What is this question all about. You can create interface inside class, class inside interface etc.
@Ravikanth well classes inside interfaces are static but not final
Why is everyone looking for further explanation about this.. As everyone knows, there is no actual inner classes or interfaces. All inner classes and interfaces are converted into outer classes. It's just that by nesting a class or interface, you can keep a class that is needed by a method of a class inside that class. Arvind gives a good example for this.