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U.O.I & Anr. v. M.P. Trading & Investment Rac. Corp. Ltd.

Civil Appeal · Neutral citation not assigned (Civil Appeal Nos. 8077-8079 of 2015)Decided 28 Sept 2015
Civil Appeal Nos. 8077-8079 of 2015
Justice Kurian Joseph · Justice Arun Mishra

Background

An arbitral award was passed against the Union of India on 02.03.2001. While objections to the award under Section 34 of the Arbitration and Conciliation Act were pending before the High Court, the Union was directed to deposit the principal award amount, which it did on 03.03.2003. At the respondent's request, the High Court later directed that the deposited sum be kept as a Fixed Deposit in a nationalised bank. The objections and the subsequent appeal were both ultimately dismissed, leaving a dispute over how post-award interest should be calculated across these different phases.

Decision Breakdown

The Supreme Court held that the respondent was entitled to interest as per the award from the date of the award until the principal amount was deposited in the High Court on 03.03.2003. From that date until withdrawal, the respondent was entitled only to the interest actually accrued on the Fixed Deposit (since the deposit-as-FD arrangement was made at the respondent's own request). However, on any balance of the award amount that the appellants had failed to deposit, the respondent remained entitled to interest at the award rate. The High Court's judgment was modified accordingly, and the appeals were disposed of with no order as to costs.

Lesson Learnt

When a court-ordered deposit is converted into a fixed deposit at a party's own request, that party's entitlement to interest for that period is generally capped at the actual FD interest earned, not the (often higher) award rate, asking for a particular form of deposit can affect how much interest you ultimately recover.

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

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