2015 (10) TMI 412 - SC - Indian Laws

Payment of Interest under Section 34 of Arbitration & Conciliation Act Respondents deposited the principal amount before the High Court and requested the same to be made as Fixed Deposit which was ultimately dismissed - Contended by the Appellant that once the amount is deposited in Court, there is no liberty to pay interest in terms of the award - Held That - Appellants shall be entitled to interest as per award from the date of award till the principal amount was deposited in the High Court - Respondent shall be entitled to the interest in terms of the award on the balance of the award amount which the appellants failed to deposit in Court Judgement of the Court modified Decided in favour of the Respondent.

Summary

Issues:
Dispute over payment of interest during pending Section 34 proceedings before High Court.

Analysis:
The Supreme Court addressed the issue of interest payment during the pendency of proceedings under Section 34 of the Arbitration and Conciliation Act, 1956 before the High Court. The Court noted that in a specific case, an award was passed on 02.03.2001, and subsequently, there were directions to deposit the principal amount before the High Court. The amount was deposited on 03.03.2003, and a further direction was given to convert the deposit into a Fixed Deposit in a nationalist bank. Referring to a previous decision, the Court emphasized that once the amount is deposited in Court, there is no obligation to pay interest as per the award.

The Court highlighted the significance of the term "payment" in the context of Section 37(1)(b), stating that it signifies the satisfaction of the award and the extinguishment of liability arising from the award. Therefore, once the appellants deposited the award amount before the High Court, the liability for post-award interest ceased from the date of deposit. The Court found that the respondent did not request the withdrawal of the deposited amount as per the High Court's directions, and the appellants had not deposited the full amount as per the award.

Considering the circumstances, the Court ruled that the appellants were entitled to interest as per the award from the date of the award until the principal amount was deposited in the High Court. Subsequently, the respondent would be entitled to the interest accrued on the principal amount as per the Fixed Deposit directive. However, the respondent would receive interest in terms of the award on the balance of the award amount that the appellants failed to deposit in Court. The Court modified the High Court's judgment accordingly, disposing of the Civil Appeals with no order as to costs.