are deposited with the office / registry of the court /

tribunal, that such amounts should mandatorily be deposited in a

bank or some financial institution, to ensure that no loss is caused

in the future. Such guidelines should also cover situations where

the concerned litigant merely files the instrument (Pay Order,

Demand Draft, Banker's Cheque, etc.) without seeking any order,

so as to avoid situations like the present case. These guidelines

should be embodied in the form of appropriate rules, or regulations

of each court, tribunal, commission, authority, agency, etc.

exercising adjudicatory power.”

28.1. Accordingly, the matter be placed before the Hon’ble the Chief

Justice for framing of necessary guidelines complying with directions issued

by Supreme Court ibid.

CR No.3191 of 2025 (O&M) 19

29. In addition to the aforesaid directions, this Court deems it

necessary to direct the Executing Courts in the States of Punjab, Haryana

and U.T., Chandigarh that the amounts received in execution proceedings be

immediately deposited with nationalized bank instead of keeping the same

idle. This will ensure that the parties are not at loss due to act of court.

Money deposited in execution shall be deposited in interest bearing Fixed

Deposits with a nationalized bank. Fixed Deposit should be transferred to

the party entitled. Party concerned may withdraw the interest or continue

with the fixed deposit. Otherwise, the question qua interest for the period

amount remained deposited with Executing Court shall keep on bothering

the courts. The act of Court shall not prejudice any party.

July 07, 2026 (Pankaj Jain)

Dpr Judge

Whether speaking/reasoned : Yes

Whether reportable : Yes

Reference cases

Description

High Court Clarifies Key Principles of Execution Proceedings Interest Cessation and Civil Procedure Code Order XXI Rule 1

In a significant ruling, the Hon'ble High Court of Punjab and Haryana, in CR No.3191 of 2025 (O&M), has provided crucial clarity on the cessation of interest on decretal amounts deposited during execution proceedings, anchoring its decision firmly in the principles of Execution Proceedings Interest Cessation and the interpretation of Civil Procedure Code Order XXI Rule 1. This ruling, now accessible on CaseOn, serves as a vital guide for all stakeholders involved in the enforcement of money decrees.

Case Background: Unraveling the Execution Dispute

The Initial Decrees

The case involved two separate money decrees against the same set of judgment debtors (respondents No.2 to 6). Respondent No.1, M/s Shiv Lal Raj Kumar & Commission Agent, secured a decree for Rs.56,25,817/- with an 18% annual interest rate from the filing date until 'realization' (dated 05.01.2018). Subsequently, the petitioners, M/s Pardeep Kumar Kuldeep Kumar and another, obtained their own decree for Rs.1,59,60,040/- (dated 25.03.2019).

The Execution Saga and Prior Rulings

During the execution of Respondent No.1’s decree, two properties of the judgment debtors were auctioned. Shop No.65 was sold for Rs.66,11,000/-, with the amount deposited on 27.11.2018. Shop No.58 fetched Rs.65,00,000/-, deposited on 23.01.2019. The petitioners, holding a subsequent decree, sought to attach any residual funds from these sales to satisfy their own claim. This led to a series of legal challenges and calculations by the executing courts, culminating in the impugned order dated 11.03.2025 by the Additional Civil Judge (Senior Division), Safidon, which calculated the residual amount based on interest accruing until 10.03.2025. The petitioners challenged this, arguing that interest should have ceased upon the deposit of the sale proceeds.

The Core Legal Questions (Issues)

The High Court distilled the complex arguments into two fundamental questions:

  1. Whether the deposit of the decretal amount with the Executing Court constitutes 'realization' for the purpose of stopping interest.
  2. Whether the decree-holder is entitled to continue earning interest even after the decretal amount has been deposited with the Executing Court.

