1

REPORTABLE

IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 3984 OF 2019

NEPA LIMITED THROUGH ITS SENIOR

MANAGER (LEGAL) ..... APPELLANT

VERSUS

MANOJ KUMAR AGRAWAL ..... RESPONDENT

J U D G M E N T

SANJIV KHANNA, J.

1.By award dated 14.04.2000, the appellant, M/s Nepa Limited,

was held liable to pay Rs. 14,49,300/- to the respondent,

Manoj Kumar Agrawal. The amount was towards refund of the

balance security deposit, which was made by Manoj Kumar

Agrawal in terms of the agreement dated 25.10.1996. The award

had stipulated that Rs. 14,49,300/- would carry an interest @

the rate of 18% per annum from the date of the award, till

payment.

2.It is an accepted case that the appellant paid an amount of

Rs. 1,50,000/- to the respondent on 22.10.2001. It is also

undisputed that this payment would be adjusted/set-off against

the interest, and not from the principal amount of the award,

i.e., Rs.14,49,300/-.

3.The objections filed by the appellant under Section 34 of the

Arbitration and Conciliation Act, 1996

1

were dismissed on

28.02.2001.

1 For short, the “Act”.

2

4.The appellant had thereupon preferred an appeal under Section

37 of the Act before the Division Bench of the High Court. On

30.10.2001, the Division Bench passed an order whereby, on the

appellant depositing 50% of the awarded amount within ten days

from the date of the order before the executing court, the

execution proceedings for the balance amount were to remain

stayed. The respondent was entitled to withdraw the deposited

amount after furnishing personal undertaking for restitution

of the amount if he is so directed, within three months from

the date of the final disposal of the appeal. The

direction/order attaching the properties of the appellant was

to continue.

5.Pursuant to the interim order, the appellant had deposited Rs.

7,78,280/- on 05.11.2001. On 08.11.2001, the respondent

withdrew Rs.7,78,280/-, after furnishing personal undertaking

in terms of the order dated 30.10.2001.

6.The appeal preferred by the appellant under Section 37 of the

Act was dismissed by the Division Bench on 02.02.2012.

7.It may be stated here that the respondent had also challenged

the award by filing objections under Section 34 of the Act,

which were dismissed. Thereupon, the respondent had filed an

appeal under Section 37 of the Act which was also dismissed.

It is stated by the respondent, who appears in-person, that

both the appellant and the respondent had preferred a special

leave petition before this Court, which were dismissed.

8.Learned counsel appearing for the appellant accepts that the

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payment of Rs.7,78,280/-, which was withdrawn by the

respondent on 08.11.2001, would be first adjusted/set-off

against the interest element payable in terms of the decree,

which in this case, is the award. The balance amount would be

set off/adjusted towards the principal amount payable. To this

extent also, there is no dispute.

9.The dispute before us is whether the respondent is entitled to

interest @ the rate of 18% as per the award on the principal

amount of Rs. 14,49,300/- till the decision of the appeal

under Section 37 of the Act on 02.02.2012, or interest @ the

rate of 18% is payable on the net principal amount

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after the

set-off/adjustment of interest due on 08.11.2001 from

Rs.7,78,280/- which was withdrawn by the respondent on

08.11.2001.

10.On 01.08.2012, the respondent had filed an application for

recovery of amount of Rs. 3,97,382/- along with the interest.

On 18.08.2012, the respondent had filed another application

stating and claiming that he was entitled to interest on

Rs.14,06,259/-, i.e., the principal amount awarded along with

the 18% interest till the decision of the appeal under Section

37 of the Act, which was decided on 02.02.2012.

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11.The executing court vide order dated 05.10.2012 held that the

respondent is entitled to decree in the sum of Rs. 3,97,382/-

2 See paragraph 25 below. As per calculations made by the appellant vide Annexure

‘A’ to this judgment the net principal amount payable is Rs. 9,13,483/-. As per

the calculations made by the respondent vide Annexure ‘B’ to this judgment the

net principal amount payable is Rs.9,30,300/-.

3 It appears that some payments were made by the appellants post dismissal of

their appeal under Section 37 of the Act on 02.02.2012. Therefore, the figures

mentioned do not tally with awarded amount etc.

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along with the interest @ the rate of 18% per annum.

12.The appellant paid an amount of Rs. 4,15,629/- on 31.10.2012.

