Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | SLP(C) No.-019767 of 2025 |
| Diary Number | 38535/2025 |
| Judge Name | HON’BLE MR. JUSTICE J.B. PARDIWALA |
| Bench | HON’BLE MR. JUSTICE J.B. PARDIWALA and HON’BLE MR. JUSTICE K.V. VISWANATHAN |
| Precedent Value | Binding |
| Overrules / Affirms | Affirms existing precedent |
| Type of Law | Civil Procedure—Appellate Practice |
| Questions of Law | Whether an appellate court may grant an unconditional stay of execution of a money decree under Order XLI Rule 5 CPC without requiring deposit or conventional security, and how “sufficient cause” must be interpreted for that purpose. |
| Ratio Decidendi | The Court held that (1) deposit or furnishing security under Order XLI Rule 1(3) is directory, not mandatory; (2) stay of execution of any decree—including money decrees—depends on “sufficient cause” under Rule 5(3), examined by reference to potential loss, delay, and security; (3) “sufficient cause” may include egregious perversity, patent illegality or facial untenability; (4) unconditional stays are permissible in exceptional cases where such cause is shown. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | All High Courts when interpreting Order XLI Rule 5 CPC in appeals involving money decrees |
| Distinguishes | Dhunjibhoy Cowasji Umrigar v. Lisboa (13 Bom 241; pre-CPC Order XLI) |
| Follows |
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What’s New / What Lawyers Should Note
- Clarifies that deposit or security under Order XLI Rule 1(3) CPC is directory, not a condition precedent for a money-decree appeal.
- Defines “sufficient cause” under Rule 5(3) to include egregious perversity, patent illegality or facial untenability of the decree.
- Holds that appellate courts may grant unconditional stays in exceptional cases without insisting on deposit.
- Reaffirms that mere filing of an appeal does not stay execution; specific, reasoned orders are required.
- Counsel should frame stay applications by demonstrating an exceptional case, not rely solely on high decretal amounts.
Summary of Legal Reasoning
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Statutory Text & History
- Order XLI R.1(3) CPC (as amended 1976) directoryly empowers courts to fix time for deposit/security; non-compliance bars only stay, not appeal.
- Order XLI R.5 CPC authorizes stays for “sufficient cause,” with sub-rules requiring potential loss, no unreasonable delay, and security.
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Interpretation Principles
- “Shall” read as directory if purposive reading avoids absurdity; legislative intent not to mandate deposit in all money-decree appeals.
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Precedents
- Kayamuddin (1998 8 SCC 676): deposit non-compliance affects only stay, not appeal.
- Sihor Nagar Palika (2005 4 SCC 1) & Malwa Strips (2009 2 SCC 426): stays discretionary, deposit not mandatory; unconditional stay possible in exceptional cases.
- Pam Developments (2019 8 SCC 112): “due regard” to CPC is directory when considering stay under Arbitration Act; analogous logic applies to CPC stays.
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Exceptional-Cause Standard
- Unconditional stay warranted where decree is egregiously perverse, riddled with patent illegality or facially untenable.
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Application on Facts
- High Court found prima facie no valid service, ex parte decree, gross enhancement of damages without pleadings, and lack of material linking respondent to infringement—constituting “exceptional cause” for unconditional stay.
Arguments by the Parties
Petitioners (Original Plaintiffs)
- Order XLI R.1(3) CPC mandatory: must deposit or furnish security before stay.
- High Court flouted mandatory provisions; deposit prerequisite under R.5(5).
- Valid service existed via email/WhatsApp and compliance with Order XXXIX R.3 CPC; no ex parte decree.
- Reliance on Sihor Nagar Palika (2005 4 SCC 1), Sunil Poddar (2008 2 SCC 326), LT Foods Ltd. v. Saraswati Trading Co. (2022 SCC OnLine Del 3694).
Respondent (Original Defendant)
- Appellate discretion broad; deposit not mandatory (Malwa Strips, 2009 2 SCC 426).
- Exceptional defects in decree: no service, massive unpleaded damage award, no basis for infringement findings.
- Stay appropriate without deposit; undertaking suffices as “security.”
Factual Background
A trademark infringement suit in Delhi HC proceeded ex parte against the defendant for alleged sale of infringing apparel online. The Single Judge granted permanent injunction and awarded ₹ 3.36 billion damages. On appeal, the Division Bench granted an unconditional stay of the money decree under Order XLI R.5 CPC without requiring deposit, prompting the plaintiffs’ SLP to this Court.
Statutory Analysis
- Order XLI R.1(3) CPC: Directs appellant in a money-decree appeal to deposit disputed amount or furnish security “within such time” as court allows; directory.
- Order XLI R.5 CPC: Stay of execution requires specific court order for “sufficient cause,” must consider (a) potential substantial loss, (b) no unreasonable delay, (c) security for due performance. Sub-rule (5) prohibits stay only if deposit/security per R.1(3) is not offered—but does not mandate deposit as sole mode of security.
Alert Indicators
- ✔ Precedent Followed