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Nepa Limited Through Its Senior Manager (Legal) vs Manoj Kumar Agrawal

Civil Appeal · 2022 INSC 1263Decided 8 Dec 2022
Civil Appeal No. 3984 of 2019
Sanjiv Khanna · Sudhanshu Dhulia

Background

An arbitral award in the year 2000 directed Nepa Limited to refund a security deposit of about Rs. 14.49 lakh to Manoj Kumar Agrawal, with 18% annual interest until payment. While Nepa's appeal against the award was pending, it deposited Rs. 7,78,280 (50% of the award) under a court-ordered stay, and Agrawal withdrew this amount in 2001 on furnishing a personal undertaking. Years later, a dispute arose over whether interest continued running on the withdrawn amount until the appeal was finally decided in 2012, or stopped once Agrawal actually withdrew and used the money. The Madhya Pradesh High Court, in execution proceedings, ruled that interest kept running on the withdrawn sum too, because Nepa had not given formal notice of the deposit as required under the Civil Procedure Code.

Decision Breakdown

The Supreme Court held the High Court's view was legally unsustainable. Relying on a five-judge Constitution Bench ruling (Gurpreet Singh v. Union of India), it held that once a decree holder actually withdraws a deposited amount and it is credited to him, interest stops running on that sum regardless of whether formal notice was given: notice exists only to enable withdrawal, and once withdrawal happens the purpose is served. Since Agrawal had voluntarily withdrawn and used the Rs. 7,78,280 in 2001, interest on that portion stopped from the date of withdrawal; interest at 18% continued only on the balance principal still unpaid. The appeal was allowed and the matter sent back to the executing court to recompute the exact balance.

Lesson Learnt

Once a person entitled to money under a court order actually withdraws and uses a deposited amount, interest on that specific sum stops running from the date of withdrawal: a formal notice of deposit is not needed once the money has, in fact, changed hands.

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

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