Supreme Court: conditional deposit does not stop interest on arbitral awards

The case concerns a dispute between National Seeds Corporation Ltd. and National Agro Seed Corporation (India) regarding whether interest continues to accrue on an arbitral award amount that was deposited in court but not released to the award-holder due to conditions and litigation delays.

Who it concerns: Appellant: National Seeds Corporation Ltd.; Respondent: National Agro Seed Corporation (India); Bench: Not stated in the provided text.

What the court decided

• The Court held that a deposit is not synonymous with payment and does not extinguish liability if the sum is not freely available to the creditor.
• The Court noted that the Arbitration and Conciliation Act, 1996, lacks clear guidance on the interplay between conditional deposits and the accrual of interest.
• The Court requested the Law Commission of India to examine the issues highlighted in the judgment, including consulting the Reserve Bank of India, Ministry of Finance, and Ministry of Law and Justice.
• The Court permitted the release of interest accrued on monies lying deposited in the High Court during the pendency of the appeal.

Also in the document

• The judgment is marked as 'REPORTABLE'.
• The Court identified a legal lacuna in the 1996 Act regarding conditional deposits and interest.
• The Court directed the Law Commission of India to review the matter and consult relevant government bodies.