The payment was computed on the basis of the order passed by

the executing court quantifying the decree amount as Rs.

3,97,382/- and included interest payable on the said amount.

13.Aggrieved, the respondent preferred a civil revision before

the High Court of Madhya Pradesh at Jabalpur, which had been

allowed by the impugned order dated 19.06.2017, inter alia

holding that in terms of Order XXI, Rule 1, sub-rules (4) and

(5)

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of the Code of Civil Procedure, 1908

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, 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 the decision of the appeal

under Section 37 of the Act, on 02.02.2012.

14.In our opinion, the judgment of the High Court is

unsustainable and contrary to the law. In the present case, 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. In Gurpreet Singh v. Union

4 Order XXI – Execution of Decrees and Orders –

1. Modes of paying money under decree. –

xx xx xx

(4) On any amount paid under clause (a) or clause (c) of sub-rule

(1), interest, if any, shall cease to run from the date of service of

the notice referred to in sub-rule (2).

(5) On any amount paid under clause ()b) of sub-rule (1), interest,

if any, shall cease to run from the date of such payment.

xx xx xx”

5 For short, ‘CPC’

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of India, (2006) 8 SCC 457, a five Judges Bench of this Court

had examined Rule 1 to Order XXI of the CPC, post the

substitution by Act No. 4 of 1976, and observed that the

effect of the substitution is that upon deposit of the

decretal amount in the court and giving notice thereof to the

decree holder, there would be cessation of interest from the

date of notice to the decree holder of such deposit. Rule 1 to

Order XXI of the CPC also postulates payment by the judgment

debtor to the decree holder by other specified modes, namely,

by postal money order, bank or by payment evidenced in

writing, in which case the interest ceases to run from the

date money is tendered. 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.

15.In the present case, order dated 30.10.2001 was passed in the

presence of the parties including the respondent. Thereupon,

the appellant had deposited Rs. 7,78,280/- before the

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executing court on 05.11.2001. The respondent had notice of

the deposit and accordingly had withdrawn the said amount,

i.e., Rs. 7,78,280/- on 08.11.2001.

16.The respondent, who appears in-person, has relied on the

judgments of this Court in P.S.L. Ramanathan Chettiar and

Others. vs. O.R.M.P.R.M. Ramanathan Chettiar , AIR 1968 SC 1047

and the decision dated 13.02.2020 in C.A. No. 3867 of 2010,

Delhi Development Authority through its Vice Chairman vs. Bhai

Sardar Singh and Sons , to submit that the order dated

30.10.2001 being conditional and the withdrawal of Rs.

7,78,280/- being in terms of the conditional order i.e., on

furnishing of personal undertaking given by the respondent,

the direction for payment of interest @ the rate of 18% on

Rs.7,78,280/- would continue till the decision of the appeal

under Section 37 of the Act on 02.02.2012. It is only then

that the complete title and the payment got vested in the

respondent.

17.In our opinion, the submission made is fallacious and is

contrary to law. In Ramanathan (supra), the amount which was

deposited by the judgment-debtor was not withdrawn by the

decree holder. The judgment in Ramanathan (supra) in paragraph

12 thereof, specifically states that “on principle, it appears

to us that the facts of a judgment-debtor’s depositing a sum

in court to purchase peace by way of stay of execution of the

decree on terms that the decree holder can draw it out on

furnishing security, does not pass title to the money to the

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decree holder. He can if he likes take the money out in terms

of the order, but so long as he does not do it, there is

nothing to prevent the judgment-debtor from taking it out by

furnishing another security, say, immovable property, if the

court allows him to do so and on his losing the appeal putting

the decretal amount in court in terms of Order XXI Rule 1 of

the CPC in satisfaction of the decree”. The aforesaid

narration makes it clear that this was not a case in which the

decree holder had withdrawn the money. The penultimate

paragraph of this judgment records that the deposit made was

not unconditional, and that the decree holder was not free to

withdraw the amount whenever he likes even before the disposal

of the appeal. In order to do so, he had to give security in

terms of the order, which he did not furnish. It may be noted

that this judgment is prior to the substitution of Rule 1 to

Order XXI of the CPC by Act No. 104 of 1976 with effect from

1

st

February 1977.

