Lifestyle Equities C.V. vs. Amazon Technologies Inc.

REPORTABLE
2025 INSC 1190


IN THE SUPREME COURT OF INDIA
EXTRAORDINARY APPELLATE JURISDICTION

Petition for Special Leave to Appeal (C) No.19767 of 2025




LIFESTYLE EQUITIES C.V. & ANR. …PETITIONER(S)


VERSUS


AMAZON TECHNOLOGIES INC. …RESPONDENT


J U D G M E N T









Signature Not Verified

Digitally signed by
VISHAL ANAND
Date: 2025.10.07
16:09:58 IST
Reason:



J.B. PARDIWALA J.,
For the convenience of exposition, this judgment is divided
into the following parts:-

INDEX

A. FACTUAL MATRIX ................................................................. 3
B. SUBMISSIONS ON BEHALF OF THE PLAINTIFFS .................. 11
C. SUBMISSIONS ON BEHALF OF THE DEFENDANT ................. 13
D. REJOINDER TO THE SUBMISSIONS CANVASSED ON BEHALF
OF THE DEFENDANTS ............................................................. 15
E. ANALYSIS............................................................................ 16
i. History of the Legislation in Question ................................................ 18
ii. Principles required to be followed while Interpreting a Provision of a
Statute ................................................................................................. 22
iii. Decisions of various High Courts on the Subject .............................. 33
iv. Meaning and Import of “sufficient cause” under Order XLI Rule 5 of the
CPC...................................................................................................... 38
v. Service of Summons and Irregularity in the Service of Summons ...... 39
vi. Reading of Section 36 of the Arbitration Act and Order XLI Rule 3 and
Rule 5 respectively of the CPC .............................................................. 41
vi. Relevant aspects which the High Court looked into for the purpose of
granting unconditional stay .................................................................. 53
F. CONCLUSION ...................................................................... 69


Page 1 of 73


1. Our Order dated 24.09.2025 passed in the instant petition reads thus:
“1. Exemption Application is allowed.
2. Heard Mr. Mukul Rohatgi and Mr. Gaurav
Pachnanda, the learned Senior counsel appearing
for the petitioners and Dr. Abhishek Manu
Singhvi, Mr. Neeraj Kishan Kaul and Mr. Arvind
Nigam, the learned Senior counsel appearing for
the respondent.
3. We are of the view that there is no good reason
for us to interfere with the impugned Judgment
and Order passed by the High Court.
4. The Special Leave Petition is, accordingly,
dismissed.
5. In view of the dismissal of the Special Leave
Petition, no orders are required to be passed on
the application for intervention/impleadment and
the same stands disposed of.
6. However, reasons to follow by a separate
Order.”

2. This petition arises from the judgment and order passed by the High
Court of Delhi, dated 01.07.2052 in the CM Application No. 26455 of
2025 filed in the RFA(O.S.)(COMM) No.11 of 2025 by which the
application filed by the respondent herein (judgment debtor-original
defendant) under Order XLI Rule 5(1) and Rule 5(3) of the Civil
Procedure Code, 1908, (for short, “ the CPC ”) respectively came to be
allowed, and thereby the Court stayed the operation of the judgment
and money decree dated 25.02.2025 passed by a learned Single Judge
in the suit instituted by the petitioner herein. In short, the Division
Bench of the High Court granted stay of the execution of the money
decree suffered by the respondent herein without insisting for the
deposit of the decretal amount.

3. For the sake of convenience, the petitioners herein shall be referred to
as the original plaintiffs and the respondent herein shall be referred to
as the original defendant.
Page 2 of 73

A. FACTUAL MATRIX
4. The plaintiffs along with its subsidiaries and licensees claim to be
engaged in the business of manufacturing, distribution and sale of a
wide range of products including garments, apparels, footwear for men,
women and children, furniture, textiles, watches and other
lifestyle/personal care products under the trademark Beverly Hills Polo
Club (hereinafter referred to as, “ BHPC ”).

5. The plaintiff No. 1 is an Amsterdam based company and is the
proprietor of the BHPC trademark and claims to hold exclusive rights
for its use and commercialisation. The BHPC trademark consists of a
distinctive look featuring a charging Polo pony with a mounted rider
wielding a raised polo stick (mallet) symbolising the sport of Polo.

6. The plaintiff no. 2 is the licensee of the said trademark pursuant to the
Master License and Licensing Service Agreement dated 20.05.2008.

7. The plaintiffs instituted Civil Suit (COMM) No. 443 of 2020 in the Delhi
High Court, inter alia , seeking permanent injunction and damages
against the defendant for the alleged infringement of their registered
trademark BHPC.

8. It is the case of the plaintiffs that they are the rightful proprietors of
the BHPC Mark which enjoys extensive goodwill and recognition in the
domestic and international markets. The plaintiffs instituted the suit
contending that the defendant has been unlawfully using a mark
identically or deceptively similar to the plaintiffs’ trademark, thereby
violating their statutory and common law rights.

Page 3 of 73


9. In such circumstances referred to above, the plaintiffs prayed for the
following reliefs:
“a. Decree for permanent injunction restraining
die Defendants, its partners, directors,
shareholders or proprietor as the case may be, its
assigns in business, franchisees affiliates,
subsidiaries, licensees, and agents from selling,
offering for sale, advertising, directly or indirectly
dealing in any products or reproducing or using in
any manner whatsoever, the Infringing Logo
Mark or any other trade mark or logo/device,
which is identical to and/or deceptively similar to,
or is a deceptive variant of, and/or includes the
Plaintiffs' well known Logo Mark amounting to
infringement of the Plaintiffs' registered trade
marks as disclosed in the Plaint.

b. Decree for permanent injunction restraining the
Defendants, its partners, directors, shareholders
or proprietor as the case may be, its assigns in
business, franchisees, affiliates, subsidiaries,
licensees and agents from selling, offering for
sale, advertising, directly or indirectly dealing in
any products or reproducing or using in any
manner whatsoever, the infringing Logo Mark or
any other trade mark or logo/device, which is
identical to and/or deceptively similar to or
imitation of, or is a deceptive variant of, and/or
includes the Plaintiffs' artistic Logo Mark
amounting to infringement of the Plaintiffs'
copyright in the said logo.

c. Decree for permanent injunction restraining the
Defendants, its partners, directors, shareholders
or proprietor as the case may be, its assigns in
business, franchisees, affiliates, subsidiaries,
licensees and agents from selling, offering for
sale, advertising, directly or indirectly dealing in
any products or using in any manner whatever,
the infringing Logo Mark or any other mark or
logo/device, which is identical to, or is a deceptive
variant of and/or deceptively similar to and/or
includes the Plaintiff’s well known Logo Mark
amounting to passing off of the goods/services
Page 4 of 73

and/or business of the Defendants for those of
the Plaintiffs, dilution of goodwill and unfair
competition.

d. A decree for delivery up of all products and
material including stationery, visiting cards, hill
boards, brochures, promotional material, letter-
heads, cash memos, sign boards, sign posts,
leaflets, cartons, or any other items of
whatsoever, bearing the infringing Logo Mark
and/or any other mark, logo or device which may
be identical and/or deceptively similar, or is a
deceptive variant of and/or includes the Plaintiff's
well-known Logo Mark.

e. A decree for damages amounting to Rs.
2,00,05,000/- (Rupees Two Crores and Five
Thousand only) or any such amount as found due
in favour of the Plaintiffs. The Plaintiffs submit
that the valuation of damages is an approximate
figure only, and the Plaintiffs undertake to pay
further Court fees as may be determined by this
Hon'ble Court upon the damages that the
Plaintiffs are able to prove in the course of trial.

f. An order for rendition of accounts of profits in
favour of the Plaintiffs and against the
Defendants to ascertain the profits made by
Defendants through sale of its apparel products
or any other products which bear the infringing
Logo Mark. The Court fees as and when the
accounts of profit are determined precisely and
accurately in the course of trial, and upon
disclosure of profits made by the Defendants.

g. An order awarding costs of this suit to the
Plaintiffs;

h. Any other and further relief(s) as this Hon'ble
Court may deem fit and proper to meet the ends
of justice.”


10. It appears from the materials on record that in the suit filed by the
plaintiffs there were three defendants including the respondent herein
Page 5 of 73

as the original defendant No. 1. The plaint computed the damages
claimed from all the defendants to the tune of Rs. 2,00,05,000/-
(Rupees Two Crore and Five Thousand Only), or such other amount as
the court would find it to be payable.

11. It further appears that the defendant No. 1 was proceeded ex parte vide
Order dated 20.04.2022. Of the remaining two defendants, the suit was
decreed against the defendant No. 2 for Rs. 4,78,484/- vide the Order
dated 02.03.2023. The very same order deleted the defendant No. 3
from the array of parties.

12. In such circumstances, the respondent before us is the only defendant
now contesting the litigation.

13. It appears that upon institution of the suit by the plaintiffs the following
Order dated 12.10.2020 came to be passed:
“1. Allowed, subject to all just exceptions.
2. Original documents, if any, be filed within two
weeks of the resumption of the normal functioning
of the Court.
3. Application is disposed of.

