Arbitral Award Holder Cannot Decline To Receive Amount And Then Claim Decree Unsatisfied: Delhi High Court

The Delhi High Court has said, in an arbitration dispute, that once a judgment debtor deposits the decretal amount in court, its liability stands discharged to that extent.

It went on to make clear that execution proceedings cannot be reopened simply because the decree holder decides not to withdraw the money and later tries to take advantage of a more favourable exchange rate.

Justice Harish Vaidyanathan Shankar refused to reopen execution proceedings that had already been disposed of in May 2022, noting that the decretal amount of Rs. 2,89,90,273, arising from US$ 1,30,681.52 along with interest, had been deposited by The State Trading Corporation and remained available for withdrawal, which UPM Kymmene Corporation consciously chose not to avail.

Imposing Rs.1 lakh as costs for misuse of the judicial process, the court observed:

"In law, once a Judgment Debtor deposits the decretal amount in compliance with a judicial order, the obligation qua that extent stands discharged, and the amount is deemed to be placed at the disposal of the Decree Holder. The Court, in such circumstances, merely acts as a custodian of the funds. The liability of the Judgment Debtor does not remain in a state of perpetual flux merely because the Decree Holder elects not to withdraw the amount. To hold otherwise would be to ignore the settled principle that payment into Court, in compliance with judicial direction, constitutes satisfaction to that extent”

It added, "A party cannot, by its own volition, decline to receive monies lying to its credit and thereafter assert that the decree remains unsatisfied so as to revive concluded proceedings."

The dispute arose from commercial dealings between the parties, culminating in an arbitral award dated December 17, 1998 in favour of UPM Kymmene Corporation for US$ 1,30,681.52 with interest at 18% per annum.

The award was upheld by the High Court on March 15, 2005, which rejected objections and made it a rule of the Court under the Arbitration Act, 1940, while modifying the rate of future interest.

An appeal filed by The State Trading Corporation was dismissed by a Division Bench on October 29, 2018. Subsequent proceedings before the Supreme Court did not result in any interim protection against execution.

In April 2013, the Supreme Court directed the judgment debtor to deposit the entire decretal amount. The direction was complied with, and the amount was placed in a fixed deposit.

By an order in May 2022, the Delhi High Court permitted UPM Kymmene Corporation to withdraw the deposited amount along with accrued interest, subject to furnishing a corporate undertaking to refund the same with interest in the event the judgment debtor succeeded. The execution proceedings were accordingly disposed of.

Notwithstanding this, UPM Kymmene Corporation approached the Court in 2025, invoking its inherent powers, seeking revival of the execution, release of the deposited amount without conditions, directions for payment of the alleged balance, and application of a later date for currency conversion.

It contended that the decree had attained finality and that it was entitled to realise the decretal amount in full on that basis.

Opposing the plea, The State Trading Corporation argued that the deposit already satisfied the decree to that extent and that UPM's failure to withdraw the amount was a self-imposed restraint. It was submitted that the decree holder could not seek to take advantage of a more favourable exchange rate by delaying withdrawal.

Agreeing with this, the court held that once the decretal amount is deposited and made available, the judgment debtor's obligation stands discharged to that extent, and the decree holder cannot seek revival of concluded proceedings due to its own inaction. It clarified that the condition requiring a corporate undertaking was only a safeguard to balance equities and did not restrict access to the funds.

Rejecting the plea for applying a later conversion date, the Court held that amounts already deposited must be reckoned at the exchange rate prevailing on the date of deposit, and a party cannot defer withdrawal to secure a financial advantage.

Dismissing the application, the Court imposed Rs. 1 lakh as costs for abuse of process.

For UPM Kymmene Corporation: Advocates Ramesh Singh, Bharti Badesra, Shivleen Pasricha.

For The State Trading Corporation of India Ltd.: Advocates Sanjeev Puri, Danish Zubair Khan, Pragya Puri, Swati Yadav.