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National Seeds Corporation Ltd. v. National Agro Seed Corporation (India)

Civil Appeal · 2026 INSC 1017Decided 18 Sept 2026
Civil Appeal arising out of SLP(C) No. 5710 of 2025
Justice Pamidighantam Sri Narasimha · Justice Alok Aradhe

Background

An arbitral award of about Rs. 1.78 crore (with interest) was passed against National Seeds Corporation (the appellant) in 2019. While challenging the award, the appellant deposited only half the principal amount in court to obtain a stay, and later deposited the balance, but each time it opposed the award-holder's attempts to actually withdraw the money, right up until the Supreme Court finally dismissed its challenge in 2022. The award-holder was allowed unconditional withdrawal only in September 2022. The dispute in this appeal was whether the appellant still owed interest on the deposited sums for the roughly three-year period during which the money sat in court but could not actually be used by the award-holder.

Decision Breakdown

Relying on a Constitution Bench ruling and a line of subsequent decisions, the Court held that merely depositing money in court does not stop interest from running. Interest stops only if the deposit is unconditional and the award-holder is genuinely free to withdraw it. Since the appellant here resisted every withdrawal attempt and the money became freely available to the award-holder only on 8 September 2022, interest continued to run on the full amount from the date of the award (2019) until that date, exactly as the executing court had held; the appeal on this point was dismissed. Separately, and unusually, the Court used the case to flag a wider systemic gap: there is no uniform national rule on how courts and tribunals invest and manage money deposited during pending appeals, leading to inconsistency across High Courts and unfair outcomes for both sides. It therefore directed the Law Commission of India to study the issue (consulting the RBI, Finance Ministry and Law Ministry) and recommend a standardised framework, drawing comparisons with pooled court-deposit investment systems used in the USA and Canada.

Lesson Learnt

If you deposit money in court to get a stay but then fight every attempt by the other side to withdraw it, you cannot claim that the deposit stopped your interest liability. Interest only stops when the money is made truly and unconditionally available to the person entitled to it.

Official source (sci.gov.in)View Judgment (PDF)

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