I.A. 9256/2020 (under Order XI Rule 1
(4) Commercial Courts Act)

1. Additional documents, if any, be filed within 30
days.
2. Application is disposed of.
Signing Date:13.10.2020 07:06:56 This file is
digitally signed by PS to HMJ Mukta Gupta
CS(COMM) 443/2020 I.A. 9254/2020 (under
Order XXXIX Rule 1 and 2 CPC)

1. Plaint be registered as a suit.
2. Issue summons in the suit and notice in the
application to the defendants.
Page 6 of 73

3. Learned counsel for the defendant No.2 and
defendant No.3 accept summons in the suit and
notice in the application.
4. Summons in the suit and notice in the
application be now issued to defendant No.1 on
the plaintiff taking steps through email and
whatsapp, returnable before this Court on 2nd
February, 2021.
5. Written statement and reply affidavit along
with affidavit of admission/denial be filed within
30 days of the receipt of summons in the suit and
notice in the application.
6. Replication and rejoinder affidavit, along with
affidavit of admission/denial, be filed within
three weeks thereafter.
7. Case of the plaintiff is that the plaintiff is a
brand-owner of "BEVERLY HILLS POLO CLUB"
which was established by its predecessors in the
year 1981. The first registration for the trademark
"BEVERLY HILLS POLO CLUB" was applied on
3rd December, 1992 and thereafter the plaintiff
has number of registrations for the said mark.
The mark of the plaintiff is a device mark, that is,
and the plaintiff is the owner of the registered
trademark and the copyright thereof.
8. Grievance in the present suit of the plaintiff is
limited to defendant No.1 which is a group
company of defendant No.3 but not working as an
intermediary but is selling its own brand, copying
the logo of the plaintiff as….. It is thus claimed
that by infringing the plaintiff's device mark as
also the copyright in the logo, the defendant No.1
is selling its goods representing them to be as the
plaintiff's brand. Learned counsel further states
that defendant No.2 is selling the products of the
defendant No.1 under the impugned logo mark by
listing the same on the platform of defendant
No.3.
9. None appears on behalf of defendant No.1
despite advance notice however, learned counsel
for defendant No.3, that is, Amazon Seller Service
Pvt. Ltd. enters appearance and states that in an
earlier suit filed by the plaintiff being CS(COMM)
1015/2018 Lifestyle Equities C.V. and Ors. vs.
Amazon Seller Services Pvt. Ltd., vide order dated
Page 7 of 73

16th July, 2018, this Court had already directed
the defendant No.3 to take down the URLs
wherein the brand/logo/device mark of the
plaintiff is copied including those mentioned in
the plaint and as and when the plaintiff gives any
further information in this regard. Learned
counsel for the defendant No.3 states that since
the defendant No.3 is covered by the said order
of this Court dated 16th July, 2018, no fresh suit
is maintainable and the plaintiff was only
required to intimate the same to the defendant
No.3 and hence the present suit is mala fide.
10. Learned counsel for the defendant No.2 states
that the defendant No.2 has already taken down
the listing and will further investigate into the
matter and take down any further listing which is
either on the defendant No.3's platform or any
other platform.
11. Case of the plaintiff is that in the earlier suit,
that is, CS (COMM) No.1015/2018, the plaintiff
had impleaded parties who were selling their
products on the defendant No.3's listing by
infringing the plaintiff's device mark and the
copyright and in the earlier suit the defendant
No.1 was not a party and in the present suit, not
only does the plaintiff seek delisting of the brand
of the defendant No.1 from the defendant No.3's
platform but also seeks the relief of injunction
against the defendant No.1 which is infringing
and diluting the plaintiff's mark by selling its
products on a much cheaper rates representing to
be that of the plaintiff.
12. Considering that the defendant No.1 is a
separate entity, this Court is prima facie of the
view that the present suit would be maintainable.
From the averments in the plaint as also the
documents filed therewith, this Court finds that
the plaintiff has made out a prima facie case in
its favour and in case no ex-parte ad-interim
injunction is granted, the plaintiff would suffer an
irreparable loss. Balance of convenience also lies
in favour of the plaintiff. Consequently, till the
next date of hearing, defendant No.1 and
defendant No.2, their Partners, Directors,
Proprietors, Shareholders, Affiliates, Licensees,
Page 8 of 73

Agents etc. are restrained from selling, offering for
sell, advertising, directly or indirectly dealing in
any products or reproducing or using in any
manner whatsoever the infringing logo mark
which is identically/deceptively similar to the
plaintiff's logo mark "BEVERLY HILLS POLO
CLUB". In the meantime, defendant No.3 is
directed to take down the products of the
defendant No.1 with the infringing logo within 72
hours of the URLs being provided by the plaintiff.
13. Compliance under Order XXXIX Rule 3
CPC be made within one week. ”

14. Thus, the Court while registering the plaint as a suit noted that the
defendant No. 1, i.e., the respondent before us despite an advance
notice failed to enter appearance, and accordingly granted an ex parte
ad interim injunction restraining the defendants, their partners,
directors, proprietors, shareholders, etc., from selling, offering for sale,
advertising, directly or indirectly dealing in any products which is
identically/deceptively similar to the plaintiffs’ logo mark “BHPC”.

15. The suit ultimately came to be adjudicated ex parte , and came to be
decreed in favour of the plaintiffs and against the defendant No. 1, i.e.,
the respondent before us in the following terms:
“121. The suit is accordingly decreed as under in
favour of Plaintiffs and against Defendant No. 1
in the following terms:
(i) A decree of permanent injunction is granted in
terms of paragraphs 64(a), (b) and (c) of the plaint,
(ii) A decree of damages to the tune of $38.78
million as on date Rs. 336,02,87,000.00/- is
granted in favour of the Plaintiffs against
Defendant No. 1. If the said amount is paid within
three months, no interest would be liable to be
paid. However, if the same is not paid by the
Defendant No.1, interest @ 5% per annum would
he payable from the date of this judgment until
the full realization of the said amount.
Page 9 of 73

(iii) A decree of costs to the tune of Rs.
3,23,10,966.60/- along with the Court Fee.
122. The details of the relief granted are
summarized below:

123. Decree sheet be drawn up in the above
terms.
124. The suit along with all pending applications,
if any are disposed of.”

16. The defendant being dissatisfied with the judgment and money decree
passed by the learned Single Judge of the High Court challenged the
same by filing RFA (O.S.) (COMM) No. 11 of 2025.

17. In the appeal filed by the defendant, an application was filed under
Order XLI Rule 5(1) and Rule 5(3) of the CPC respectively, seeking stay
of the operation of judgment and money decree passed by the learned
Single Judge referred to above.

Page 10 of 73


18. The Division Bench of the High Court after hearing the decree-holders
and the judgment-debtor allowed the stay application in the following
terms:
“181. We, therefore, dispose of the present
application by staying the operation of the
impugned judgment dated 25 February 2025,
passed by the learned Single Judge, insofar as it
awards damages of Rs. 336,02,87,000/-, and
costs of Rs. 3,23,10,966.60/-.
182. This shall, however, be subject to an
undertaking being furnished by the appellant
Amazon Tech to comply with the impugned
judgment, in the event of its failing in the present
appeal, to be furnished with the Registry of this
Court within a period of two weeks from
pronouncement of the present judgment.
183. CM Appl 26455/2025 stands flowed to the
aforesaid extent.
184. Observations and findings contained in the
present judgment, we clarify, are only intended to
be prima facie and for the purposes of disposing
of the present application. They shall not be
binding on Court while deciding the present
appeal.”

19. In such circumstance referred to above, the original plaintiffs/decree-
holders are here before us with the present petition.
B. SUBMISSIONS ON BEHALF OF THE PLAINTIFFS

20. Mr. Mukul Rohatgi and Mr. Gaurav Pachnanda, the learned Senior
Counsel appearing for the plaintiffs submitted that the Division Bench
of the High Court committed an egregious error in granting the benefit
of unconditional stay of the execution of money decree. It was
vehemently submitted that the impugned judgment and order passed
by the Division Bench of the High Court is in gross violation and
flagrant disregard of the mandatory provisions of Order XLI Rule 5(1)
and Rule 5(3) of the CPC respectively.

Page 11 of 73


21. Mr. Rohatgi vehemently submitted that impugned judgment and order
is erroneous on all counts. According to the learned Senior Counsel,
the High Court is not correct in saying that there was no valid service
of summons to the defendant.

22. The learned Senior Counsel vehemently submitted that Order XLI Rule
1(3) of the CPC makes it abundantly clear that in an appeal against a
decree for payment of amount, the appellant is obliged in law, within
the time permitted by the Appellate Court, to deposit the amount
awarded or furnish such security in respect thereof as the Court may
think fit. He laid much stress on the fact that under Order XLI Rule
5(5) of the CPC a deposit or security, is a condition precedent for an
order by the Appellate Court staying the execution of the decree.

23. In other words, according to the learned Senior Counsel the provision
is mandatory in character. With a view to fortify the submissions noted
aforesaid, the learned Senior Counsel placed strong reliance on the
decision of this Court in the case of Sihor Nagar Palika Bureau v .
Bhabhlubhai Virabhai & Co. , reported in (2005) 4 SCC 1 .


24. It was vehemently argued that, if according to the defendant it is a case
of an ex parte decree, i.e., decree passed without service of valid
summons, then why the defendant did not prefer any application under
Order IX Rule 13 of the CPC? Why defendant thought fit to prefer an
appeal against such so called ex parte decree?

