Interest under a decree is simple unless the decree expressly awards compound interest.

The petitioner was one of the plaintiffs in Civil Suit No. 19-A/1987, in which the District Judge, Raigarh, passed a decree dated 26 November 1992 directing payment of the decreetal amounts with interest at 12% per annum from the respective dates of liability until realization.

The decree was affirmed in further proceedings, including by the Supreme Court.

During execution, the executing court calculated interest on a simple-interest basis and determined the amount payable at ₹1,50,240.25, thereafter closing the execution proceedings through orders dated 25 April 2026 and 4 May 2026.

The petitioner invoked Article 227 of the Constitution, contending that interest ought to have been calculated on a compound-interest basis because compound interest had allegedly been claimed in the suit.

Whether the decree dated 26 November 1992 directed calculation of interest on a compound-interest basis rather than on a simple-interest basis?

Whether the executing court committed perversity or jurisdictional error by calculating interest at 12% per annum on the principal amounts and closing the execution proceedings?

The Court exercised the limited supervisory jurisdiction available under Article 227 of the Constitution of India, which permits interference with orders of subordinate courts only where there is jurisdictional error, perversity, or grave procedural illegality.

In execution proceedings, the executing court must give effect to the decree as drawn and cannot enlarge or modify its substantive terms.

The Court applied the principle that where a decree awards interest at a specified annual rate but does not expressly direct capitalization or compound interest, the award is to be executed as an award of simple interest.

The operative terms of the decree, rather than an interest claim made during the suit, determine the manner in which interest is calculated.

The Court examined the decree dated 26 November 1992 and found that it awarded ₹24,000 in specified components, together with interest at 12% per annum from the respective dates until payment; it contained no direction for capitalization or compound interest.

The petitioner’s assertion that compound interest had been claimed in the original suit could not alter the terms of the decree actually passed.

The executing court accordingly calculated interest separately on the principal amounts—₹12,000, ₹6,000, and ₹6,000—at 12% per annum on a simple-interest basis, along with proportionate costs, arriving at ₹1,50,240.25.

Since this calculation conformed to the decree and did not disclose perversity or jurisdictional error, the High Court found no basis to exercise its supervisory jurisdiction under Article 227.

It held that the decree did not provide for compound interest and that the executing court had correctly calculated interest on a simple-interest basis at 12% per annum.

The orders dated 25 April 2026 and 4 May 2026 were upheld, and the writ petition was dismissed for want of merit.