Both the teams played 22 overs can someone explain me

It has to do with wickets lost as well, l think.
india had more wickets in hand.

India started their innings thinking there will be 50 overs of play, so they started more cautiously than they would have if they had known that there would be only 22 overs. Meanwhile England came out to bat knowing there would be only 22 overs, thus to be fair the target was increased.
BUT the first 17 overs that India batted were ALL powerplay overs, which r really used for big hitting, so clearly India were not that slow at the start. Bearing that in mind, l think increasing the target by 31 runs was too many. 10 or 15 runs would have been appropriate

Princess Sadia has explained it perfectly.

This type of situation is not uncommon with the D/L system. l think it is poor but until something better comes up we are stuck with it.

The essence of the D/L method is 'resources'. Each team is taken to have two 'resources' to use to make as many runs as possible: the number of overs they have to receive; & the number of wickets they have in hand. At any point in any innings, a team is ability to score more runs depends on the combination of these two resources. Looking at historical scores, there is a very close correspondence between the availability of these resources & a team is final score, a correspondence which D/L exploits[3].

Using a published table which gives the percentage of these combined resources remaining for any number of overs (or, more accurately, balls) left & wickets lost, the target score can be adjusted up or down to reflect the loss of resources to one or both teams when a match is shortened one or more times. This percentage is then used to calculate a target (sometimes called a 'par score') that is usually a fractional number of runs. If the second team passes the target then the second team is taken to have won the match; if the match ends when the second team has exactly met (but not passed) the target (rounded down to the next integer) then the match is taken to be a tie.

For more explanation, please check the following link:

http://cricinfo.com/link_to_database/ABOUT_CRICKET/RAIN_RULES/DL_FAQ.html

the weightage of 31 runs was ridiculous in terms of common sense
d/l method makes no sense as it seems to disregard the power play factor
but england deserve defeat; why they did not appeal for the sehwag run out?

:).. because of duckworth lewis system.. india win