Facts
The Bangalore Development Authority (BDA) deposited the arbitral award amount before the Commercial Court pursuant to an order dated 9 August 2023, which required the deposit as a condition for staying execution and operation of the award.
Source reference: p. 5The respondent later sought permission to withdraw the deposit, but BDA objected.
Source reference: p. 3, p. 5The Execution Court’s order dated 14 February 2025 directed payment of interest, including on the deposited amount; BDA challenged that order under Article 227 of the Constitution.
Source reference: p. 1–2Issues
Whether BDA remained liable to pay interest on the award amount after depositing it before the Commercial Court, where the deposit was not shown to be unconditionally available to the decree-holder for withdrawal.
Source reference: p. 5Law Applied
Section 36(1) of the Arbitration and Conciliation Act, 1996 treats an arbitral award as enforceable as a decree, while Section 36(3) requires the Court, when considering a stay of a money award, to have due regard to the provisions governing stays of money decrees under the Code of Civil Procedure.
Source reference: p. 6Under Order XXI Rule 1 CPC, a court deposit constitutes payment in satisfaction of a decree only if it is unconditional and available to the decree-holder for withdrawal; if withdrawal is conditional on furnishing security, interest continues to accrue.
Source reference: p. 6–7Conversely, where an unconditional deposit is available for withdrawal and the decree-holder fails to seek it, interest is not payable on that deposited amount.
Source reference: p. 7The Court applied the principles summarised in National Seeds Corporation Limited v. National Agro Seed Corporation (India), 2026 SCC OnLine SC 1924.
Source reference: p. 5–7Reasoning
The deposit was made to obtain a stay of the award, not demonstrated to be an unconditional payment in satisfaction of it.
Source reference: p. 5, p. 8BDA’s objection to the respondent’s withdrawal application showed that the amount was not freely available to the respondent.
Source reference: p. 8Further, the Execution Court had noted that no notice of the deposit was issued to the decree-holder under the applicable CPC provisions; accordingly, the respondent could not be treated as having declined an unconditional tender by failing to withdraw the amount.
Source reference: p. 8The Court therefore found no basis to disturb the direction requiring interest.
Source reference: p. 8–9Holding
The Court held that BDA’s liability to pay interest did not cease merely upon depositing the award amount, because the deposit was not shown to be unconditionally available for withdrawal by the decree-holder.
Finding no error warranting interference under Article 227, the High Court dismissed the writ petition.
Source reference: p. 8–9Acts & Sections Cited
1 provisions across 1 statute referred to in this judgment. Each provision opens on LawLens.
Arbitration and Conciliation Act, 19961
Original Court PDF
BANGALORE DEVELOPMENT AUTHORITYvsM/S. ABHIRAM INFRA PROJECTS PRIVATE LIMITED,
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