Case: M/S.Malwa Strips Pvt.Ltd Vs. M/S.Jyoti Ltd

2. Appellant is a company incorporated and registered under the Companies Act, 1956 (for short, "the said Act"). It is engaged in manufacturing of copper strips and copper foils etc. It has its registered office at 17-20, Industrial Area No.2, AB Road, Dewas, Madhya Pradesh. Respondent is also a company registered and incorporated under the said Act. It has its registered office at Nanubhai Amin Marg, Industrial Area, Vadodara. Respondent used to place orders for supply of copper rods strips and foils from time to time with the appellant. Allegedly, the payments used to be made towards the said supply from time to time. Appellant, inter alia, on the premise that a sum of Rs. 49,03,908.29 was owed to it by the respondent filed a Summary Suit under Order XXXVII of the Code of Civil Procedure, 1908 (for short, "the Code"). An application for leave to defend the suit was filed by the respondent. Appellant contended that as the respondent raised a defence only as regards the rate of interest and not the principal amount, its application should be dismissed. By an order dated 23.08.2007, the application for leave to defend the suit was allowed, subject to the condition that the respondent shall make payment of undisputed and admitted amount of Rs.22,64,789.52. Such deposit was to be made by 22.9.2007. Respondent obtained extension of time to deposit the amount. However, as the said amount was not deposited, the trial court passed a judgment on or about 14.11.2007 decreeing the suit in favour of the appellant. Respondent preferred an appeal there against. An application for stay of the said judgment and decree passed by the trial Court was also filed. By reason of the impugned judgment, the High Court stayed the operation and execution of the decree in its entirety. While doing so, the High Courtare conscious of the fact that usually money decrees are not stayed in appeal. At the same time, it is not a universal principle of law that the stay can never be granted in cases relating to money decree. The Court has discretion to grant a stay keeping in view all facts and circumstances of the case, including the manner in which the trial of the suit was conducted and the impugned decree was passed.We are prima facie of the view that a case for stay of execution of the decree is made out by the appellant on the facts on record. We do not, however, wish to express any opinion on the merits and demerits of the case at this stage, which, in our opinion, will be gone into at the time of hearing of the appeal. For the purpose of grant of stay, we are of the view that a ground for stay, as contemplated under O.41 R.5 CPC is made out.We are, therefore, inclined to stay execution of the decree pendingis, thus, before us.

Court's reasoning:
In terms of sub-rule (5) of Rule 5 of Order XLI, the court shall not make an order staying the execution of the decree notwithstanding anything contained in the foregoing sub-rules, where the appellant fails to make the deposit or furnish the security specified in sub-rule (3) of rule 1.We will proceed on the assumption that although the word `shall has been used in Order XLI Rule 1 (3) of the Code, the same is not mandatory in character, and, thus, may be read asmay, however, notice that although the provisions of sub-rule (3) of Rule 1 of Order XLI have been held not to be mandatory, this Court in Kayamuddin Shamsuddin Khan vs. State Bank of India [(1998) 8 SCC 676] opined that non-compliance of a direction to deposit the decreetal amount or part of it or furnish security therefor would result in the dismissal of the stay application but not the entireif the said provision is not mandatory, the purpose for which such a provision has been inserted should be taken into consideration. An exceptional case has to be made out for stay of execution of a money decree. The Parliamentary intent should have been given effect to. 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 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 decretal amount is granted. A strong case should be made out for passing an order of stay of execution of the decree in itstherefore, having regard to the facts and circumstances of this case direct the respondent to deposit a sum of Rs.35 lakhs within a period of four weeks from date. Respondent shall furnish adequate security for the rest of the decreetal amount within the same period. Appellant shall be entitled to withdraw a sum of Rs.30 lakhs out of the said deposited amount without furnishing any security and the rest amount on furnishing security. In the event the respondent fails to comply with the order, the decree shall be executable at once.