Key Legal Framework and Precedents (Rules)

The Court meticulously examined the relevant legal provisions and judicial pronouncements:

  • Order XXI Rule 1 of the Civil Procedure Code (CPC): This rule outlines the permissible modes of payment under a decree and, critically, when interest ceases. Sub-rule (2) mandates that the judgment-debtor must give notice to the decree-holder upon making a payment into court. Sub-rule (4) specifies that interest ceases from the date of service of such notice.
  • Punjab and Haryana High Court Rules and Orders, Volume 1, Chapter-12, Part-L, Rule 12: This rule dictates that purchase money from immoveable property sales should be retained by the Court for 15 days after sale confirmation, after which it can be paid to the decree-holder.
  • Supreme Court in *K.L. Suneja and another vs. Dr. (Mrs.) Manjeet Kaur Monga (D) Through Her Lr and another*, (2023)6 SCC 722: This landmark judgment clarified that if a decretal amount is deposited with the court or paid to the decree-holder, the entitlement to future interest on that amount ceases. The underlying principle is that the debtor fulfills their obligation by placing the funds at the disposal of the entitled party.

Judicial Analysis: When Does Interest Stop?

The High Court observed that the decree in favor of Respondent No.1 clearly stated interest was payable until 'realization.' The pivotal point became whether the deposit of auction sale proceeds into the Executing Court, especially when the decree-holder's counsel was present, amounted to realization or at least constructive notice.

The Court found that Respondent No.1's counsel was present when the total sale consideration was deposited on 23.01.2019. This presence, according to the Court, implied knowledge of the deposit. Drawing parallels with Order XXI Rule 1(4) CPC and the Supreme Court's pronouncement in *K.L. Suneja*, the High Court reasoned that if the decree-holder has knowledge of the deposit, the purpose of formal notice is served, and interest should cease from the date of such deposit. The Court stated that the decree-holder ought to have sought payment immediately after the sale was confirmed, typically after the 15-day period stipulated in the High Court Rules.

The Court emphasized that once the money is deposited, it is at the disposal of the decree-holder, who is then under an obligation to take steps to withdraw it. Allowing interest to run indefinitely after deposit, particularly when the decree-holder is aware of it, would be contrary to the spirit of the law and the principles of fairness.

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The Verdict (Conclusion)

The High Court concluded that the impugned order of the Executing Court, which calculated interest until 10.03.2025, was erroneous and unsustainable. It allowed the revision petition, holding that interest on the decretal amount ceased from the respective dates of deposit of the sale proceeds (27.11.2018 for Shop No.65 and 23.01.2019 for Shop No.58). This decision reaffirms that knowledge of deposit, even without formal notice, can trigger the cessation of interest.

Additionally, the Court, following the directions from *K.L. Suneja*, directed the Hon'ble Chief Justice to frame necessary guidelines for all Executing Courts in Punjab, Haryana, and Chandigarh. These guidelines are to ensure that amounts received in execution proceedings are promptly deposited in interest-bearing Fixed Deposits with nationalized banks, preventing loss to parties due to court delays and streamlining the process of interest calculation.

Why This Judgment Matters for Legal Professionals

This judgment is a crucial read for lawyers and law students for several reasons:

  • Clarity on Interest Cessation: It provides definitive guidance on when interest ceases to accrue on decretal amounts, especially in cases of court deposits arising from auction sales. The emphasis on the decree-holder's knowledge of the deposit is particularly significant.
  • Impact on Execution Strategy: Lawyers representing decree-holders must be proactive in withdrawing deposited amounts to avoid losing out on interest for the post-deposit period. For judgment-debtors, it highlights the importance of ensuring timely deposits and demonstrating notice or knowledge to limit interest liability.
  • Reinforcement of Supreme Court Precedent: The judgment reinforces the principles laid down in *K.L. Suneja*, underscoring the consistent judicial approach towards managing deposited funds and interest.
  • Procedural Reforms: The directive to frame guidelines for depositing funds in interest-bearing accounts is a significant step towards improving the efficiency and fairness of execution proceedings, ensuring that litigants are not prejudiced by procedural delays.
  • Understanding Court Rules: It highlights the interplay between the CPC provisions and specific High Court Rules, which are vital for practice.

Disclaimer

All information provided in this article is for informational purposes only and does not constitute legal advice. While efforts have been made to ensure accuracy, readers are advised to consult with a qualified legal professional for advice pertaining to their specific circumstances.

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