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.