NEPA LIMITED THROUGH ITS SENIOR MANAGER (LEGAL) versus MANOJ KUMAR AGRAWAL

Citation: [2022] 14 S.C.R. 446 · Decided: 08-12-2022 · Supreme Court of India · Bench: SANJIV KHANNA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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SUPREME COURT REPORTS
[2022] 14 S.C.R.
[2022] 14 S.C.R. 446
446
NEPA LIMITED THROUGH ITS SENIOR MANAGER (LEGAL)
v.
MANOJ KUMAR AGRAWAL
(Civil Appeal No. 3984 of 2019)
DECEMBER 08, 2022
[SANJIV KHANNA AND SUDHANSHU DHULIA, JJ.]
Code of Civil Procedure, 1908 – Order XXI, Rule 1 –
Arbitration and Conciliation Act, 1996 – ss. 34 and 37 – Interest on
award – By award dated 14.04.2000, appellant was held liable to
pay Rs. 14,49,300/- to respondent with interest @ rate of 18% per
annum from date of award, till payment – Objections filed by
appellant u/s.34 were dismissed – Appeal filed u/s.37 – High Court
passed order whereby, on appellant depositing 50% of the awarded
amount within 10 days from date of the order before executing court,
the execution proceedings for the balance amount were to remain
stayed – Respondent was entitled to withdraw the deposited amount
after furnishing personal undertaking for restitution of the amount
– Pursuant to the interim order, appellant deposited Rs.7,78,280/-
– Respondent withdrew this amount after furnishing the personal
undertaking on 08.11.2001 – Whether respondent entitled to interest
@ the rate of 18% p.a. as per award on the principal amount of Rs.
14,49,300/- till decision of appeal u/s. 37 of the Act or interest @
the rate of 18% p.a. is payable on the net principal amount after
set-off/adjustment of interest due on 08.11.2001 from Rs.7,78,280/
- which was withdrawn by respondent on 08.11.2001 – High Court
by impugned order held that in terms of Order XXI, Rule 1, sub-
rules (4) and (5) of CPC, the appellant having failed to give notice
for deposit of amount of Rs.7,78,280/-, the respondent would be
entitled to interest @ the rate of 18% per annum, even on the sum
of Rs. 7,78,280/-, which was withdrawn by him, till decision of the
appeal under u/s. 37 – Held: When the deposited amount is
withdrawn and gets credited in the account of the decree holder, he
is not entitled to interest on the deposited amount, even when there
is failure on the part of the judgment debtor to issue notice of deposit
– In absence of notice, the interest would cease to run from the date
when the amount is transferred /credited in the account of the decree
holder – If notice is issued, interest ceases to run from the date of
service of notice.
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Allowing the appeal, the Court
HELD: 1. It is accepted and admitted position that the
respondent had withdrawn amount of Rs. 7, 78, 280/-, which had
been deposited by the appellant, on 08.11.2001. In this
background, the question of notice in terms of sub-rule (4) to
Rule 1 to Order XXI of the CPC becomes irrelevant. [Para
14][450-E-A; 451-A]
2. The legislative intent clearly, is that the interest would
cease on the principal amount paid by the judgment debtor to the
decree holder. Issue of notice is to enable the decree holder to
withdraw the amount deposited. Therefore, when the deposited
amount is withdrawn and gets credited in the account of the decree
holder, he is not entitled to interest on the deposited amount,
even when there is failure on the part of the judgment debtor to
issue notice of deposit. In absence of notice, the interest would
cease to run from the date when the amount is transferred/
credited in the account of the decree holder. If notice is issued,
interest ceases to run from the date of service of notice. [Para
14][451-C-E]
3. In the present case, Rs.7,78.280/- was deposited by the
appellant on 05.11.2001. The stay, therefore, only operated for
the balance amount. On the balance amount, certainly, the
appellant would be liable to pay interest @ the rate of 18% per
annum till the date of actual payment. However, on Rs.7,78,280/
- paid, after adjusting /appropriating payment due on the interest
accrued, on the balance principal amount paid to the respondent,
interest would not be payable. [Para 21][453-C-E]
Gurpreet Singh v. Union of India (2006) 8 SCC 457 :
[2006] 7 Suppl. SCR 422-followed on.
P.S.L. Ramanathan Chettiar and Others. v. O.R.M.P.R.M.
Ramanathan Chettiar AIR 1968 SC 1047 : 1968 SCR
367 – distinguished.
State of Rajasthan v. J.K.S Synthetics and Anr. (2011)
12 SCC 518 : [ 2011] 10 SCR 993 ; Raunaq
International Limited v. I.V.R. Construction Limited and
Others (1999) 1 SCC 492 : [1998] 3 Suppl. SCR 421
and Hyder Consulting (UK) Ltd. v. State of Orissa
(2015) 2 SCC 189 : [2014] 14 SCR 1029 - referred to.
NEPA LIMITED THROUGH ITS SENIOR MANAGER (LEGAL)
v. MANOJ KUMAR AGRAWAL
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