M.M. Dutt, J.
1. This Rule was issued at the instance of the Life Insurance Corporation of India and it is directed against order dated May 23, 1978 of the Second Subordinate Judge, Alipore.
2. The Calcutta Insurance Company Limited instituted a suit for mortgage for the realisation of a sum of Rs. 30,000/- advanced by it to the opposite party Samarendra Nath Roy with interest at the rate 7% per annum with quarterly rests as provided in the Mortgage Bond dated Aug. 8, 1947. The suit was eventually decreed on compromise in accordance with the terms embodied in the joint petition of compromise. The terms are as follows :
"(a) The plaintiffs do get a final mortgage decree for sale for full amount as claimed with interest at the bond-rate i.e. at 7 per cent per annum with quarterly rests till date and with cost on ex parte scale, such cost not exceeding Rs. 2,100/- and the said entire amount shall carry interest at the bond-rate until actual realisation,
(b) The defendant shall pay the interest on decretal amount or such amount as may be outstanding quarterly in March, June, Sept. and Dec., each year -- the first of such payment to be made in Sept. 1952.
(c) The defendant is to pay the decretal amount by 5 annual instalments -- the first of such payment to be made in June, 1953 and the subsequent instalments in June, each year.
(d) In respect of all payments time shall be deemed to be essence of the contract.
(e) In case of default in payment of interest for any three quarters or part thereof or of any one of the instalments for payment of the decretal amount the entire amount then remaining due shall forthwith become payable and the plaintiff will be entitled to realise the same by sale of the mortgaged property in execution of this decree without any further application therefor and in case of shortfall from the defendant personally."
3. The opposite party having failed to comply with the terms of the decree, the Calcutta Insurance Company Limited put the said decree into execution. During the pendency of the execution case the Life Insurance Corporation Act, 1956 was enacted and, consequently, the Life Insurance Corporation of India was substituted as the decree-holder in place of the Calcutta Insurance Company Limited in Sept. 1966. The opposite party made several deposits in the executing court by challans. In all these challans, the deposits were stated to have been made towards (original in Bengali). On Aug, 22, 1969, the opposite party made an application in the execution case for entering satisfaction of the decree and for the disposal of the execution proceeding. The application gave rise to Misc. Case No. 9 of 1973. The petitioner filed objection and also a statement of accounts showing that Rs. 81,742.23 was due from the opposite party till Feb. 23, 1974. The learned Subordinate Judge, by his Order No. 417 dated April 17, 1974, rejected the prayer of the opposite party for recording full satisfaction, holding that according to the terms of the petition of compromise as embodied in the final decree, the petitioner was entitled to claim interest at 7% with quarterly rests on the decretal amount until realisation. Being aggrieved by the said order, the opposite party filed an appeal against the same to this Court being F. M. A. No. 480 of 1975. This Court, by its order dated Nov. 22, 1976 disposed of the appeal holding inter alia that the petitioner was not entitled to claim interest at the compound rate on the entire amount from the date of decree till realisation. In that view of the matter, this Court set aside the order of the learned Subordinate Judge and sent the case back on remand for disposal of the said Misc. case.
4. After the case went back on remand, the decree-holder prayed for the amendment of the execution petition incorporating therein, the claim of Rs. 65,095.21 from the opposite party. Subsequently, the petitioner submitted a statement of accounts on Dec. 15, 1977 to show that a sum of Rs. 64,814.96 had fallen due from the opposite party on that date. The opposite party in his turn filed two applications on Jan. 9, 1978 and March 30, 1978 and also submitted a statement of accounts on April 6, 1978 and prayed for recording full satisfaction of the claim of the petitioner arising out of the present execution case. It may be stated at this stage, that the opposite party has since paid a sum of about Rs. 60,000/-.
5. The learned Subordinate Judge prepared two accounts, namely, the decretal account and the interest account from the statements of account submitted by either party. On such accounting, the learned Subordinate Judge came to the finding that a sum of Rs. 13,611.30 was due from the opposite party to the petitioner towards the decretal dues. In arriving at the said sum, the learned Subordinate Judge credited the amount deposited by the opposite parry in the execution case towards the decretal amount or the principal amount. It seems that he overruled the contention of the petitioner that the petitioner was entitled to appropriate the same towards interest or that the petitioner having entered the same in its books-of-accounts towards interest, the same could not be taken to be payment of the principal amount or the decretal amount. In that view of the matter, the learned Subordinate Judge dismissed the Misc. case and permitted the petitioner to amend the execution petition and the sale proclamation showing a claim of Rupees 13,611.30 against the opposite party. Being aggrieved by the said order of the learned Subordinate Judge, the present Rule has been obtained by the petitioner, the Life Insurance Corporation of India.
