NHAI Must Pay Contractor 13% Interest On Award Money Kept In A Non-Interest-Bearing Account Until Receipt: Madras HC

In brief

The question

Whether the respondents remained liable to pay interest under the awards until the petitioner actually realised the deposited amounts, where the deposits were held in a non-interest-bearing account

The court held

The Court ordered both execution petitions on the basis that the petitioner was entitled to:

It also directed

the unpaid principal of Rs.1,51,06,691

13% interest on that amount from 3 October 2012 until realisation

the refund of Rs.2,92,00,711 directed by the Division Bench, with 13% interest from 3 October 2012 until realisation

13% interest on Rs.18,86,61,452 from 27 November 2019 until realisation

There was no order as to costs

01Facts

The petitioner sought execution of arbitral awards enhancing compensation, claiming the awarded amounts, interest at 13% per annum, and further interest until actual realisation

pp. 1–2

The respondents contended that they had deposited the awarded amounts into court and were not liable for further interest on those deposits. The petitioner maintained that the deposits were held in a non-interest-bearing account and that it could not withdraw them while the execution proceedings remained contested

p. 3

The Court recorded that deposits were made on 27 November 2019, part of the funds was permitted to be withdrawn on 24 February 2020, and the balance on 29 April 2024

p. 4

The Section 34 petitions were dismissed on 30 April 2019; the intra-court appeals were dismissed on 21 February 2024, and the SLPs on 12 August 2024

p. 3

02Issues

i.Whether the respondents remained liable to pay interest under the awards until the petitioner actually realised the deposited amounts, where the deposits were held in a non-interest-bearing account

pp. 3–4

ii.Whether the respondents were liable for interest on the unpaid principal and on the amount directed to be refunded by the Division Bench

pp. 5–6

03Law Applied

The Court applied the interest terms of the awards, including the stipulated rate of 13% per annum, and treated actual realisation by the decree-holder—not merely deposit into court—as the relevant endpoint for the respondents’ interest liability where the deposited funds earned no interest

pp. 4–6

It also gave effect to the Division Bench’s direction requiring repayment of the amount recovered under the dissenting award

p. 5

The order does not identify or analyse any statutory provision or judicial precedent as the basis for these conclusions

pp. 4–6

Provisions in the judgment · 1

the Act (alias, unresolved) Section 34

04Reasoning

The Court found that the deposits remained in a non-interest-bearing account and had not been realised by the petitioner while the parties’ dispute continued. It therefore held that deposit alone did not discharge the respondents’ obligation to pay interest under the awards until the petitioner received the funds

p. 4

The Court also relied on the respondents’ own calculations, which acknowledged an unpaid principal balance of Rs.1,51,06,691, and held that interest at 13% on that balance ran from the date of the award, rather than from the date of deposit

p. 5

It further included the Rs.2,92,00,711 ordered to be refunded by the Division Bench, with interest at 13% from 3 October 2012, and allowed interest on Rs.18,86,61,452 from 27 November 2019 until realisation

pp. 5–6