25. The learned Senior Counsel invited our attention to the second Proviso
to Order IX Rule 13 of the CPC. Relying on the same, it was argued that
the defendant had the requisite knowledge of the date of hearing and
had sufficient time to appear, file its written statement, and to contest
Page 12 of 73

the suit. It was argued that the delivery of the suit papers and the order
passed by the High Court dated 12.10.2020 granting ex parte
injunction subject to compliance of Order XXXIX Rule 3 of the CPC
would amount to adequate service of summons in accordance with law.
To fortify this submission reliance was placed on the decision of this
Court in the case of Sunil Poddar and Others v . Union Bank of
India , reported in (2008) 2 SCC 326 , and the decision of the Delhi
High Court in the case of LT Foods Ltd. v . Saraswati Trading
Company , reported in 2022 SCC OnLine Del 3694 .

26. It was also submitted by the learned Counsel that the Division Bench
of the High Court committed an egregious error in staying the money
decree on mere asking the defendant to furnish an undertaking on
oath, that in the event, if the appeal is dismissed the defendant shall
deposit the decretal amount. This according to the learned Senior
Counsel cannot be termed as adequate security.

27. In such circumstances referred to above, the learned Senior Counsel
prayed that there being merit in his petition the same may be allowed
and the impugned judgment and order be set aside, and further the
defendant may be directed to deposit the decretal amount with interest
in the court below.
C. SUBMISSIONS ON BEHALF OF THE DEFENDANT
28. On the other hand, Dr. Abhishek Manu Singhvi, Mr. Neeraj Kishan
Kaul and Mr. Arvind Nigam, the learned Senior Counsel appearing for
the defendant, while vehemently opposing this petition submitted that
no error not to speak of any error of law could be said to have been
committed by the High Court in passing the impugned judgment and
order.

Page 13 of 73


29. The learned Senior Counsel submitted that all the relevant aspects of
the matter could be said to have been looked into by the Division Bench
painstakingly, and upon being fully convinced on all aspects, the
Division Bench in its discretion thought fit to grant the benefit of stay
of the execution of the money decree without insisting for the deposit
of the decretal amount with interest or any other tangible security.

30. It was argued that the decision of this Court in Sihor Nagar Palika
( supra ) upon which strong reliance has been placed on behalf of the
petitioner is of no avail in view of the decision of this Court in Malwa
Strips Pvt. Limited v. Jyoti Limited , reported in (2009) 2 SCC 426 .

31. It was pointed that in Malwa Strips ( supra ), this Court considered
Sihor Nagar Palika ( supra ) and took the view that the word “shall” in
Order XLI Rule 5 of the CPC is not mandatory, and if an exceptional
case is made out then it is always open for the Appellate Court to grant
the benefit of stay of the execution of a money decree without insisting
for deposit of the entire decretal amount with interest.

32. It was argued that the Division Bench of the High Court was fully
convinced that not only any valid summons was not served upon the
defendants and the suit proceeded ex parte , but even on other counts,
the judgment and decree passed by the Court, prima facie , suffers from
various legal infirmities.

33. The learned Senior Counsel submitted that the Division Bench of the
High Court in its impugned judgment and order has recorded few
shocking facts like the plaintiffs enhancing the claim of damages
consequently from Rs. 2 crore in the plaint to Rs. 3,780 crore at the
stage of written submissions post-trial, and that too without any
Page 14 of 73

amendment and without putting the defendant to notice of such
enhanced claim without any basis in the pleadings. It was argued that
having regard to the gross perversities and illegalities writ large in the
decree and conduct of the suit proceedings, asking the defendant to
furnish security or deposit of any particular amount as a pre-condition
for stay would be wholly disproportionate and excessive.

34. In such circumstances referred to above, the learned Senior Counsel
prayed that there being no merit in the present petition the same may
be dismissed.
D. REJOINDER TO THE SUBMISSIONS CANVASSED ON
BEHALF OF THE DEFENDANTS
35. Mr. Gaurav Pachnanda, the learned Senior Counsel appearing for the
plaintiffs in rejoinder put forward an important submission, which we
must take record and deal with the same.

36. The learned Senior Counsel invited our attention to Section 36(3) of the
Arbitration and Conciliation Act, 1996 (for short, “ the Arbitration
Act ”). He would submit that the second Proviso attached to Section
36(3) of the Arbitration Act is an indication that ordinarily by applying
the principles of Order XLI Rule 5 of the CPC, as mentioned in Section
36(3) of the Arbitration Act, the Court would not be empowered to
unconditionally stay an arbitration award or a judgment.

37. In the alternative, the learned Senior Counsel sought to argue that,
even if it was to be understood that the second Proviso attached to
Section 36(3) of the Arbitration Act provides that instead of exercising
discretion, the Court must grant unconditional stay in cases of fraud
and corruption, the same would lead to a logical inference that the
Page 15 of 73

discretion to grant an unconditional stay under Order XLI Rule 5 of the
CPC would be restricted to only cases of fraud or corruption, or grounds
that take colour from those two grounds and not cases of an extreme
or egregious view on the merits of the adjudication.
E. ANALYSIS
38. Having heard the learned Senior Counsel appearing for the parties and
having gone through materials on record, the only question that falls
for our consideration is whether the Division Bench of the High Court
committed any error in passing the impugned judgment and order?

39. Before adverting to the rival submissions canvassed on either side, we
must look into few relevant provisions of law and also look into few
decisions of this Court and various High Courts.

40. Order XLI Rule 1(3) of the CPC reads thus:-
“1. Form of appeal – What to accompany
memorandum.-
xxx
(3) Where the appeal is against a decree for
payment of money, the appellant shall, within
such time as the Appellate Court may allow,
deposit the amount disputed in the appeal or
furnish such security in respect thereof as the
Court may think fit.”

41. Order XLI Rule 5 of the CPC reads as under:-

“Order XLI Rule 5. Stay by Appellate Court .
(1) An appeal shall not operate as a stay of
proceedings under a decree or order appealed
from except so far as the Appellate Court may
order, nor shall execution of a decree be stayed
by reason only of an appeal having been
preferred from the decree; but the Appellate Court
may for sufficient cause order stay of execution of
such decree.
Page 16 of 73

Explanation-
An order by the Appellate Court for the stay of
execution of the decree shall be effective from
the date of the communication of such order to
the Court of first instance but an affidavit
sworn by the appellant, based on his personal
knowledge, stating that an order for the stay
of execution of the decree has been made by
the Appellate Court shall, pending the receipt
from the Appellate Court of the order for the
stay of execution or any order to the contrary,
be acted upon by the Court of first instance.
(2) Stay by Court which passed the decree.-
Where an application is made for stay of
execution of an appealable decree before the
expiration of the time allowed for appealing
therefrom, the Court which passed the decree
may on sufficient cause being shown order the
execution to be stayed.

(3) No order for stay of execution shall be made
under sub-rule (1) or sub-rule (2) unless the Court
making it is satisfied-

(a) that substantial loss may result to the party
applying for stay of execution unless the order
is made;
(b) that the application has been made without
unreasonable delay; and
(c) that security has been given by the
applicant for the due performance of such
decree or order as may ultimately be binding
upon him.
(4) [Subject to the provisions of sub-rule (3)], the
Court may make an ex parte order for stay of
execution pending the hearing of the application.
(5) 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, the Court shall not make
an order staying the execution of the decree.”


Page 17 of 73

i. History of the Legislation in Question
42. The Bill No. 27 of 1974, being a Bill to amend the CPC and the
Limitation Act, 1963, was introduced in the Lok Sabha on April 8,
1974. The text of the Bill is found published in the Gazette of
India, Extraordinary dated April 8, 1974, in Part-II, Section 2 at pages
203 to 293.

43. The Statement of Objects and Reasons accompanying the Bill recites in
paragraph 5 at page 295 that after carefully considering the
recommendations made by the Law Commission in its Twenty-seventh,
Fortieth, Fifty-fourth and Fifty-fifth Reports, the Government had
decided to bring forward the said Bill for the amendment of the Code of
Civil Procedure, 1908, keeping in view, among others, the following
basic considerations, namely:
(i) that a litigant should get a fair trial in accordance with the
accepted principles of natural justice;
(ii) that every effort should be made to expedite the disposal of civil
suits and proceedings, so that justice may not be delayed;
(iii) that the procedure should not be complicated and should, to
the utmost extent possible, ensure fair deal to the poorer sections
of the community who do not have the means to engage a pleader
to defend their cases.

44. Clause 90 of the Bill provided for the amendment of Order XLI. In Rule
1 of Order XLI, after sub-rule (2), sub-rule (3) in the following terms
was sought to be introduced:
“(3) Where the appeal is against an order made in
execution of a decree for payment of money, the
appellant shall, within such time as the Appellate
Court may allow, deposit the amount disputed in
the appeal or furnish such security in respect
thereof as the Court may think fit.”
Page 18 of 73

(Emphasis supplied)

45. In addition, the following provision was sought to be introduced by way
of amendment as sub-rule (1A), after sub-rule (1), in Rule 3 of Order
XLI:
“(1A) Where the appellant fails to make the
deposit or furnish security specified in sub-rule (3)
of Rule 1, the Court shall reject the memorandum
of appeal.”

