Know The Law| Can There Be A Blanket Stay On Money Decree?

In cases where a money decree is being challenged, a common question that often arises is whether a blanket stay, in its execution, can be granted without requiring the judgment debtors (against whose favour the Court has decreed the suit) to deposit a part of the money decree. One such case happened recently where though the Court had decreed the suit in favour of the plaintiff; however, its execution was stayed by the High Court in an appeal. The Court, while asking the High Court to reconsider its order of stay, also emphasised the need to consider the aforementioned question. During the hearing, primarily two judgments were brought to the Court's notice. Those were: Sihor Nagar Palika Bureau Vs. Bhabhlubhai (2005) 4 SCC 1 and Kanpur Jal Sansthan and Anr Vs. Bapu Constructions (2015) 5 SCC 267. This piece will discuss these judgments to help our readers understand the point of law surrounding the aforesaid issue. Appellate Court Has The Discretion To Direct Either Deposit Of The Amount Or To Furnish Security The factual matrix of Bhabhlubhai's case was such that the Sihor Nagar Palika Bureau/ present appellant had given a contract for collection of octroi to the respondent. However, the appellant terminated the same. Aggrieved by this, the respondent filed a civil suit claiming wrongful termination and sought recovery of damages. The suit ended in a money decree being passed in favour of the respondent and against the appellant. The latter appealed to the Gujarat high court which asked it to deposit a certain amount of money before hearing the appeal. However, the appellant filed an application seeking modification of this order. He requested the Court to dispense with the requirement of depositing the money as he was facing financial difficulty and was in dire need of money to carry out public utility services. As an alternative, he instead offered to furnish security. Since the Court declined this prayer, the present appeal was filed before the Supreme Court. To understand the statutory provisions around this issue, Order 41 Rule 1(3) CPC provides that in an appeal against a decree (for payment of amount), the appellant shall deposit the amount disputed by the appeal or furnish such security as the court may think fit. Further, Order 41 Rule 5(5) states that a deposit or security, is a condition precedent for an order by the appellate court staying the execution of the decree. The Top Court, while allowing an appeal, had asked the appellate to furnish security to the trial court instead of making a cash deposit. To reason this, the Court had perused Order 41 Rule 1(3) and Order 41 Rule 5(5) of the CPC. After examining these provisions, the Court observed that the appellate court has a discretion to direct either deposit of the amount disputed in the appeal or to permit furnishing of an appropriate security. Apart from the above observations, the Court also opined that an execution of a money decree does not amount to irreparable injury. This was supported by the reasoning that if an appeal is allowed then the remedy of restitution can always be availed. Still the power is there, of course a discretionary power, and is meant to be exercised in appropriate cases., the Court said. Allowing the appeal, the Court said that it would be in public interest to allow the appellant to retain the amount during the pendency of the appeal. “ It is not the case of the respondent that in the event of the appeal being dismissed the decretal amount may not be recovered from the appellant. On the other hand, the appellant has made out a prima facie strong case for the hearing of the appeal on its merits and further a case that public interest would be better served by the amount being retained by the appellant during the pendency of the appeal,” the Court reasoned. Direction Passed For Furnishing Security For The Entire Amount Moving on to the next case, in Kanpur Jal Sansthan's case, the Supreme Court had directed the appellant (against whom an arbitral award was passed), to furnish the security for the entire amount as a prerequisite for granting a stay. In this case also Kanpur Jal Sansthan/ present appellant, had entered into a contract for "supply of sand for slow sand filter". The dispute arose between both the parties and the same led to the appointment of an arbitrator. Eventually, the award was passed in favor of the respondent and the appellant was required to pay a significant amount of money. Challenging this, an appeal was filed before the High Court coupled with an application for stay of the award. The Allahabad High Court, while dealing with this application, directed the appellant to deposit the entire amount in the court as security. Not only this but it also permitted the respondent to withdraw 50% of amount without furnishing security. As far as the other half is concerned, the same was ...

Know The Law| Can There Be A Blanket Stay On Money Decree?

Gyanvi Khanna

This is a premium content
Available exclusively to
Our subscribers

INR 1099+GST

Tags

Know The Law| Can There Be A Blanket Stay On Money Decree?

Gyanvi Khanna

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

Tags

This is a premium content
Available exclusively to
Our subscribers