CLAT PG Current Affairs — 20 September 2026

The Supreme Court ruled that a conditional deposit made by a judgment-debtor does not halt the accrual of interest on an arbitral award if the award-holder cannot freely withdraw the deposited amount. The Court held that only an unconditional deposit that places the money at the award-holder's disposal can stop interest from running. A deposit hedged by conditions imposed by the depositor continues to deprive the award-holder of the beneficial use of the money, so interest must keep accruing until free access is granted.

This ruling operates at the intersection of arbitration law and the law of interest on money decrees. Under Section 31(7) of the Arbitration and Conciliation Act, 1996, an arbitral tribunal may award interest from the date of the award until payment. Once a court confirms the award and the award-holder seeks execution, the judgment-debtor often deposits money in court claiming that the deposit extinguishes further interest liability. The Supreme Court has now clarified the governing principle: a deposit halts interest only if it is unconditional — that is, the award-holder can withdraw the full amount without having to satisfy any further condition set by the depositor. If the deposit is conditional (for instance, subject to an appeal pending, or released only on furnishing security), the award-holder is still deprived of the beneficial use of the money. Deprivation of beneficial use is the foundational reason why interest is awarded in the first place, so conditions that perpetuate that deprivation cannot simultaneously stop interest from running. This principle echoes the Supreme Court's older formulation in Hind Construction v. State of Maharashtra and aligns with the Code of Civil Procedure's understanding of 'payment' in Order XXI. For CLAT PG, the key analytical skill is applying this principle to hypotheticals — the examiner will typically change the type of condition attached to the deposit and ask whether interest continues.

The Supreme Court has recommended that Parliament enact a dedicated statute to govern money deposited in courts during litigation — funds that currently lack a unified legal framework for management, investment, and disbursement. The Court directed the Law Commission of India to examine the issue and propose draft legislation. The ruling arose from cases where deposited amounts sat idle, earning no interest, causing financial prejudice to rightful claimants who received depreciated sums after prolonged litigation.

Court deposits are amounts parties pay into court — as security, compensation, or pursuant to interim orders — pending final adjudication. In the absence of a unified statute, these funds are governed by a patchwork of Civil Procedure Code provisions (chiefly Order 24 and Section 34 CPC on interest), High Court rules, and ad hoc judicial orders. The Supreme Court's recommendation addresses a structural gap: idle deposits lose real value through inflation and earn no systematic return, prejudicing the party ultimately entitled to the money.

The Court's referral to the Law Commission is significant for two reasons. First, it signals judicial recognition that gap-filling through case-by-case orders is insufficient — legislative intervention is needed. Second, it engages the Law Commission's advisory function under its mandate to recommend law reform, a constitutional-law-adjacent concept CLAT PG tests.

For CLAT PG aspirants, the conceptual hook is the interplay between judicial power and legislative competence: courts can identify lacunae and recommend reform, but cannot themselves legislate. The ruling also touches on Article 300A (right to property) and the equitable principle that a successful litigant should not be penalised by the system's delay. The Law Commission referral creates a reform pipeline — recommendation → draft bill → Parliament — that illustrates how judge-driven law reform works in practice.

The Supreme Court held that National Seeds Corporation Ltd did not enter into a valid contract with National Agro Seed Corporation India because the latter's response to NSC's tender constituted a counter-offer, not an acceptance. Under the Indian Contract Act, a valid acceptance must mirror the offer without modification. Since the respondent added new terms, the original offer lapsed, and no enforceable agreement arose. The Court applied the mirror image rule to dismiss the claim of a binding seed supply contract.

This judgment directly applies Section 7 of the Indian Contract Act, 1872, which requires that acceptance must be absolute and unqualified. The underlying doctrine is the mirror image rule: any acceptance that varies, qualifies, or adds conditions to the original offer is legally treated as a counter-offer, which automatically extinguishes the original offer. The original offeror is then free to accept or reject this counter-offer, but no contract exists until there is an unconditional acceptance on identical terms.

The distinction between a counter-offer and a mere inquiry is critical. A counter-offer substitutes new terms; an inquiry asks for clarification without altering the original offer. Only a counter-offer destroys the original offer.

The case also engages the concept of invitatio ad offerendum (invitation to treat): a tender notice issued by NSC is an invitation to treat, not an offer. The seed corporation's bid in response is the actual offer. NSC's acceptance letter, if qualified, then becomes the counter-offer. The Court's application clarifies which party was the offeror at each stage — a distinction the CLAT PG examiner routinely tests by reversing party positions in hypotheticals.

For NABARD and UPSC, the institutional angle matters: NSC is a Central Government undertaking under the Ministry of Agriculture, established in 1963, making any contract dispute it enters also a public procurement law question.