The Supreme Court has ruled that depositing an arbitral award amount in court does not stop interest from running on the sum unless the award-holder is actually free to withdraw the money — reaffirming that a conditional deposit is not the same thing as payment.
A bench of Justice Pamidighantam Sri Narasimha and Justice Alok Aradhe was hearing an appeal arising out of a challenge under Section 34 of the Arbitration and Conciliation Act, 1996, filed by National Seeds Corporation Ltd. against an arbitral award of over ₹1.46 crore, plus 12% annual interest, in favour of National Agro Seed Corporation (India). While the Section 34 challenge was pending, the Delhi High Court had stayed enforcement on the condition that National Seeds deposit 50% of the principal; the balance was deposited only in April 2022, after the challenge failed.
The catch was that the award-holder could withdraw the deposited funds only against furnishing security or title deeds — a condition it could not meet. The question before the Supreme Court was whether interest kept accruing between the date of the award, June 13, 2019, and the date the award attained finality, September 8, 2022, given that the money was technically "deposited" for part of that period.
The Court held that a deposit counts as payment under Order XXI Rule 1 of the Code of Civil Procedure only if it is unconditional and freely available for the award-holder to withdraw.
"A deposit is not synonymous with payment," the Court observed, adding that a deposit "must be unconditional and available to the award-holder for withdrawal."
Since National Agro Seed could not access the deposited amount without meeting conditions it was unable to satisfy, interest continued to run on the outstanding sum for the full period. The ruling, reported as 2026 LiveLaw (SC) 958, is likely to be cited often in post-award enforcement disputes where debtors seek to stop the interest clock through conditional court deposits.