Order XXIV Rule 3 CPC - Interest on Deposit Not Allowed After Notice
Order XXIV Rule 3 of the Code of Civil Procedure, 1908 addresses the effect of notice of a defendant's payment into court on the plaintiff's entitlement to interest. It applies to money deposited under the payment-into-court procedure of Order XXIV.
Text of Order XXIV Rule 3 CPC
No interest shall be allowed to the plaintiff on any sum deposited by the defendant from the date of the receipt of such notice, whether the sum deposited is in full of the claim or falls short thereof.
Official source: Code of Civil Procedure, 1908, First Schedule, Order XXIV (India Code PDF).
Meaning and legal effect of Rule 3
The rule provides that once the plaintiff receives the notice of deposit contemplated by Order XXIV Rule 2, interest ceases to be allowable on the sum actually deposited from the date the notice is received. This consequence applies even when the deposit is less than the amount claimed in the suit.
The wording is important: the relevant starting point is receipt of notice, not merely the date on which the defendant deposits the money in court. The rule does not, by itself, determine whether the whole claim is satisfied or whether the plaintiff is entitled to the balance.
Related provisions under Order XXIV
Rule 1 - Deposit by defendant
In a suit to recover a debt or damages, the defendant may deposit in court, at any stage of the suit, an amount considered sufficient to satisfy the claim in full. See Order XXIV Rule 1 CPC.
Rule 2 - Notice and payment to plaintiff
The defendant must give notice of the deposit to the plaintiff through the court. Unless the court directs otherwise, the deposited amount is payable to the plaintiff on application. See Order XXIV Rule 2 CPC.
Rule 4 - Acceptance in part or in full
A plaintiff who accepts the deposit as partial satisfaction may continue the suit for the balance, subject to the rule's provisions on costs. Where the plaintiff accepts it as full satisfaction, a statement is filed and the court pronounces judgment accordingly. See Order XXIV Rule 4 CPC.
Example: partial deposit and interest
Suppose a plaintiff claims Rs. 2,00,000 and the defendant deposits Rs. 1,20,000 in court. If the plaintiff receives notice of that deposit on 10 June, Rule 3 prevents the plaintiff from being allowed further interest on the deposited Rs. 1,20,000 from that date. The remaining Rs. 80,000, if disputed, may still require adjudication. Any entitlement to interest on a balance depends on the applicable law and the court's findings.
Does the rule extinguish the plaintiff's claim?
No. Rule 3 concerns interest on the deposited amount after notice. It does not automatically settle the dispute, compel acceptance of the deposit as full satisfaction, or eliminate the plaintiff's right to pursue a disputed balance under Rule 4.
Practical considerations
The date on which notice is received, the amount actually deposited, the court record and any application for withdrawal can be material. Parties should distinguish a deposit from an admission of the entire amount claimed, and distinguish interest on the deposited amount from any interest claimed on an outstanding balance.