Supreme Court moots common platform to invest money deposited by litigants in courts

The Supreme Court has proposed the creation of a common platform to pool and invest money deposited before different courts and tribunals by litigants [National Seeds Vs National Agro Seeds]. .In a judgment delivered on September 17, a bench of Justices PS Narasimha and Alok Aradhe observed that the present system lacks uniformity and can lead to financial loss for litigantsHence, the bench opined that deposits made before different courts and tribunals could be brought under a unified scheme and invested in financial instruments that are most beneficial to the parties. “This common platform will not only create certainty in the interest rates and increase the ease of accessibility for litigants but will also ease the burden on Courts/Tribunals regarding how this money deposited is to be invested and dealt with,” the Court said..The Court made the observations while deciding a dispute between National Seeds Corporation Limited and National Agro Seed Corporation (India) concerning interest payable on money deposited during a challenge to an arbitral award.The Bench noted that there is presently no statutory prescription or uniform rule governing how decretal amounts deposited before courts or tribunals should be handled.Instead, courts and tribunals have been passing orders on a case-to-case basis, resulting in “a great amount of disparity and inconsistency”, the judgment said..The Court identified several areas where this lack of uniformity causes problems, including the percentage of a decretal amount required to be deposited for obtaining a stay, the bank or financial institution in which the money is to be kept, the financial instrument used, the applicable rate of interest and the manner in which such interest is ultimately adjusted.It added that decree-holders may be prevented from using money already awarded to them, while judgment-debtors may continue facing mounting interest liability even after parting with the money.The absence of common standards can also result in similarly placed litigants receiving different treatment depending on the court or tribunal before which their proceedings are pending, the Court noted. It further said that uncertainty over the administration of deposits and interest can generate fresh litigation even after the underlying dispute has ended..In this regard, the Bench highlighted different systems followed by various High Courts across the country..The Court said that standardisation was also necessary because of the “time value of money”.“Simply put, the time value of money is a proposition that a sum of money deposited today would be worth more than the same amount receivable at a future date, leading to an opportunity cost,” the judgment explained..The Court referred to the Court Registry Investment System followed by federal courts in the United States, under which money deposited before different courts is pooled through a unified system and invested in government securities. It also noted that Canada follows a centralised mechanism for deposits made as security for obtaining a stay.Against this backdrop, the Supreme Court requested the Law Commission of India to examine the issue of court deposits and consider the systems followed in other jurisdictions. It also asked the Commission to consult the Reserve Bank of India, Ministry of Finance and the Ministry of Law and Justice..On the dispute before it, the Court held that merely depositing money in court does not amount to payment of an arbitral award unless the amount is unconditionally available to the award-holder for withdrawal..The petitioner, National Seeds Corporation Limited, was represented by advocates Yashvardhan and Apoorv Shukla..The respondent, National Agro Seed Corporation (India), was represented by advocates Ashutosh Kumar, Arunava Mukherjee, Abhilosh Chaturvedi, Kushagra Sharma and Nisarg P Khatri..[Read Judgment]