Recognised mode of payment stops further interest once the principal is debited, with no pre-2005 interest claim sustained.

Payment through a recognised bank-issued instrument was treated as stopping further interest under the principle underlying Order XXI Rule 1 CPC once the principal amount had been debited from the developer's account in 2005. Because the complainant did not seek protective directions or insist on an interest-bearing deposit when the pay order was filed, there was no legal basis to extend liability beyond 30 April 2005. The complainant's demand for interest on the principal sum from 4 October 1993 until realisation in 2016 was therefore unsupported by the stated rule and principle.

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Issues: Whether the developer remained liable to pay interest on the refunded amount after tendering the pay order in 2005, and whether the complainant could claim interest on the principal sum from 1993 till realization in 2016.

Analysis: The dispute turned on the legal effect of payment by a bank-issued instrument and the principle underlying Order XXI Rule 1 of the Code of Civil Procedure, 1908, namely that once money is paid through a recognized mode of payment, interest ceases to run from the relevant date. The complainant had not taken steps before the tribunal to secure the amount in an interest-bearing account or obtain protective directions when the original pay order was filed, while the records showed that the principal amount had been debited from the developer's account in 2005. In these circumstances, no legal basis was found for fastening further liability on the developer after 30 April 2005, and the claim for interest from 1993 onwards was unsupported by any binding rule or principle.

Conclusion: The developer was not liable to pay interest after 30 April 2005, and the complainant was not entitled to interest from 4 October 1993 till realization.

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