46. Sub-rule (5) of Rule 5 of Order XLI, as now enacted, did not find place
in the Bill, in the same or any other form.

47. The Notes on Clauses annexed to the Bill point out at page 336 that
Rule 1 of Order XLI was being amended by introduction of sub-rule (3)
to provide for the deposit, or the furnishing of security for decretal
amount by judgment-debtor when the appeal is against an order made
in execution of a money decree. As regards amendment of Rule 3 of
Order XLI by insertion of sub-rule (1A), it was mentioned that the
provision was meant to provide that where the appellant fails to make
the deposit of the decretal amount or to furnish security specified in
sub-rule (3) of Rule 1, the memorandum of appeal shall be rejected.

48. After the Bill was introduced in Lok Sabha on April 8, 1974, the motion
for reference of the Bill to a Joint Committee of the Houses was moved
in Lok Sabha on May 2, 1974, and it was adopted. The Rajya Sabha
concurred in the said motion on May 14, 1974. The Joint Committee
constituted accordingly submitted its Report to Lok Sabha on April 1,
1976. The Report is found published at pages 804/3 to 804/34 in
the Gazette of India, Extraordinary , Part-II, Section 2 dated April 1,
1976. At page 804/21, the Joint Committee offered its observations in
paragraph 65 of the Report with regard to Clause 87 (Original clause
Page 19 of 73

90) of the Bill. The relevant portion from paragraph 65 of the Report of
the Joint Committee is extracted hereinbelow:
“65. Clause 87 (Original clause 90),—

(i) The Committee note that under the proposed
new sub-rule (1A) of Rule 3 in Order 41, if the
appellant fails either to deposit the amount
disputed in the appeal or to furnish security for
such amount, the memorandum of appeal shall be
rejected. The Committee feel that such a provision
will deprive a judgment-debtor having a good
case, to pursue the appeal on account of his
inability to deposit the disputed amount or to
furnish security for such amount.”

49. The Committee is, therefore, of the opinion that in order to see that
justice is done to both the parties, the proposed sub-rule might be
amended in such a way that neither the judgment-debtor is deprived
of his right to pursue the appeal nor the decree-holder is deprived of
the remedy. Proposed sub-rule (1A) has been amended to provide that
stay of execution of the decree will not be granted unless the deposit is
made or security is furnished and has been transposed as sub-rule (5)
of Rule 5.

50. Be it stated that the Committee made no specific recommendation in
regard to sub-rule (3) of Rule 1 of Order XLI proposed to be inserted by
original Clause 90 of the Bill. In other words, the Committee
recommended no change in the form or content of sub-rule (3) which
was proposed to be inserted by way of amendment in Rule 1 of Order
XLI. However, the Bill reported by the Committee incorporated a
material change in the said sub-rule which will be presently noticed.

51. The Code of Civil Procedure (Amendment) Bill, 1974 (Bill No. 27B of
1974) as reported by the Joint Committee is found published in
the Gazette of India, Extraordinary , Part-II, Section 2, dated April 1,
Page 20 of 73

1976 at pages 804/35 to 804. At page 804/111, Clause 87 finds place
and the relevant portions of the said clause are reproduced
hereinbelow:
“87. In the First Schedule, in Order 41,—
(i) Rule 1,—
xxx
(b) after sub-rule (2), the following sub-rules shall
be inserted, namely:
“(3) Where the appeal is against a decree for
payment of money, the appellant shall, within
such time as the Appellate Court may allow,
deposit the amount disputed in the appeal or
furnish such security in respect thereof as the
Court may think fit.”

(ii)
xxx

(iii) in rule 5,—

(a)
xxx
(b)
xxx

“(5) 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, the Court shall not make
an order staying the execution of the decree.”
(Emphasis supplied)

52. The Bill having been considered and passed by both the Houses of
Parliament was enacted into the Code of Civil Procedure (Amendment)
Act, 1976 (No. 104 of 1976). The Act received the assent of the President
of India on September 9, 1976, and it was published in the Gazette of
India, Extraordinary , Part-II, Section-1, dated September 10, 1976. The
material amendments, namely, the insertion of sub-rule (3) in Rule 1
and sub-rule (5) in Rule 5 of Order XLI were duly enacted and stood
inserted in the CPC by Section 87 of the Amendment Act, which is to
Page 21 of 73

be found at page 1337 of the Gazette, and they came into force on and
with effect from February 1, 1977.

53. The substance of the legislative history set out hereinabove is that
Clause 90 of Bill No. 27 of 1974 stood materially altered as per clause
87 of Bill No. 27B of 1974, as reported by the Joint Committee, in the
following respects:
“(1) In sub-rule (3) of Rule 1 of Order 41, the
provision relating to the requirement of the
appellant depositing the amount disputed in the
appeal or furnishing such security in respect
thereof as the Court may think fit in cases where
the appeal is against an order made in execution
of a decree for payment of money was substituted
by the provision requiring such deposit being
made or security being furnished where the
appeal is against a decree for payment of money.

(2) Sub-rule (1A) of rule 3 of Order XLI requiring
the Court to reject the memorandum of appeal
where the appellant fails to make the deposit or
furnish security specified in sub-rule (3) of Rule 1
of Order 41, was deleted.

(3) Sub-rule (5) was added in Rule 5 of Order 41
providing that where the appellant fails to make
the deposit or to furnish the security, the Court
shall not make an order staying the execution of
the decree.”
(Emphasis supplied)

54. These changes are also found reflected in the Code of Civil Procedure
(Amendment) Act, 1978, and they now find place in the parent Act,
namely, the CPC.
ii. Principles required to be followed while Interpreting a
Provision of a Statute
55. As the entire debate revolves around the interpretation of the provisions
of Order XLI Rule 5(1) and Rule 5(3) of the CPC respectively, we must
Page 22 of 73

discuss the well settled principles required to be followed while
interpreting a provision of a statute.

56. The well-settled principles required to be followed by a court while
interpreting a provision of a statute is that the intention of the
legislature is primarily to be gathered from the language used, and
consequently, a construction which results in rejection of words as
meaningless, has to be avoided. It is not a sound principle of
construction to brush aside words or phrase in a statute as being
inapposite surplusage if they can have appropriate application in
circumstances conceivably within the contemplation of the statute. In
interpretation of statutes, the courts always presume that the
legislature inserted every part thereof for a purpose and the legislative
intention is that every part of the statute should have effect. The
legislature is deemed not to waste its words, or to say anything in vain.
[ See : Mithilesh Singh v. Union of India , reported in (2003) 3 SCC
309 ].

57. Similarly, in the case of Padma Sundara Rao v. State of Tamil
Nadu , reported in (2002) 3 SCC 533 , it was held that two principles of
construction – one relating to casus omissus , and the other in regard
to reading the statute as a whole appear to be well-settled. Under the
first principle, the rule of casus omissus cannot be supplied by the
court except in the case of clear necessity. The rule of casus
omissus should not be readily inferred and for that purpose, all the
parts of a statute or section must be construed together and every
clause of a section should be construed with reference to the context of
the statute and other clauses thereof, so that the construction to be
put on a particular provision makes a consistent enactment of the
whole statute. This would be more so, if literal construction of a
Page 23 of 73

particular clause leads to manifestly absurd or anomalous results,
which could not have been intended by the legislature. Therefore, if the
language is plain, there is no necessity of taking aid of external aid for
gathering the real intention of the legislature.
58. Over and above, we should bear in mind the following well-known rule
of interpretation of the statute reiterated by this Court in the case
of Union of India v . Deoki Nandan Agarwal , reported in 1992 Supp
(1) SCC 323 :
“It is not the duty of the Court either to enlarge the
scope of the legislation or the intention of the
Legislature when the language of the provision is
plain and unambiguous. The Court cannot
rewrite, recast or reframe the legislation for the
very good reason that it has no power to legislate.
The power to legislate has not been conferred on
the Courts. The Court cannot add words to a
statute or read words into it which are not there.
Assuming there is a defect or an omission in the
words used by the Legislature the Court could not
go to its aid to correct or make up the deficiency.
Courts shall decide what the law is and not what
it should be. The Court of course adopts a
construction which will carry out the obvious
intention of the Legislature but could not legislate
itself. But to invoke judicial activism to set at
naught legislative judgment is subversive of the
Constitutional harmony and comity of
instrumentalities.”
(Emphasis supplied)

Page 24 of 73

60. The aforesaid view has been expressed by this Court in the case of
Kayamuddin Shamsuddin Khan v . State Bank of India , reported
in (1998) 8 SCC 676 , wherein it has been held as follows:-
“6. The learned counsel for the respondent has
invited our attention to Sub ‐ rule (3) of Rule 1 of
Order XLI in the CPC, as amended in the State of
Maharashtra, which reads as under:
“(3) Where the appeal is against a decree for
payment of money, the appellant shall, within
such time as the Appellate Court may allow,
deposit the amount disputed in the appeal or
furnish such security in respect thereof as the
Court may think fit:
Provided that the Court may dispense with the
deposit or security where it deems fit to do so
for sufficient cause.”
7. The submission of the learned counsel for the
respondent is that the High Court was right in
giving the direction regarding the deposit of Rs
75,000 as per the aforesaid provision and since
the appellant has failed to comply with the same
the appeal has been rightly directed to be
dismissed. We, however, find that the only
consequence for non ‐ compliance with the
direction given under Sub ‐ rule (3) of Rule 1 of
Order XLI is as provided in Sub ‐ rule (5) of Rule 5
of Order XLI which reads as under:
“(5) 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, the Court
shall not make an order staying the execution
of the decree.”

