Part payment before judgement is considered as principal or interest?

In a money suit between two individuals, part payment made by the judgment debtor before the judgment is generally appropriated first towards interest and costs, and then towards the principal amount, unless there's a specific agreement or direction in the decree stating otherwise.

🧾 Legal Basis and Rules Involved Here’s how the law typically treats such payments: Order 21 Rule 1 of the Code of Civil Procedure (CPC), 1908 governs the mode of payment in execution of decrees.

Sub-rules (4) and (5) of Order 21 Rule 1 were added to clarify how interest ceases to run once payment is made and notice is given. According to judicial precedents like Gurpreet Singh v. Union of India and BHEL v. R.S. Avtar Singh, the general rule of appropriation is: First towards interest Then towards costs Finally towards principal However, if the judgment debtor specifies that the payment is towards principal, or if the decree itself directs a different mode of appropriation, that will override the general rule. 

⚖️ Key Takeaways If no direction is given in the decree and no indication is made by the debtor, creditor (decree-holder) has the right to apply the payment first to interest. Once part of the principal is paid along with interest due on that portion, interest on that part ceases to accrue thereafter.

The relevant provisions are found in Order 21 Rule 1 CPC, especially sub-rules (4) and (5), and supported by case law such as V. Kala Bharathi & Ors vs The Oriental Insurance Co. Ltd..

Generally part payment if made against loan/outstanding amount will be adjusted  firstly towards interest and then principal.

The query is short of material facts.

The amount shall be calculated towards interest and costs.

What is the opinion and advise of the lawyer engaged by you, if it is a true story. Prima facie it is an examination hall question.

Thank you Ramachari sir for the detailed explanation. 

Thank you all for your kind suggestions. 

Yest the part payment made  towards the debt amount is usually adjusted towards the interest as on date of filing the suit

Generally when a loan is advanced the document will stipulate the payment of interest periodically such as monthly, quarterly, half-yearly, annually etc. All payments are first adjusted against interest due till date as per agreement.