Interest under a decree ceases only when payment is effectively made available to the decree-holder.

The Appellant/Judgment Debtor challenged the order dated 8 October 2024 passed by the District Judge-03, South District, Saket Courts, in Execution Petition No. 942/2018.

The Executing Court held that interest on the decretal amount would cease only from 7 January 2019, when the Respondent/Decree Holder received the revalidated demand draft.

The Appellant had filed the execution petition on 26 September 2018 along with a photocopy of the demand draft and produced the original demand draft before the Executing Court on the first date of hearing.

The Respondent became aware of the execution proceedings only in late November or early December 2018, by which time the original demand draft had expired and could not be encashed. A revalidated demand draft was ultimately delivered on 7 January 2019.

Whether interest on the decretal amount ceased to run upon filing the execution petition accompanied by a photocopy of the demand draft or upon production of the original demand draft before the Executing Court?

Whether interest ceased to run only when the decretal amount was effectively made available to the Decree Holder through delivery of the revalidated demand draft on 7 January 2019?

The Court applied Order XXI Rule 1 CPC, which prescribes the modes of payment of money under a decree.

Payment may be made by deposit in Court under Rule 1(1)(a), directly to the Decree Holder through recognised modes under Rule 1(1)(b), or in a manner directed by the Court under Rule 1(1)(c).

Where payment is made under clauses (a) or (c), the Judgment Debtor must give notice of payment to the Decree Holder under Rule 1(2), and interest ceases only from the date of service of such notice under Rule 1(4).

In the case of payment under clause (b), interest ceases from the date of payment under Rule 1(5), subject to the proviso concerning refusal or avoidance of payment.

The Court held that mere preparation or production of a demand draft does not, by itself, discharge the decretal liability; the decretal amount must be deposited or effectively made available to the Decree Holder in a legally recognised manner, together with the requisite notice where applicable.

The demand draft was drawn in favour of the Decree Holder and not in favour of the Court; therefore, its production before the Executing Court did not amount to a deposit under Order XXI Rule 1(1)(a).

Further, the Decree Holder had not received notice of the proceedings until late November or early December 2018, by which time the original demand draft had expired and was incapable of realisation.

Since the decretal amount was not actually accessible to the Decree Holder until delivery of the revalidated demand draft on 7 January 2019, the statutory purpose of Order XXI Rule 1—ensuring that the Decree Holder can obtain the decretal amount—was not fulfilled earlier.

Accordingly, interest could not cease merely on filing the execution petition or producing the expired demand draft.

The order of the Executing Court dated 8 October 2024 was upheld, and the Execution First Appeal was dismissed for lack of merit.

Any pending applications were also disposed of.