61. It may be apposite to observe that this Court in the aforesaid decision
was dealing with the interpretation of Order XLI Rule 1(3) of the CPC,
Page 25 of 73

as amended in the State of Maharashtra, where the appellate Court
has power to dispense with making deposit or security in fit and proper
cases.

62. In Malwa Strips ( supra ) this Court interpreted Order XLI Rule 1(3) of
the Code as provided in the Central legislation, i.e., the CPC, and held
that the said provision although couched with the expression “shall”
yet must be read as directory and not mandatory. It quoted with
approval the ratio laid down in Kayamuddin ( supra ).

63. In view of the law declared by this Court in Kayamuddin ( supra ) and
Malwa Strips ( supra ), there is no escape from the conclusion that the
obligation under Order XLI Rule 1(3) is not mandatory but directory in
nature, and failure to comply with the same shall not result in rejection
of the appeal, but would disentitle the appellant the benefit of stay of
execution of the money decree.

64. The provisions of Order XLI Rule 5 of the CPC govern the question of
grant or refusal of stay of execution of the decree by the appellate
court. A mere reading of the provision makes it clear that it does not
make any distinction between a money decree and other decrees. The
powers of the Appellate Court to order stay of execution of the decree
are not fettered in any way if there is “sufficient cause” for passing
such an order. Even with regard to money decrees, the discretion of
the court is circumscribed by the same limitations imposed under
the provisions of Order XLI Rule 5. There is no reason why decrees
for payment of money should receive a consideration different from
the other decrees in the matter of stay pending appeals. In suitable
cases, where the court is satisfied that substantial loss may result to
the applicant, if no stay is granted or there are any exceptional
Page 26 of 73

circumstances, the court may grant stay as prayed for either with or
without any condition whatsoever. Otherwise, in the absence of any
exceptional circumstance, money decree ordinarily would not be
stayed unconditionally from its execution by the appellate court
pending the final disposal of appeal on its own merits.

65. Mere filing of an appeal would not operate as stay of execution of
decree, but the Appellate Court may, for “sufficient cause”, order stay
of execution of decree. The other relevant part of the rule is contained
in sub-rule (3) of Rule 5 of Order XLI. As per the provisions of sub-
rule (3) of Rule 5 of Order XLI, the Court has to see;
(1) whether there will be substantial loss to the party applying for
stay;
(2) whether the application has been made without unreasonable
delay; and
(3) whether security has been given by the applicant for due
performance of the decree.


66. Thus, the provisions of the Rule are very clear and they do not make
any distinction between money decrees and other types of decrees.

67. This Court in Sihor Nagar Palika ( supra ), observed the following as
regards the power of the Appellate Court to stay the decree in first
appeal:-
“Order 41 Rule 1(3) CPC provides that in an
appeal against a decree for payment of amount
the appellant shall, within the time permitted by
the appellate court, deposit the amount disputed
in the appeal or furnish such security in respect
thereof as the court may think fit. Under Order 41
Rule 5(5), a deposit or security, as abovesaid, is
a condition precedent for an order by the
appellate court staying the execution of the
Page 27 of 73

decree. A bare reading of the two provisions
referred to hereinabove, shows a discretion
having been conferred on the appellate court to
direct either deposit of the amount disputed in the
appeal or to permit such security in respect
thereof being furnished as the appellate court
may think fit. Needless to say that the discretion
is to be exercised judicially and not arbitrarily
depending on the facts and circumstances of a
given case. Ordinarily, execution of a money
decree is not stayed inasmuch as satisfaction of
money decree does not amount to irreparable
injury and in the event of the appeal being
allowed, the remedy of restitution is always
available to the successful party. Still the power
is there, of course a discretionary power, and is
meant to be exercised in appropriate cases.”
(Emphasis supplied)


68. In Atma Ram Properties (P) Ltd. v . Federal Motors (P) Ltd. ,
reported in (2005) 1 SCC 705 , this Court while deciding a litigation
arising from the Delhi Rent Control Act, 1958 observed as under:-
“6. The order of eviction passed by the Rent
Controller is appealable to the Rent Control
Tribunal under Section 38 of the Act. There is no
specific provision in the Act conferring power on
the Tribunal to grant stay on the execution of the
order of eviction passed by the Controller, but
sub-section (3) of Section 38 confers the Tribunal
with all the powers vested in a court under the
Code of Civil Procedure, 1908 while hearing an
appeal. The provision empowers the Tribunal to
pass an order of stay by reference to Rule 5 of
Order 41 of the Code of Civil Procedure, 1908
(hereinafter “the Code” for short). This position
was not disputed by the learned Senior Counsel
appearing for either of the parties.
xxx
8. It is well settled that mere preferring of an
appeal does not operate as stay on the decree or
order appealed against nor on the proceedings in
the court below. A prayer for the grant of stay of
proceedings or on the execution of decree or order
appealed against has to be specifically made to
Page 28 of 73

the appellate court and the appellate court has
discretion to grant an order of stay or to refuse the
same. The only guiding factor, indicated in Rule 5
aforesaid, is the existence of sufficient cause in
favour of the appellant on the availability of which
the appellate court would be inclined to pass an
order of stay. Experience shows that the principal
consideration which prevails with the appellate
court is that in spite of the appeal having been
entertained for hearing by the appellate court, the
appellant may not be deprived of the fruits of his
success in the event of the appeal being allowed.
This consideration is pitted and weighed against
the other paramount consideration: why should a
party having succeeded from the court below be
deprived of the fruits of the decree or order in his
hands merely because the defeated party has
chosen to invoke the jurisdiction of a superior
forum. Still the question which the court dealing
with a prayer for the grant of stay asks itself is:
why the status quo prevailing on the date of the
decree and/or the date of making of the
application for stay be not allowed to continue by
granting stay, and not the question why the stay
should be granted.
9. […]In our opinion, while granting an order of
stay under Order 41 Rule 5 CPC, the appellate
court does have jurisdiction to put the party
seeking stay order on such terms as would
reasonably compensate the party successful at
the end of the appeal insofar as those
proceedings are concerned. Thus, for example,
though a decree for payment of money is not
ordinarily stayed by the appellate court, yet, if it
exercises its jurisdiction to grant stay in an
exceptional case it may direct the appellant to
make payment of the decretal amount with
interest as a condition precedent to the grant of
stay, though the decree under appeal does not
make provision for payment of interest by the
judgment-debtor to the decree-holder. Robust
common sense, common knowledge of human
affairs and events gained by judicial experience
and judicially noticeable facts, over and above
the material available on record — all these
Page 29 of 73

provide useful inputs as relevant facts for
exercise of discretion while passing an order and
formulating the terms to put the parties on. […]”
(Emphasis supplied)


69. In Malwa Strips ( supra ), this Court after looking into the decision
in Sihor Nagar Palika ( supra ) observed as under :-
“9. In terms of sub-rule (5) of Rule 5 of Order 41,
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 41 Rule 1(3)
of the Code, the same is not mandatory in
character, and, thus, may be read as directory.
10. In Rajasthan SEB v. Ram Deo [AIR 1999 Raj
264] after noticing some of the aforementioned
decisions as also the legislative history of the said
provision, a learned Single Judge of the
Rajasthan High Court held as under: (AIR pp.
267-68, para 19)
“19. After close scrutiny of the aforesaid
observations, I am of the opinion that in view
of the provisions of sub-rule (5) of Rule 5 of
Order 41 CPC it cannot be held that appeal
against the decree for payment of money is not
maintainable, if filed without making
compliance with the provisions contained in
sub-rule (3) of Rule 1 of Order 41 CPC and it is
the duty of the Registry to see that on
application under Order 41 Rule 5 CPC seeking
stay of money decree the appellant has to
incorporate a note in regard to his readiness
and willingness to comply with the directions
under sub-rule (3) of Rule 1 of Order 41 CPC. If
the appeal is preferred against the decree for
payment of money without any stay
application under Order 41 Rule 5 CPC then in
that event, it is the duty of the appellant to
incorporate a note in the memo of appeal in
respect of his readiness and willingness to
Page 30 of 73

comply with the directions issued by the court
under sub-rule (3) of Rule 1 of Order 41 CPC.”
11. We may, however, notice that although the
provisions of sub-rule (3) of Rule 1 of Order 41
have been held not to be mandatory, this Court in
Kayamuddin Shamsuddin Khan v. SBI [(1998) 8
SCC 676] opined that non-compliance with a
direction to deposit the decretal amount or part of
it or furnish security therefor would result in the
dismissal of the stay application but not the entire
appeal, stating: (SCC p. 677, para 8)
“8. This would mean that non-compliance with
the direction given regarding deposit under
sub-rule (3) of Rule 1 of Order 41 would result
in the Court refusing to stay the execution of
the decree. In other words, the application for
stay of the execution of the decree could be
dismissed for such non-compliance but the
Court could not give a direction for the
dismissal of the appeal itself for such non-
compliance.”
To the same effect is the decision of this Court
in Sihor Nagar Palika Bureau v. Bhabhlubhai
Virabhai & Co. [(2005) 4 SCC 1], wherein it
was held: (SCC pp. 2-3, para 6)
“6. Order 41 Rule 1(3) CPC provides that in an
appeal against a decree for payment of
amount the appellant shall, within the time
permitted by the appellate court, deposit the
amount disputed in the appeal or furnish such
security in respect thereof as the court may
think fit. Under Order 41 Rule 5(5), a deposit or
security, as abovesaid, is a condition
precedent for an order by the appellate court
staying the execution of the decree. A bare
reading of the two provisions referred to
hereinabove, shows a discretion having been
conferred on the appellate court to direct either
deposit of the amount disputed in the appeal
or to permit such security in respect thereof
being furnished as the appellate court may
think fit. Needless to say that the discretion is
to be exercised judicially and not arbitrarily
depending on the facts and circumstances of a
given case. Ordinarily, execution of a money
Page 31 of 73

decree is not stayed inasmuch as satisfaction
of money decree does not amount to
irreparable injury and in the event of the
appeal being allowed, the remedy of restitution
is always available to the successful party.
Still the power is there, of course a
discretionary power, and is meant to be
exercised in appropriate cases.”

