Order XXI Rule 2 CPC - Payment Out of Court to Decree-Holder

What is Order XXI Rule 2 CPC?

Order XXI Rule 2 of the Code of Civil Procedure, 1908 (CPC), governs the certification and recording of payments made outside the executing court and other adjustments of decrees. Its purpose is to ensure that satisfaction of a decree, whether complete or partial, is entered in the execution court's record. A private receipt or settlement should not be assumed to update that record automatically.

The rule operates alongside Order XXI Rule 1, which specifies the permitted modes of payment, and Section 47 CPC, concerning questions relating to execution, discharge or satisfaction of a decree.

Order 21 Rule 2: Meaning of each sub-rule

Sub-rule (1): Certification by the decree-holder

When money payable under any decree is paid outside court, or a decree is otherwise adjusted wholly or partly to the decree-holder's satisfaction, the decree-holder shall certify the payment or adjustment to the court responsible for executing the decree. The court then records the certification. This applies to both full satisfaction and part-payment or partial adjustment.

Sub-rule (2): Application by the judgment-debtor or surety

The judgment-debtor, or a person who has become surety for the judgment-debtor, may inform the executing court about the payment or adjustment and seek notice to the decree-holder to show cause why it should not be recorded. If the decree-holder, after service of notice, fails to show cause, the court shall record the payment or adjustment accordingly.

Sub-rule (2A): Evidence required at the judgment-debtor's instance

The court cannot record a payment or adjustment at the judgment-debtor's instance unless at least one of these conditions is met:

1. Payment was made in the manner prescribed by Order XXI Rule 1;
2. Payment or adjustment is proved by documentary evidence; or
3. Payment or adjustment is admitted by or on behalf of the decree-holder in the relevant reply or before the court.

Bank transfer records, signed receipts, written settlement terms and acknowledgments may be relevant documentary evidence, depending on their authenticity and the facts.

Sub-rule (3): Effect of non-certification

Under the central text, a payment or adjustment not certified or recorded in the prescribed manner shall not be recognised by a court executing the decree. Applicable state or High Court amendments must be checked: the operation of this sub-rule is not uniform in every jurisdiction.

How to record an out-of-court decree payment

1. Preserve proof: retain bank records, receipts, written settlement terms and case identifiers.
2. Notify the executing court: the decree-holder should certify the payment or adjustment under Rule 2(1).
3. If certification is not made: the judgment-debtor or surety may apply under Rule 2(2) for notice to the decree-holder, with supporting material satisfying Rule 2(2A).
4. Obtain a court order: ensure that the executing court records the amount or terms and whether the decree is satisfied in full or in part.
5. Check limitation and local rules: Article 125 of the Limitation Act, 1963 generally prescribes 30 days from payment or adjustment for an application to record it; jurisdiction-specific procedural rules may also matter.

Order XXI Rule 1 and Rule 2: Key difference

A valid mode of payment and proper recording of satisfaction are related but distinct issues. Parties should address both.

Frequently asked questions

Is a private settlement enough to close execution proceedings?

Not necessarily. The payment or adjustment should be certified or recorded by the executing court under the applicable rule.

Can the judgment-debtor report payment if the decree-holder refuses?

Yes. Rule 2(2) provides a notice procedure, subject to the evidence requirements in Rule 2(2A) and applicable limitation.

Does Rule 2 cover part-payments?

Yes. The rule expressly covers whole or partial payment or adjustment.

What is the time limit to apply for recording an adjustment?

Article 125 of the Limitation Act, 1963 generally provides 30 days from the date of payment or adjustment. Prompt filing is important.

Official legislation and further reading

Read the Code of Civil Procedure, 1908 (India Code official PDF) and the India Code legislation portal. Check the applicable state amendments and High Court rules before relying on the central wording in a specific execution proceeding.