6. The only question that is involved in this Rule is whether the petitioner was justified in appropriating the deposits of money made by the opposite party in the execution case towards the interest. It is now well settled that the normal rule in the case of a debt due with interest is that any payment made by the debtor is in the first instance to be applied towards satisfaction of interest and thereafter to the principal (Meka Venkatadri Appa Rao v. Parthasarathi Appa Rao, AIR 1922 PC 233; Meghraj v. Bayabai, ). Section 60 of the Indian Contract Act provides that where the debtor has omitted to intimate and there are no other circumstances indicating to which debt the payment is to be applied, the creditor may apply it at his discretion to any lawful debt actually due and payable to him from the debtor, whether its recovery is or is not barred by the law in force for the time being as to the limitation of suits. If, therefore, the debtor does not make any appropriation at the time he makes the payment, the creditor will be entitled to appropriate the same towards any outstanding lawful debt at his discretion. The debtor must inform the creditor as to the appropriation of the payment towards a specific debt. If the debtor in making payment stipulates that it is to be credited towards a particular debt, namely, the principal amount, the creditor is not bound to appropriate the same towards the principal. In that case, he must not accept the money, but return it to the debtor.
7. In the instant case, the challans by which the opposite party deposited the amounts show the specification of the debt towards which the payments were intended as (original in Bengali). It is not disputed that the said Bengali expression means "towards the decretal amount". It is also not disputed that the petitioner was aware of that specification as mentioned in the challans. All the amounts have been withdrawn by the petitioner, but it credited the same towards the interest. The learned Subordinate Judge proceeded on the footing that the various amounts were deposited by the opposite party towards the principal amount due. It does not appeal from the judgment of the learned Subordinate Judge that any contention was made on behalf of the ptitioner that the opposite party did not deposit the amounts towards the principal amount. There can be no doubt that if the amounts that were deposited by the opposite party and withdrawn by the petitioner be credited towards the principal amount, in that case, a sum of Rs. 13,611.30 only will be due by the opposite party to the petitioner.
8. Mr. Rabindra Nath Chaudhuri, learned Advocate appearing on behalf of the petitioner, submits that the Bengali expression (original in Bengali) does not mean the principal amount. It is contended by him that though it may mean decretal amount, yet it does not include the principal amount of the decree. In our view, the words "decretal amount" will normally include within it both the principal amount and the interest due and not the principal amount only. But in the instant case, there could be no misapprehension in the mind of the petitioner that by the words "decretal amount" the principal amount was meant. We have quoted in extenso the terms of the compromise decree. It is apparent from the terms that a clear distinction has been made between "decretal amount" and "interest". Clause (e) of the terms of compromise referred to above, provides inter alia that in case of default in payment of interest for any three quarters or part thereof or of any one of the instalments for payment of the decretal amount, the entire amount remaining due shall forthwith become payable. The decree, therefore, consists of two parts, namely, the decretal amount and the amount due on account of interest, The judgment debtor was, therefore, to state at the time of each payment as to whether the amount is paid towards the decretal amount or towards the interest. In para. 11 of the present application under Section 115 of the Civil P. C. giving rise to this Rule, it has been stated that in the books of accounts maintained by the petitioner, the petitioner has calculated interest on the decretal amount, that is, on Rs. 43,407/-, after crediting the payments made on different dates by the judgment debtor first towards the interest. The statement in para. 11 clearly shows that by decretal amount", the petitioner understood it as the principal amount of the decree, namely, the sum of Rupees 43,407/-. In these circumstances, it is now too late to say that the words "decretal amount" do not mean the principal amount of the decree.
The decision of the Supreme Court in Meghraj v. Bayabai (supra) and the Bench decision of this Court in Life Insurance Corporation of India v. Gadadhar De, on which much reliance has been placed on behalf of the petitioner do not apply to the facts' and circumstances of the present case. In our opinion, in view of the facts stated above, it is difficult to hold that the petitioner did not understand the implication of the said Bengali expression or the words "decretal amount" as the principal amount of the decree,
9. Even assuming that there was some ambiguity in the said Bengali expression or its meaning "decretal amount", the petitioner was not justified in withdrawing the same without having sought for clarification either from the Court or from the opposite party. It has been stated already, that in the Court below no contention was raised on behalf of the petitioner that "decretal amount" did not refer to the principal amount of the decree. It is obvious from the impugned order of the learned Subordinate Judge that the parties and the learned Judge understood the meaning of the term as the principal amount of the decree. The loan was for the sum of Rs. 30,000/- only and by this time the opposite party has paid a sum of about Rupees 60,000/-. In these circumstances, we do not think that we shall be justified in exercising Our discretion in favour of the petitioner.
10. In the result, the Rule is discharged, but there will be no order for costs.