Executing Court Must Reasonably Determine Appropriation of Payments and Interest Entitlement Without Arbitrarily Restricting Durations

The applicants’ lands in village Kamoda, Banaskantha, were acquired in 1987 for the Deesa Airfield project under the Land Acquisition Act, 1894.

Following references under Section 18, additional compensation was awarded in 1994, which was later modified by the Gujarat High Court in First Appeals between 1996 and 1998, reducing the market value.

Respondent No. 2 deposited a lump sum amount in the District Court without prior notice to the decree-holders and without specifying if the deposit covered principal, interest, or costs.

The applicants filed Execution Petition No. 1 of 2013 and application Exh. 106, arguing that the deposited amount should first be appropriated toward interest and costs before the principal.

The Executing Court (Principal Senior Civil Judge, Palanpur) partly allowed the application but restricted interest to the period between 1987 and 2002 without providing reasons for the cutoff.

1. Whether the Executing Court ERRED in failing to decide the question of appropriation of the deposited amount toward interest and costs before principal.

2. Whether the Executing Court was justified in restricting the entitlement of interest to the year 2002 without assigning specific reasons.

The Court applied Order 21 Rule 1 of the Code of Civil Procedure, 1908, regarding the modes of paying money under a decree and the requirement of notice to the decree-holder.

The Court relied on the legal principle governing the "appropriation of payments," which dictates how a judgment debtor’s deposit should be applied toward a debt consisting of principal and interest.

The Court followed its own precedents in Special Civil Application No. 10650 of 2018 and Civil Revision Application No. 335 of 2021, which established that the Executing Court must hear both parties on detailed calculation sheets to determine entitlement under respective heads.

The High Court observed that the Executing Court's order was fundamentally flawed as it failed to address the core dispute regarding the mode of appropriation of the deposited funds.

The court noted that the lower court had restricted interest to the year 2002 without disclosing any rational basis or legal reasoning for such a limitation.

The High Court emphasized that the exercise of determining interest and principal remains a factual calculation based on record, and since the specific issue of appropriation had already been addressed in favor of claimants in allied matters (CRA No. 335 of 2021), a similar consistency was required.

The court determined that it could not perform these calculations in its revisional jurisdiction and that the matter necessitated a re-adjudication by the Executing Court using calculation sheets from both sides.

The court remanded the matters back to the Executing Court with directions to decide the applications afresh after considering the parties' calculation sheets and the principles laid down in previous coordinate bench orders.

The Executing Court was ordered to decide the matters expeditiously, but no later than November 30, 2026.

The Revision Applications were partly allowed with no order as to costs.