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Money Deposited In Court Can Only Be Claimed By Litigants With The Court's Permission

In Nahar Builders Ltd Vs. Housing Development and Infrastructure Ltd, application was filed by Nahar Builders for leave to withdraw the deposited amount of Rs. 8 crores furnished by the Respondent as per court order pending Arbitration. The Applicant claimed that since Arbitration proceeding has been completed and there is an Award in favour of Nahar Buidler of this amount plus interest, the Applicant should be allowed to withdraw this amount and accrued interest for partial or perhaps even complete satisfaction of Nahar Builders’ award.

The opposition from HDIL is that since there is a moratorium that has came in to play in view of the insolvency proceedings under the Insolvency & Bankruptcy Code, 2016, the amount of Rs. 8 crores deposited in this Court is ‘the property of HDIL’ within the meaning of Section 14 of the IBC. 

The High Court allowing the withdrawal held that once an amount is deposited in this Court, it is placed beyond the reach of either party without permission of the Court and no party can automatically claim any right to it without an adjudication by a Court. It is, therefore, not ‘the property’ of either party pending an adjudication as to entitlement by the Court and the provisions regarding a moratorium cannot possibly apply to such cash deposits made in this Court. Once the Arbitrator held that it was Nahar Builders that was entitled to this amount, and that award became enforceable as a decree of this court, then no question remained of the amount being claimed by HDIL. In another manner of speaking, from the time the deposit was made until the time withdrawal is ordered, that amount is not the property of either party to the dispute.


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