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18.In the decision of this Court in Delhi Development Authority

(supra), the money deposited by the Delhi Development

Authority in the court was not withdrawn by the contractor

Bhai Sardar Singh and Sons. In fact, an application was filed

by Bhai Sardar Singh and Sons to permit them to withdraw the

money, but they were not permitted to do so. In this

background, it was held that the deposit was not payment in

terms of Rule 1 to Order XXI of the CPC. Under the Arbitration

6 Whether the amendment has the effect of substitution of the principle

enunciated in Ramanathan’s case (supra), need not be examined in this decision.

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Act, 1940, the award can be executed after the award is made

Rule of the Court. Therefore, an award under the Arbitration

Act, 1940 per se was not a decree of the Court. Under the

provisions of the Act, i.e., the Act, 1996, an award is a

decree of the Court and is executable, unless objections are

filed under Section 34 of the Act.

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19.In the present case, objections under Section 34 of the Act

were filed and dismissed on 28.02.2001. Thereupon, the award

was executable.

20.In Delhi Development Authority (supra), on the aspect of

liability of Delhi Development Authority to pay interest on

the deposit made in court for failure to issue written notice,

it was held that it was not necessary. The reason was that the

decree holder was aware of the deposit made by the judgment

debtor. Therefore, the decree holder cannot be permitted to

urge and plead that he was served a notice of the deposit.

Accordingly, the decree holder, it was held, was not entitled

to interest post the decision, even when the judgment debtor

had not served any formal notice as required under sub-rule

(4) to Rule 1 to Order XXI of the CPC.

21.In the present case, the appellate court, on the appeal

preferred under Section 37 of the Act did grant stay, subject

to the condition that the appellant would deposit 50% of the

7 Post substitution by Act No.3 of 2016 with retrospective effect from 23

rd

October 2015, the legal position has undergone change. Section 36 as it stood

before the Amendment Act 3 of 2016 reads:

“36. Enforcement. – Where the time for making an application to set aside

the arbitral award under section 34 has expired, or such application having been

made, it has been refused, the award shall be enforced under the Code of Civil

Procedure, 1908 (5 of 1908) in the same manner as if it were a decree of the

Court.”

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amount. 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.

22.The respondent has relied on the principle that the interim

order merges into the final order. In Civil Appeal No. 2417 of

2022, decided on 25.03.2022, titled State of Uttar Pradesh

through Secretary and Ors. v. Prem Chopra, this Court had

referred to an earlier decision in State of Rajasthan v. J.K.S

Synthetics and Anr. , (2011) 12 SCC 518, wherein it has been

observed that where a stay is granted by way of interim order

on dismissal of the writ petition or vacation of the interim

order, the beneficiary of the interim order shall have to pay

interest on the amount withheld or not paid by him by virtue

of the interim order. The aforesaid observations, in fact,

support the appellant and not the respondent. The observations

hold that the person liable to make payment would have to pay

the principal amount along with the interest which is

specified in the contract or the statute as he had enjoyed

benefit of the stay order. The interest is payable only on

the amount that is not paid. It will be incongruous to hold

that the person would be liable to pay interest even in

respect of the amount, which has been paid and handed over to

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the decree holder.

23.This Court in Raunaq International Limited v. I.V.R.

Construction Limited and Others , (1999) 1 SCC 492, has

observed that the parties, at whose instance, interim orders

are obtained, should be made accountable for the consequences

of the interim order. These observations obviously are

relevant in the context of the present case to the extent that

the appellant is liable to pay interest @ the rate of 18% per

annum on the amount which was not paid to the respondent.

However, the amount which was withdrawn and paid to the

respondent, no interest liability would occur and would be

payable.

24.The respondent submits that the payment of Rs. 7,78,280/-

being conditional, the respondent would have been under an

obligation to refund the said amount in case the appellant had

succeeded in the appeal under Section 37 of the Act, 1996.

This argument does not impress, as in the event the appellant

had succeeded in their appeal, the entire amount paid would

have been refundable. The undertaking was not onerous, and was

to operate only if the amount of Rs. 7,78,280/- was not

refunded by the respondent. The respondent had obviously used

and utilized the money. The appellant did not have any right

on the money paid to the respondent, who could use it in a

manner and way he wanted. There was no charge. Money is

fungible and would have gotten mixed up with the other amounts

available with the respondent. Right to restitution would not

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make the payment conditional. Interest has been

jurisprudentially defined as the price paid for money

borrowed, or retained, or not paid to the person to whom it is

due, generally expressed as a percentage of amount in one

year. It is in the nature of the compensation allowed by law

or fixed by parties, for use or forbearance or damage for its

detention.