To the same effect is the decision of this Court
in B.P. Agarwal v. Dhanalakshmi Bank Ltd.
[(2008) 3 SCC 397]
12. The High Court in this case failed to notice the
provisions of sub-rule (3) of Rule 1 of Order 41.
The appellate court, indisputably, has the
discretion to direct deposit of such amount, as it
may think fit, although the decretal amount has
not been deposited in its entirety by the judgment-
debtor at the time of filing of the appeal. But 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 should be cogent and adequate.
13. The High Court, with respect, failed to notice
that suit was one under Order 37 of the Code.
Whether it was maintainable or not may fall for
consideration in the appeal. Even assuming that
the same was not 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
respondent under Order 12 Rule 6 of the Code.
We, therefore, see no justification at all as to why
an order of stay of the nature was passed by the
High Court.
14. Even if 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
Page 32 of 73

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 decretal 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 its
entirety.”
(Emphasis supplied)


70. Thus, in Malwa Strips ( supra ), this Court unequivocally observed
that although the word “shall” has been used in Order XLI Rule 5
CPC, yet the same is not mandatory in character. The Court further
observed that the purpose for which such a provision has been
inserted, should be taken into consideration. An exceptional case
has to be made out for unconditional stay of execution of a money
decree. Thus, it is necessary to imply that if an exceptional case is
made out, the Appellate court has the discretion to stay the
execution of the money decree without imposing any condition.
iii. Decisions of various High Courts on the Subject
71. We may now look into few old decisions of various High Courts on
the subject. In the case of A.A. Khan v . Ameer Khan, reported in
1949 SCC OnLine Kar 11 , the High Court of Mysore has observed
as follows (headnote):-
“The court can stay execution of money decrees
pending appeal on such security as it deems fit in
proper cases in which sufficient cause for a stay
has been made out, without requiring in all cases
that the decree amount should be deposited in
court.”
(Emphasis supplied)

Page 33 of 73


72. Similarly, the Division Bench of the Saurashtra High Court in the
case of Borough Municipality v . Firm Ramji Vashram , reported
in AIR 1955 Guj 113 , has in terms held that the judgment of the
Bombay High Court in the case of Dhunjibhoy Cowasji Umrigar v .
Lisboa , reported in ILR 1889 13 Bom 252 , cannot serve as a useful
guide for cases under Order XLI Rule 5 of the CPC. It is further
observed therein that when the Bombay High Court decided the case
of Dhunjibhoy ( supra ), the provisions of the Civil Procedure Code,
1882, were applicable and therein, there was no provision similar to
that of Order XLI Rule 5 of the CPC. The relevant observations read
thus:-
“6. We are not concerned with sub-rule (4) which
deals with ex parte orders for stay of execution
pending the hearing of the application. The power
of the Court to stay execution of a decree has to
be exercised within the four corners of the above
Rule. The intention of the Legislature which
appears from the language of this rule seems to
be that an appeal should not automatically
operate as a stay of execution of the decree and
no order for stay of execution should be made
merely by reason only that an appeal has been
preferred from the decree.
7. The reason of the rule appears to be that the
rights of the decree-holder having been
determined by a competent Court, it is not fair
that he should be deprived of the fruits of his
decree merely because the judgment-debtor
prefers an appeal against the decree. At the same
time if execution of the decree is likely to result in
substantial loss to the decree-holder, discretion is
given to the Court to stay execution provided the
other two conditions of sub-r. (3) are satisfied. It
is, therefore, impossible to formulate any uniform
rule of practice and each case must be decided on
its own facts.
8. In the case of money decrees, a Bench of the
Bombay High Court decided in Dhunjibhoy
Cowasji Umrigar v. Lisboa, 13 Bom 241 (A) that
where a decree orders payment of money and an
Page 34 of 73

appeal is lodged against that decree by the party
directed to pay, then on his application execution
of the decree should be stayed, so far as it directs
payment, on the judgment-debtor lodging the
amount in Court, unless the other party gives
security for the repayment of money in the event
of the decree being reversed.
9. If such security is given by the successful
party, then stay of execution should not be
granted. This order was made in 1888 under the
Code of Civil Procedure of 1882. That Code did
not have any provision similar to O. 41 R. 5 of the
CPC and the order must be taken to have been
passed in the exercise of the inherent power of the
Court.
10. But after the enactment of O. 41 R. 5 in the
Code of 1908 the discretion of the Court is very
much limited and has to be exercised within the
limits prescribed by the rule, and in a proper case
where substantial loss is likely to result to the
judgment-debtor if a decree for payment of money
is executed, the Court can stay execution of the
decree even before the judgment-debtor deposits
the amount in Court. The above decision therefore
cannot serve as an useful guide for the cases
under O. 41 R. 5.”
(Emphasis supplied)

73. In the case, Movie Enterprises v . M.S. Periasamy Mudaliar ,
reported in 1952 SCC OnLine Kar 14 , the High Court of Mysore has
observed as under (headnote):
“Order 41, rule 5, cannot be read as imposing any
limitation that the decrees for payment of money
should receive a consideration different from the
other decrees in the matter of stay pending
appeal. Therefore, there could be no restriction on
the discretion of the court for staying a decree for
payment of money in suitable cases where the
court is satisfied that substantial loss will result
to the applicant if no stay is made. In this view, it
cannot be contended that a decree directing
payment of money should not be stayed unless
the decree amount is lodged into court.”
(Emphasis supplied)
Page 35 of 73


74. In Borough Municipality ( supra) , the Saurashtra High Court
referred to the Bombay High Court decision in the case of
Dhunjibhoy ( supra ). We must look into this decision of Dhunjibhoy
( supra ).

75. In the case of Dhunjibhoy ( supra ), the Bombay High Court had
observed that no stay of execution of money decree should be granted
without asking the judgment debtor to deposit the decretal amount.
In Dhunjibhoy ( supra ) the Bombay High Court held that:
“A party appealing against a decree, which
directs him to pay money, may obtain stay of
execution of-decree, so far as it directs payment,
on his lodging the amount in court, unless the
other party gives security for the repayment of the
money in the event of the decree being reversed.
If such security be given by the successful party,
then stay of execution should not be granted.”

76. The case of Dhunjibhoy ( supra ) was decided by the Bombay High
Court on August 31, 1888, under the provisions of the Civil
Procedure Code, 1882. In that Code, there was no provision similar
to Order 41 Rule 5 of the CPC. Therefore, the order must be taken
to have been passed by the court in exercise of its inherent powers.
On the other hand, the facts and circumstances of the present case
are governed by the provisions of the CPC, wherein there is an
express provision regarding grant or refusal of stay of execution of
decree. Hence, it is not permissible to the court to have recourse to
the inherent powers of the court. This distinction makes a world of
difference between the two situations.

77. It may also be noted that in Dhunjibhoy ( supra ), the suit was for
injunction restraining the defendant from erecting a building which
Page 36 of 73

will interfere with the free access of light and air through certain
windows in the plaintiff's house. The plaintiff had obtained a decree
in respect of the windows and had also obtained a decree for
compensation by way of damages for the injury done to the
windows. The decree also directed the defendant to pay the
plaintiff's costs of the suit. The defendant had filed an appeal and
a question arose regarding the execution of the decree so far as it
related to costs. It is in this context, i.e., where the prayer was for
recovery of the amount of costs awarded by the trial court, the
aforesaid observations were made by the Bombay High Court.

78. Thus, it cannot be said as a principle of universal rule that in all
cases of money decree, the defendant should be directed to deposit
the amount in court and then only the question of stay be
considered.

79. The decisions of the High Court of Mysore in A.A. Khan ( supra ) and
Movie Enterprises ( supra ) have been followed by the Rajasthan
High Court in the case of Bansidhar v . Pribhu Dayal , reported in
1952 SCC OnLine Raj .

