M/S. MALWA STRIPS PVT. LTD. versus M/S. JYOTI LTD.

Citation: [2008] 17 S.C.R. 1297 · Decided: 18-12-2008 · Supreme Court of India · Bench: S.B. SINHA · Disposal: Appeal(s) allowed

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Judgment (excerpt)

[2008] 17 S.C.R. 1297 
MIS. MALWA STRIPS PVT. LTD. 
v. 
M/S. JYOTI LTD. 
(Civil Appeal No. 7410-7411 of 2008) 
DECEMBER 18, 2008 
[S.B. SINHA AND CYRIAC JOSEPH, JJ.] 
Code of Civil Procedure, 1908 ~ 0. XL/ r. 1(3), 5(1) and 
A 
8. 
(3) - Appeal against money decree - Stay of execution of 
decree pending appeal, even though judgment debtor not c 
depositing decretal amount - Held: Not justified - While 
granting stay of execution of decree, sufficient cause must be 
shown - High Court did not arrive at the conclusion that it 
would cause undue hardship tQ judgment debtor if ordinary 
rule to direct payment ofdecretal amount or part of it and/or D 
directly through judgment debtor to secure the payment is 
granted - Hence, judgment debtor directed to deposit the 
sum and furnish security therefor. 
Appellant filed a summary suit under order 37 CPC 
against the respondent claiming certain sum. 
Respondent filed application for leave to defend the suit. E 
Application was allowed subject to the deposit of the 
admitted amount within the specified period. Respondent 
did not deposit the amount and the trial court decreed the 
suit in favour of appellant. Respondent filed appeal. He 
also filed application for stay of the decree passed by trial F 
court. High Court stayed the operation and execution of 
the decree in its entirety. Hence the present appeal. 
Allowing the appeals, the Court 
HELD: 1.1. The decree passed by the trial judge is a 
money decree. A conditional leave to defend was granted. G 
The said condition has not been fulfilled. Thus, leave to 
defend would be d~emed to have been refused. [Para 3] 
1.2. In the instant case, High Court failed to notice the 
1297. 
H 
1298 
SUPREME COURT REPORTS 
[2008] 17 S.C.R. 
A provisions of sub-rule (3) of Rule 1 of Order XLI CPC. The 
appellate court has the discretion to direct deposit of 
such amount, as it may think fit, although the decreetal 
amount has not been deposited in its entirety by the 
judgment debtor at the time of filing of the appeal. But 
8 while granting stay of the execution of the decree, it must 
take into consideration the facts and circumstances of 
the case before it. It is not to act arbitrarily either way. If a 
stay is granted, sufficient cause .must be shown, which 
means that the materials on record were required to be 
perused and reasons are to be assigned. Such reasons 
C should be cogent and adequate. [Para 11] [1304-D-E] 
1.3. High Court failed to notice that suit was one 
under Order XXXVll of the Code. Whether it was 
maintainable or not may fall for consideration in the 
appeal. Even assuming -that the same was not 
D maintainable, the question which should have been 
posed by the High Court was as to whether sufficient 
cause had been made out to reverse the decree passed 
in favour of the appellant. Even a decree could have 
been passed having regard to the defence raised by the 
E respondent under Order XII Rule 6 of the Code, therefore, 
there is no justification at all as to why an order of stay 
of the nature was passed by the High Court. Even if sub-
rule (3) of Rule 1 of Order XLI CPC is not mandatory, the 
purpose for which such a provision has been inserted 
F should be taken into consideration. An exceptional case 
has to be made out for stay of execution of a money 
decree. The High Court has not said that any exceptional 
case has been made out. It did not arrive at the conclusion 
that it would cause undue hardship to the respondent if 
G the ordinary rule to direct payment of the decreetal 
amount or a part of it and/or directly through the 
judgment debtor to secure the payment of the decreetal 
amount is granted. A strong case should be made out for 
passing an order of stay of execution of the decree in its 
entirety. [Para 12] [1305-A-C] 
H 
. 
.. 
J Jo . 
\"' 
MIS. MALWA STRIPS PVT. LTD. v. MIS. JYOTI LTD. 
1299 
1.4. Having regard to the facts and circumstances of A 
the instant case, the respondent is directed to deposit a 
sum of Rs.35 lakhs within the period. Respondent shall 
furnish adequate security for the rest of the decreetal 
amount within the said period. In the event the 
respondent fails to comply with the order, the decree shall B 
be exec,utable at once. [Para 13] [1305-C-E] 
Rajasthan State Electricity Board and Anr. vs. Ram Deo 
... 
and ors. AIR 1999 Rajasthan 264; Kayamuddin Shamsuddin 
... 
Khan vs. State Bank of India 1998 (8) SCC 676; Sihor Nagar 
,, 
Palika Bureau vs. Bhabhlubhai Virabhai

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