Supreme Court Directs All Courts/Tribunals To Mandatorily Deposit Amounts Deposited By Parties With Registry In A Bank/Financial Institution

The Supreme Court has issued an important direction that all courts and judicial forums should frame guidelines to ensure that amounts deposited with the office or registry of the Courts or Tribunals are mandatorily deposited in a bank or financial institution. This direction is issued to ensure that litigants do not face any future loss of interest on the amount deposited before Courts.

"...this court is of the opinion that all courts and judicial forums should frame guidelines in cases where amounts are deposited with the office / registry of the court / tribunal, that such amounts should mandatorily be deposited in a bank or some financial institution, to ensure that no loss is caused in the future", directed a bench comprising Justices MR Shah and S Ravindra Bhat.

"Such guidelines should also cover situations where the concerned litigant merely files the instrument (Pay Order, Demand Draft, Banker’s Cheque, etc.) without seeking any order... These guidelines should be embodied in the form of appropriate rules, or regulations of each court, tribunal, commission, authority, agency, etc. exercising adjudicatory power", the Court added.

The Court passed this direction considering the predicament faced by a litigant in losing out on interest due to an unwise conduct. The litigant was fighting a case against a builder over delay in allotting a flat. The complainant, after paying up to 6 instalments, had refused to pay further instalments citing delay in progress of completion. In this backdrop, on 30th April 2005 (this date is crucial), the builder cancelled the allotment. Along with the cancellation letter, the builder enclosed a Pay Order dated 30th April 2005 for ₹ 4,53,750/- issued by Citibank towards full refund of payments made by the complainant. 

Demanding possession of flat, the complainant filed a case before the MRTP Commission. She refused to accept the refund and did not encash the Pay Order. The Pay Order was also annexed with the complaint filed before the MRTP. Ultimately, the Competition Appellate Tribunal held that the complainant was entitled to compensation.

The issue in the present appeal before the Supreme Court was regarding the entitlement of interest for the complainant for the period from 30th April 2005, the date on which the builder issued the Pay Order for refund, which the complainant did not encash. The developer said that on that date, the amount was debited from its current account. Citibank also stated that since the amount was deducted from the developer’s account, the bank too did not enjoy any interest on that amount, during pendency of the proceedings.

The Court noted that the complainant must have been under the impression that by filing the original Pay Order before the Commission, she established that she was not interested in receiving refund, but was interested only to secure possession of the flat.

"Nevertheless, it was necessary for her to apply through counsel for an appropriate order to ensure that the amount was deposited in an interest-bearing account", the Court observed.

The Court opined that the complainant ought to have adopted any of the following courses :

• She could have sought for a deposit of the proceeds of the Pay Order in an account, to be maintained by the Registrar of the Commission.
• She could have sought for a ‘without prejudice’ order enabling her to encash the amount, and at the same time ensure that her claim was not defeated on that score. 
• She could also have sought for appropriate orders that the amount be maintained by the developer, who could, in the event it became necessary, be directed to pay the principal along with such interest as the Commission or the Tribunal deemed appropriate and in the interests of justice.

Since none of these choices were opted for, and also having regard to the fact that the amount in question was undoubtedly debited from the developer's current account, the Court said that no liability could be fastened on the developer for the period from April 30, 2005.

In this regard, the Court applied the principles in Order XXI of the Code of Civil Procedure, that "if the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it".

"This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation to ensure that the amount payable is placed at the disposal of the person entitled to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker’s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or ‘payment’ is complete", the Court observed.

Case Title : KL Suneja and others vs Dr(Mrs) Manjeet Kaur Monga (Died) through legal representatives

Citation : 2023 LiveLaw (SC) 68

Headnotes

Courts/Tribunals should mandatorily deposit amounts deposited by litigants with the Registry or Office in a bank account- Supreme Court issues directions- all courts and judicial forums should frame guidelines in cases where amounts are deposited with the office / registry of the court / tribunal, that such amounts should mandatorily be deposited in a bank or some financial institution, to ensure that no loss is caused in the future-These guidelines should be embodied in the form of appropriate rules, or regulations of each court, tribunal, commission, authority, agency, etc. exercising adjudicatory power - Para 35

Code of Civil Procedure -Order XXI - Liability to pay interest on money deposited by judgment debtor-f the amount is deposited, or paid to the decree holder or person entitled to it, the person entitled to the amount cannot later seek interest on it-This is a rule of prudence, inasmuch as the debtor, or person required to pay or refund the amount, is under an obligation to ensure that the amount payable is placed at the disposal of the person entitled to receive it. Once that is complete (in the form of payment, through different modes, including tendering a Banker’s Cheque, or Pay Order or Demand Draft, all of which require the account holder / debtor to pay the bank, which would then issue the instrument) the tender, or ‘payment’ is complete- Para 31

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