80. Then the question is: Is there an established practice that the
execution of money decree should not be stayed unless the
judgment debtor deposits the decretal amount in court, and on
such deposit, the successful party be permitted to withdraw the
money on furnishing security to the satisfaction of the court. We do
observe that in a large number of cases where a money decree is
passed, this Court generally does not grant stay unless the
defendant deposits the amount in court. But this appears to be a
rule of prudence and not a principle of law of universal application.
Page 37 of 73

We also believe and hold that this practice based on the rule of
prudence should ordinarily be followed by appellate courts. The
practice of not granting stay in money decrees except on condition
that the decretal amount be deposited in the court, and the
successful party be permitted to withdraw the same on furnishing
security to the satisfaction of the trial court appears to have been
well entrenched, and for good reasons. [ See : Central Bank of India
v. State of Gujarat , reported in (1987) 4 SCC 407 ]

81. Hence, the term “sufficient cause” occurring in Order XLI Rule 5 of
the CPC has got to be interpreted and understood in the light of the
aforesaid discussion. After all, what is “sufficient”? One may again
turn to Black’s Law Dictionary. “Sufficient” means “adequate-
enough” as much as may be necessary-equal or fit for end
proposed-and that which may be necessary to accomplish an
object.
iv. Meaning and Import of “sufficient cause” under Order XLI
Rule 5 of the CPC
82. Having regard to the case law discussed above and for reasons to be
recorded, we are inclined or rather persuaded to take the view that the
benefit of stay of execution of a money decree may be granted by the
Appellate Court unconditionally, if it:
i. is egregiously perverse;
ii. is riddled with patent illegalities;
iii. is facially untenable; and/or
iv. such other exceptional causes similar in nature.

83. The aforesaid factors would bring the case within the purview of
“exceptional case” for the purpose of granting benefit of unconditional
stay of the execution of money decree.
Page 38 of 73


84. We are at one with the submission canvassed on behalf of the
defendant that in contradistinction to Order XLI, the word “deposit”
does not figure in Rule 1(3), Rule 5(5) and Rule 5(3) respectively.

85. Under Rule 5(3) sub-clause (c) – security has to be furnished for “due
performance” of the decree. We find it difficult to read any mandate for
direction to deposit the decretal amount.

86. As noted above, the provision under Order XLI Rule 5(3) of the CPC
provides for satisfaction regarding sufficient cause as a pre-condition
for granting benefit of stay of execution of decree. It casts an obligation
upon the court to record its satisfaction for stay of execution such
decree. Therefore, security can be in the shape of property, bond, or by
undertaking from the appellant to abide by the decree, seeking stay of
execution.

87. However, there is no provision under Order XLI Rule 5 of the CPC
imposing a mandate to deposit cash security as the only mode of
security for execution of the decree.
v. Service of Summons and Irregularity in the Service of
Summons
88. At this stage, we must deal with one submission canvassed on behalf
of the petitioners that in view of the second Proviso to Order IX Rule 13
of the CPC, the defendant could be said to have had the requisite
“knowledge” of the date of hearing and sufficient time to appear. It was
sought to be argued vehemently that the delivery of suit papers and the
order granting ex parte injunction dated 12.10.2020 could be said to
be valid service of summons. In this regard, strong reliance was sought
to be placed on the decision of this Court in the case of Sunil Poddar
Page 39 of 73

( supra ) and the Delhi High Court judgment in the case of LT Foods
( supra ) respectively referred to above.

89. We do not find any merit in the aforesaid submission, for the simple
reason that the second Proviso to Order IX Rule 13 of the CPC would
come into play only when there is “irregularity” in the service of
summons (for instance, the publication in wrong newspaper, no
acknowledgment on duplicate summons being received etc).

90. This has been well explained by this Court in its decision in Basant
Singh v . Roman Catholic Mission , reported in (2002) 7 SCC 531 . In
the case in hand, the High Court has noted that there was
prima facie
nothing on record to establish valid service of “summons”. If that be so,
the second Proviso would not come into play. This proposition is again
well explained by this Court in its decision Sushil Kumar Sabharwal
v . Gurpreet Singh & Ors. , reported in (2002) 5 SCC 377 .

91. In the aforesaid context, the reliance placed on behalf the petitioners,
on the decision in Sunil Poddar ( supra ) is of no avail. The undisputed
facts in the said case were that the parties had already filed their
pleadings before the civil court much prior to the case being transferred
to the DRT. The parties were also aware of the transfer of the suit to
the DRT. Despite such knowledge the party concerned consciously
avoided service of summons in those proceedings. The decision in
Sunil Poddar ( supra ) is distinguishable on the facts.

92. In the case on hand, the Division Bench in its impugned judgment has
prima facie noted that there was nothing to indicate whether:
(a) the plaintiffs had actually served all the documents with their
notices under Order XXXIX Rule 3 and;
Page 40 of 73

(b) the defendant was actually made aware with sufficient time of
the claim as regards the next date of hearing in the proceedings.

93. In the same manner the decision of the Delhi High Court in LT Food
( supra ) is also of no avail as the same is distinguishable on the facts.

94. We now proceed to deal with the submission canvassed by Mr. Gaurav
Pachnanda, the learned Senior Counsel in rejoinder as noted by us in
paras 35 and 36 respectively of our judgment.
vi. Reading of Section 36 of the Arbitration Act and Order
XLI Rule 3 and Rule 5 respectively of the CPC
95. At this stage, we need to clarify something important. At the outset, we
must state that this litigation has nothing to do with Section 36 of the
Arbitration Act. In the present litigation, we are only concerned with
Order XLI Rule 3 and 5 respectively, of the CPC. We are referring to
Section 36 of the Arbitration Act only for the limited purpose of
answering the specific contention raised by Mr. Gaurav Pachnanda. In
other words, whether the learned counsel is right in extending the
analogy of Section 36 of the Arbitration Act to the present case or rather
to the provisions of Order XLI Rule 3 and 5 of the CPC, is inappropriate.
For this limited purpose only, we have thought fit to look into the two
decisions of this Court one in the case of Sepco Electric Power
Construction v . Power Mech Projects Limited , reported in 2022 SCC
OnLine SC 1243 , and the other, in the case of Pam Developments
Private Limited v. State of West Bengal , reported in (2019) 8 SCC
112 .

96. Section 36 reads thus:
“36. Enforcement.—(1) Where the time for making
an application to set aside the arbitral award
Page 41 of 73

under section 34 has expired, then, subject to the
provisions of sub-section (2), such award shall be
enforced in accordance with the provisions of the
Code of Civil Procedure, 1908 (5 of 1908), in the
same manner as if it were a decree of the court.

(2) Where an application to set aside the arbitral
award has been filed in the Court under section
34, the filing of such an application shall not by
itself render that award unenforceable, unless
the Court grants an order of stay of the operation
of the said arbitral award in accordance with the
provisions of sub-section (3), on a separate
application made for that purpose.
(3) Upon filing of an application under sub-section
(2) for stay of the operation of the arbitral award,
the Court may, subject to such conditions as it
may deem fit, grant stay of the operation of such
award for reasons to be recorded in writing:
Provided that the Court shall, while
considering the application for grant of stay in
the case of an arbitral award for payment of
money, have due regard to the provisions for
grant of stay of a money decree under the
provisions of the Code of Civil Procedure, 1908
(5 of 1908).]
Provided further that where the Court is
satisfied that a Prima facie case is made out
that,—
(a) the arbitration agreement or contract
which is the basis of the award; or
(b) the making of the award,
was induced or effected by fraud or corruption,
it shall stay the award unconditionally
pending disposal of the challenge under
section 34 to the award.
Explanation.—For the removal of doubts, it is
hereby clarified that the above proviso shall apply
to all court cases arising out of or in relation to
arbitral proceedings, irrespective of whether the
arbitral or court proceedings were commenced
prior to or after the commencement of the
Arbitration and Conciliation (Amendment) Act,
2015 (3 of 2016)”
(Emphasis supplied)
Page 42 of 73


97. Section 36 of the Arbitration Act was substituted vide the Arbitration
and Conciliation (Amendment) Act 2015 (for short, “ the Amendment
Act, 2015 ”). Prior to the 2015 Amendment, the mere filing of an
application challenging arbitral award under Section 34 of the
Arbitration Act was understood in many quarters as a stay of the award
in terms of the unamended Section 36 of the Arbitration Act.

98. This “automatic stay” became a subject matter of legal debate as being
a great obstacle to the ease of enforcement of arbitral awards. In such
circumstances, and with a view to address this lacuna, the Amendment
Act, 2015, was introduced in the Arbitration Act. Under the
Amendment Act, 2015, the existing provision in Section 36 was wholly
substituted. Sub-section (2) of the amended provision provided that the
filing of an application to set aside the arbitral award did not by itself
render the award unenforceable unless an order was passed by
“granting a stay on the operation of the award pursuant to a separate
application filed to that effect”. Therefore, Section 36(2) of the
Arbitration Act contemplated a separate application seeking stay.

99. In Hindustan Construction Company & Anr. v . Union of India &
Ors. , reported in (2020) 17 SCC 324 , this Court held that there would
be no automatic stay on the enforcement of an arbitral award under
Section 36 of the Arbitration Act due to the mere fact that an
application to set aside the award under Section 34 had been field
before a court. In the said case, the constitutional validity of Section
87 of the Arbitration Act as inserted by Section 13 of the Arbitration
and Conciliation (Amendment) Act, 2019 (for short, “the Amendment
Act, 2019” ) was challenged along with repeal of Section 26 of the
Amendment Act, 2015 by Section 15 of the Amendment Act, 2019. This
Court in the final analysis held as under:
Page 43 of 73


i. The language of Section 36 of the Arbitration Act does not warrant
an automatic stay on the enforcement of an arbitral award due to
the mere filing of a Section 34 petition.
ii. The legislature, by inserting Section 87 and deleting Section 26
through the Amendment Act, 2019, had subverted the purpose of
the Arbitration Act, 1996 and the Amendment Act, 2015, and was
contrary to public interest because it sought to revive the pre-2015
Amendment automatic stay regime that was a major cause of
delay to the disposal of arbitral proceedings, and thus, the Court
declared Section 13 and 15 of the Amendment Act, 2019 as
manifestly arbitrary and unconstitutional as being violative of
Article 14 of the Constitution.
iii. The ratio in the BCCI v . Kochi Cricket Pvt. Ltd. , reported in
(2018) 6 SCC 287 , was the position of law, prevailing at that time
and would be used to interpret the applicability of the Amendment
Act, 2015, to the arbitral proceedings and proceedings in relation
to them.