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In the context of the present case, interest would

be the compensation payable by the appellant to the

respondent, for the retention or deprivation of use of money.

Therefore, once the money was paid to the respondent, interest

as compensation for deprivation of use of money will not

arise.

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25.In view of the aforesaid reasons, we allow the present appeal

and set aside the impugned order dated 19.06.2017, whereby the

appellant had been directed to pay interest @ the rate of 18%

per annum on Rs.14,49,300/- from the date of the award till

the date of decision of the appeal under Section 37 of the Act

on 02.02.2012. We hold that the appellant would be liable to

pay interest @ the rate of 18% on Rs.9,13,483.00/9,30,300.00

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(the exact amount to be calculated and determined by the

executing court) with effect from 08.11.2001 till the payment

8 Hyder Consulting (UK) Ltd. v. State of Orissa , (2015) 2 SCC 189, as quoted in

Webster’s Third New International Dictionary and Corpus Juris Secondum.

9 We have not examined and decided the issue either way – whether interest would

be payable on the amount withdrawn in case withdrawal is on conditions like

furnishing bank guarantee etc.

10 We have taken the figures from the calculations made by appellant – M/s Nepa

Limited, which is enclosed as Annexure ‘A’ and by Manoj Kumar Agarwal –

respondent, which is enclosed as Annexure ‘B’ to this judgment. As per the

appellant, the principal amount due and payable is Rs.9,13,483/-. However, as per

the respondent, the principal amount due and payable is Rs. 9,30,300/-. The

difference is only Rs.17,000/-, albeit, the correct computation would be made by

the executing court.

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was/is made.

26.Learned counsel for the appellant has submitted that they have

made over-payment and our attention is drawn to annexure (P-

12), which shows that they have paid total amount of Rs.

56,70,096/-. We would not like to go into the said aspect, as

this would relate to computation and calculations. The

appellant is entitled to invoke Section 144 of the CPC and

take recourse to appropriate remedies available to him in law,

in case over-payment had been made to the respondent.

27.The appeal is allowed in the aforesaid terms.

28.Pending application(s), if any, shall stand disposed of.

..................J.

(SANJIV KHANNA)

..................J.

(SUDHANSHU DHULIA)

NEW DELHI.

DECEMBER 08, 2022.

ps

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Annexure ‘A’

Sheet of Calculation of Interest by NEPA Limited Through its Senior Manager (Legal)

– Appellant

S. No.Particular Amount (in INR)

A. Principal Amount as per the Award dated

14.04.2000

14,49,300/-

B. Rate of Interest @18% For an year:

2,60,874

Per day

714.72

C. Interest till 22.10.2001 3,96,313

D. Amount paid on 22.10.2001 (@ pg 175) (1,50,000)

E. Balance Interest 2,46,313 (C-D)

F. Interest till 08.11.2001 (Date of withdrawal of

50% Awarded amount by the Respondent)

12,150

G. Total 2,58,463 (E+F)

H. 50% of Amount deposited on 08.11.2001 7,78,280

I. Adjusted towards interest (2,58,640)

J. Adjusted towards principal 5,19,817 (H-I)

K. New Principal as on 08.11.2001 9,13,483

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Annexure ‘B’

Sheet of Calculation of Interest by Manoj Kumar Agrawal – Respondent

S. No.Particular Amount (in INR)

A.Principal Amount as per the Award dated

14.04.2000

14,49,300/-

B.Rate of Interest @18% - -

C.Interest till 22.10.2001 3,97,028

D.Amount paid on 22.10.2001 (@ pg 175) (1,50,000)

E.Balance Interest 2,47,028 (C-D)

F.Interest till 08.11.2001 (Date of withdrawal of

50% Awarded amount by the Respondent)

12,150

G.Total 2,59,178 (E+F)

H.50% of Amount deposited on 08.11.2001 7,78,280

I.Adjusted towards interest (2,59,178)

J.Adjusted towards principal 5,19,102 (H-I)

K.New Principal as on 08.11.2001 9,30,300