#security deposit

The Kerala High Court ruled that the state cannot withhold or claim damages upon contract termination unless it proves actual financial loss, mandating the return of the security deposit with 9% interest. This reinforces the principle that liquidated damages must reflect real harm, not serve as punitive leverage in public procurement - a critical safeguard for contractors.

The Supreme Court ruled that security deposits under commercial contracts do not accrue interest unless refunded beyond the agreed period, reinforcing contractual sanctity while ensuring equitable relief for delayed refunds. This judgment clarifies the enforceability of explicit no-interest clauses in contracts, impacting contractors and government entities alike.

Calcutta High Court rules that a municipal body's failure to dispute running account bills or supplementary work claims under a public works contract constitutes acceptance, imposing liability for Rs. 1.88 crore in unpaid dues. The court awarded 10% p.a. interest from the date of filing, reinforcing contractors' rights against delayed payments by government entities.

The Bombay High Court has affirmed that arbitral tribunals may order interim security for crystallised debts - such as electricity dues or lock-in license deposits - only when explicitly provided in the contract. This reinforces that Section 17 is not a tool for final adjudication but a provisional safeguard, clarifying boundaries for parties in commercial arbitration and preventing tribunal overreach.

Jharkhand High Court rules that disputes involving contractual dues with an arbitration clause must be resolved through arbitration, not writ petitions. The court dismissed a writ seeking refund of a security deposit, reinforcing that arbitration is the exclusive remedy for such claims under the contract.

Bombay High Court rules that a security deposit cannot be forfeited upon valid termination of a contract unless the agreement expressly permits it. The ruling underscores that arbitration awards directing refunds of deposits and license fees stand unless contractual terms provide otherwise, impacting commercial disputes involving public procurement and licensing agreements.

Bombay High Court reaffirms that failure to deposit security for costs under Section 117 of the Representation of the People Act at the time of filing an election petition is fatal, dismissing the petition outright. The ruling underscores strict adherence to procedural timelines, impacting election dispute litigants who risk dismissal for non-compliance.

Himachal Pradesh High Court rules that security deposits under Order 9 Rule 7 CPC must align with the claim amount, reducing an excessive Rs. 9 lakh deposit to Rs. 5 lakh. The decision reinforces judicial discretion in ensuring fairness in ex parte recall conditions for businesses and litigants.

Supreme Court rules that security deposits made before the commencement of Corporate Insolvency Resolution Process (CIRP) must remain part of the corporate debtor’s estate and cannot be appropriated by operational creditors against pre-CIRP dues. The adjustment of such deposits is permissible only post-adjudication of claims under the IBC, ensuring pari passu treatment of all creditors.

Gauhati High Court rules that landlords cannot unilaterally adjust a tenant's security deposit against rent arrears under the Assam Urban Areas Rent Control Act unless the tenancy agreement expressly permits such adjustment. The ruling reinforces tenants' strict liability for rent payment and bars automatic set-off, impacting landlord-tenant disputes in Assam.