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.