1. This appeal at the instance of the decree-holder plaintiff arises out of an order passed by the learned Sub-Ordinate Judge, 4th Court, Alipore. The short fact arising out of an order is that there was an agreement between the Rajasthan Insurance Co. Ltd., and Gadadhar De of 3, Robinson Street, Calcutta and G. Dey and Co. and Union Estates Ltd., of 184, Dharmatola Street, Calcutta on or about 1949 and in the said agreement there was a clause for arbitration. It appears that Gadadhar and others took a loan for certain sum of money but as the arbitrator was appointed by the parties, the arbitrator gave an award to the effect that Rajasthan Insurance Co. Ltd., shall be entitled to the sum of Rs. 15,000/- as principal and Rs. 5140/- as the balance of interestaggregating the sum of Rs. 20,140/- as against the said Gadadhar De and the said sum of Rs. 20,140/- shall carry interest at the rate of 6% per annum from the date of the award until payment. It was further awarded that all the three houses Nos. 4, 5 and 6 as mentioned above will be, subject to the claim, awarded and that if the awardee does not pay the purchase money the three houses will be sold. The money was not paid. The date of the award was 22nd Jan. 1954. The sum of the money was paid by the judgment-debtor amounting to Rs. 26096.56. The petitioner judgment-debtor filed the objection. It is alleged that Rajasthan Insurance Co. Ltd. is claiming compound interest and not the simple interest. The claim is excessive. The learned Judge having held in favour of the judgment-debtor, the Life Insurance Corporation after the Life Insurance Corporation Act came into force in 1956 preferred the present appeal. The short point for our consideration is that whether the calculation of interest by the Life Insurance Corporation is correct or not. On behalf of the Life Insurance Corporation it is stated that the arbitrator awarded a sum of Rs. 20,140/- in favour of the decree-holder and the said sum will carry an interest at the rate of 6% per annum from the date of the award. The debtor deposited with the Court different sums and the Life Insurance Corporation has adjusted the sum first towards the payment of interest and thereafter towards the principal amount. The judgment-debtor however contended that he has paid the said amount towards the principal and the Life Insurance Corporation was wrong in adjusting the said amount towards the interest.
2. Mr. Chowdhury on behalf of the appellant, therefore, contended on the allegation as hereinbefore stated that the learned Judge was wrong in holding that the calculation made by the Life Insurance Corporation was according to the compound interest. Unfortunately in this case the respondent does not contest the appeal. In our opinion the contention of Mr. Chowdhury must be accepted to be correct. The normal rule in case of a debt due with interest is that the payment made by the debtor must be applied first to the payment of interest and thereafter to the payment of principal amount. Applying the principle in this present case, it appears that Mr. Chowdhury's contention mustbe accepted. The case of the decree-holder Corporation is that they have adjusted all the amounts paid by the judgment-debtor towards the interest first and thereafter the balance not having been paid, the execution case has been filed.
3. Mr. Chowdhury relied upon the case reported in : 1SCR523 (Meghraj v. Bayabai). The said case arose out of a mortgage. The Hindu undivided family of Jethmal Ramkaran mortgaged a house belonging to it to Seth Haroon and Sons to secure repayment of Rs. 40,000/- due at the foot of an account. A suit was filed by Seth Haroon and Sons in 1936 for recovery of their dues by sale of the mortgaged house. A decree was passed in 1940. There was an appeal against the decree to the High Court, Nagpur. But the appeal was dismissed subject to a slight modification and the appeal was taken to the Supreme Court. During the pendency of the appeal to the Supreme Court, nine out of ten members of Seth Haroon and Sons migrated to Pakistan end were declared evacuees. By an order passed by the Supreme Court on March 28, 1958 the Custodian of Evacuee Property was impleaded as a party respondent in the appeal filed by the mortgagors. The Supreme Court dismissed the appeal. In the said case thereafter it was urged that on proper account being taken nothing was due by them on the mortgage and that the interest was wrongly calculated. The Supreme Court in paragraph 4 stated as follows :--
'4. Under the preliminary decree an amount of Rs. 42,430-2-6 was declared due upto June 23, 1941 towards principal and interest. The mortgagors made no payments under the decree directly to the mortgagees. But from time to time they claim to have made deposits in the Court under Order 21, Rule 1 of the Civil P. C. and in depositing some of the amounts they stated that the payments were towards the principal due. But there is no evidence on the record that the mortgagees were informed that the amounts were deposited towards the principal due nor is there evidence that the mortgagees accepted the amounts towards the principal. For quite a long time the mortgagees did not withdraw the amount lying in Court. Unless the mortgagees were informed that the mortgagors had deposited the amount only towards the principal and not towards the interest, and the mortgageesagreed to withdraw the money from the Court accepting the conditional deposit, the normal rule that the amounts deposited in Court should first be applied towards satisfaction of the interest and costs and thereafter towards the principal would apply'.
Applying this principle in the present case it is nowhere agitated that while depositing the money in the Court below by different challans it was stated that the money is paid towards the principal and therefore the said money was as in the normal rule when withdrawn by the Life Insurance Corporation, adjusted towards interest first and thereafter towards principal.
4. In the circumstances, therefore, the Life Insurance Corporation is right in adjusting the sum deposited by the judgment-debtor towards interest first and the learned Judge was wrong in allowing the application filed by the judgment-debtor.
5. We, therefore, set aside the order impugned and direct the Court below to proceed with the execution case.
6. We, therefore, allow the appeal. There will be no order as to costs.
G.N. Ray, J.
7. I agree.