The Supreme Court wants the law to protect multi-million court deposits

The Supreme Court said inflationary pressures and economic uncertainty are also contributing to concerns about interest rates on deposits. | Photo credit: The Hindu

A law is necessary to protect crores deposited by litigants across courts and tribunals in the country during pending appeals, the Supreme Court said in a recent judgment.

A Bench of Justices PS Narasimha and Alok Aradhe noted that litigants’ money should be saved from ad-hoc administration, while calling for nationwide legislative reform to standardize how courts and tribunals deal with money deposited during pending litigation.

The Supreme Court drew attention to the problem of the absence of uniform rules for court deposits. For example, the court would order the litigant to deposit money to obtain a stay while his appeal is heard.

Until now, individual courts and tribunals have issued orders on deposits and their investments during appeal proceedings on a case-by-case basis. This left huge sums of money tied up in financial instruments across different banks, earning inconsistent interest rates and sparking post-judgment litigation over interest on their deposits, the court said.

The bench said inflationary pressures and economic uncertainties are also contributing to concerns about interest rates on deposits.

“In order to preserve the economic integrity of any deposit and to secure interest, there must be clarity and uniformity in the way and manner in which the deposit itself is dealt with. The lack of standardization in the process by which sums deposited in court are to be dealt with undermines this basic fundamental principle of the time value of money as well as the attribution of interest in a definite and clear manner,” the recent verdict said.

The Supreme Court further pointed out that the asymmetry in the handling of deposits made by the parties to the proceedings leads to further interdependence between the courts.

“Lack of common standards and consistent principles results in repeated determination of routine questions relating to investment, recovery, quantum, accounting and interest on deposits, thereby increasing the burden on courts/tribunals,” observed the Bench, which also includes Justice Alok Aradhe.

The court proposed the American model to have a common platform where deposits made in courts and tribunals were merged into one unified system and put into the most favorable financial instrument for the litigants.

“This common platform will not only create certainty in interest rates and increase ease of access for litigants, but will also ease the burden on courts/tribunals as to how this deposited money is to be invested and managed,” Justice Narasimha observed.

The Supreme Court recommended a statutory framework modeled after international precedents, specifically pointing to the US Court Registry System (CRIS).

Justice Narasimha explained that federal courts in the US have been linked to the CRIS platform. Money deposited through CRIS is automatically pooled into a single unified portal that is used to purchase government securities of a number of accounts. The centralized mechanism offers automatic interest loading, transparency and liquidity.

“We feel that it is necessary to evolve and formulate appropriate legislation on the subject. We request the Law Commission of India to look into the issues raised by us and in the process consider the laws enacted by other countries. It may be necessary for the Law Commission to approach the Reserve Bank of India, the Ministry of Finance and also the nodal Ministry of Law and Justice,” the apex court ordered.

The Bench directed that a copy of the judgment be forwarded to the Chairman of the Law Commission; Governor, Reserve Bank of India; and the Secretaries of the Departments of Finance and Law and Justice.

Published – 20 Sep 2026 22:04 IST