100.Section 36(3) of the Arbitration Act provides that upon such an
application being filed, the court may grant a stay “subject to such
conditions as it may deem fit” for reasons to be recorded in writing. In
terms of Section 36(3) of the Arbitration Act, the Court is conferred with
the discretionary power to grant a stay of an arbitral award. Such
discretionary power flows from the usage of the words “may” for grant
of stay and the employment of the phrase “such conditions as it may
deem fit” for the conditions that may be imposed if a stay was granted.
Therefore, in terms of Section 36(3), the court retains its discretionary
power to grant a stay of an arbitral award.

Page 44 of 73

101. Further, the first Proviso to Section 36(3) provides that if the arbitral
award was for payment of money, the court shall have “due regard” to
the provisions for grant of stay of money decree under the CPC.

102. The aforesaid was, the legal position for a period of six years from 2016
to 2021. In 2021, Section 36 of the Arbitration Act was once again
amended with retrospective effect from 23.10.2015, vide the
Arbitration and Conciliation Amendment Act, 2021 (for short, “ the
2021 Amendment ”). The 2021 Amendment, inter alia , introduced a
second Proviso to Section 36(3) which provided that if a prima facie
case is made out that either the arbitration agreement/contract which
is the basis of the award, or the making of the award was induced or
effect by fraud or corruption, the Court “shall” stay the award
“unconditionally” pending the disposal of the challenge.

103. As is clear from a plain reading of the second Proviso referred to above,
it was provided that if, inter alia , the making of the award was induced
or effected by fraud or corruption then the court was mandated to stay
the award and such a stay was to be unconditional.

104. Mr. Gaurav Pachnanda, the learned Senior Counsel would argue that
the courts cannot grant the benefit of unconditional stay of an award
in cases other than those covered by the second Proviso to Section 36(3)
of the Arbitration Act. In the same manner, according to the learned
Senior Counsel, when it comes to staying a money decree
unconditionally, the judgment-debtor needs to make out more than a
prima facie case of fraud or corruption, or something analogous to the
same, and it is just not sufficient to point out our serious infirmities in
the judgment granting money decree.

Page 45 of 73

105. In the aforesaid context, we must look into the decision of this Court
in the Sepco Electric ( supra ). In the said decision, this Court was
dealing with an appeal against a judgment of the Delhi High Court
where the learned Single Judge had granted a stay of the arbitral award
subject to deposit of 100% of the award amount. This order was passed
in an application filed under Section 9 of the Arbitration Act which was
heard together with an application under Section 36(3) of the Act in a
connected petition. This decision was affirmed in appeal by this Court
which held that there were no grounds made out for interfering with
the judgment below.

106.This Court, while considering the contention of the appellant therein
observed that a court may grant an unconditional stay if it is
appropriate to do so. While so observing, this Court stated that
unconditional stays were covered by the second Proviso to Section
36(3). The relevant portions of the judgement are extracted below:
“The power under subsection (3) of Section 36 to
grant stay of an award is coupled with the duty
to impose conditions which could include the
condition of securing the award by deposit in
Court, of the amount of the Award. It may be true
as argued by Mr. Vishwanathan that the Court
may not impose condition for stay, if it deems
appropriate not to do so. The power of Court to
grant unconditional stay of an Award is not
unfettered. The power of unconditional stay is
subject to the condition in the second proviso that
is:
The Court is satisfied that a prima facie case (sic)
is made out that
(i) the arbitration agreement or contract which is
the basis of the award; or
(ii) the making of the award, was induced or
effected by fraud or corruption”
(Emphasis supplied)

Page 46 of 73

107.While this Court acknowledged that an unconditional stay could be
granted in appropriate cases, it quickly followed up saying that the
power to grant an unconditional stay is governed by the second Proviso
to Section 36(3). This may indicate that the Court acknowledged the
grant of an unconditional stay to the existence of the grounds
mentioned in the second Proviso. This would indicate that the benefit
of unconditional stay could be granted only in cases of fraud or
corruption.

108.Notwithstanding the above, this Court in order to fortify its conclusion
in the case, subsequently also noted that the appellant therein was not
able to show any cogent and glaring error that went to the root of the
award. This observation was repeated later where the Court stated that
no cogent ground had been made out even, prima facie , for interference
with the impugned award. The relevant observations are extracted
below:
“26. It is settled law that grounds for interference
with an award is restricted. Even before this
court, the Appellant has not been able to advert to
any cogent and glaring error which goes to the
root of the award. The contention of the award
being opposed to the public policy of India, is
devoid of any particulars whatsoever…
xxx xxx xxx
35. It is not in dispute that there is an award of
Rs. 142 Crores in favour of the Respondent. No
cogent ground has been made out even prima
facie, for interference with the impugned award.
xxx xxx xxx
37. We find no ground at all to interfere. The
Appeals are dismissed. ……”

Page 47 of 73

109.After arriving at such a finding, this Court proceeded to dismiss the
appeal. Therefore, the observations referred to above formed part of this
Court’s reasoning in arriving at its decision.

110.The aforesaid observations of this Court would suggest that the Court
thought it fit to consider the merits of the award at a prima facie level
in order to decide whether the conditional stay of the award was
justified or not. In the facts of the present case, the Court felt that it
was justified.

111.In light of the abovementioned observations, it is possible to
legitimately argue that if the second Proviso to Section 36(3) was the
sole source for granting an unconditional stay, there would have been
no occasion for the Court to examine whether any prima facie cogent
ground that went to the root of the award is forthcoming or not.
Therefore, by relying upon this Court’s observations, it could be
plausibly argued that in exceptional cases an unconditional stay can
be granted even in cases not arising under the second proviso to
Section 36(3). Such unconditional stay would instead be relatable to
the main part of Section 36(3).

112.The above reading of Sepco Electric ( supra ) would also be in tune with
the discretionary power of the court under the main part of Section
36(3) both with respect to the power to grant stay and the power to
impose conditions if a stay is granted. After all, it is not inconceivable
to contend that a power to impose conditions would also include the
power not to impose conditions.

113.Be that as it may, Sepco Electric ( supra ) does not clearly answer the
question whether an unconditional stay can be granted in cases not
Page 48 of 73

covered by the second Proviso to Section 36(3). This confusion remains
because while the Court states an unconditional stay can be granted
in cases covered by the second Proviso, it does not categorically exclude
the possibility of an unconditional stay in cases not covered by the
second proviso.

114.This Court in Pam Developments ( supra ) had occasion to consider the
nature of applicability of provisions of the CPC vis-à-vis the proceedings
under the Arbitration Act, and specifically, the interpretation of the
phrase “due regard” appearing in the first Proviso. The respondent
therein had preferred an application seeking an unconditional stay of
the arbitral award on the strength of Order XXVII Rule 8A, CPC which
inter alia exempted Government from furnishing a security while
seeking stay of a decree. Aggrieved by the application being allowed by
the Calcutta High Court, the appellant-award holder approached this
Court.

115.This Court allowed the appeal and directed deposit of the award
amount as a condition for continuing the stay. The Court reasoned that
the exemption from furnishing security under Order XXVII Rule 8A that
would otherwise be applicable to the ordinary civil proceedings could
not be strictly applied to the arbitration proceedings. Therefore, the
respondent-government could not have relied upon that provision to
avoid furnishing security for staying the award. The Court further held
that even if the exemption from furnishing security was made
applicable to the arbitration proceedings, such exemption would not
extend to making deposit of the award amounts. This was based on the
Court’s interpretation of the difference between Order XXVII Rule 8A
which was introduced in 1937 and exempted furnishing of ‘security’
and sub-rule (5) of Rule 5 of Order XLI that was introduced in 1976
Page 49 of 73

and which differentiated between ‘security’ and ‘deposit’. The Court
also referred to the implications of a provision introduced during the
colonial period and its continuance in the present constitutional set-
up.

116.This Court in Pam Developments ( supra ) held that the phrase “due
regard” would only mean that the provisions of CPC are to be taken
into consideration and not that they are mandatory. The relevant
observations are extracted below:
“20. In our view, in the present context, the
phrase used is “having regard to” the provisions
of CPC and not “in accordance with” the
provisions of CPC. In the latter case, it would have
been mandatory, but in the form as mentioned in
Rule 36(3) of the Arbitration Act, it would only be
directory or as a guiding factor. Mere reference to
CPC in the said Section 36 cannot be construed in
such manner that it takes away the power
conferred in the main statute (i.e. the Arbitration
Act) itself. It is to be taken as a general guideline,
which will not make the main provision of the
Arbitration Act inapplicable. The provisions of
CPC are to be followed as guidance, whereas the
provisions of the Arbitration Act are essentially to
be first applied. Since, the Arbitration Act is a self-
contained Act, the provisions of CPC will apply
only insofar as the same are not inconsistent with
the spirit and provisions of the Arbitration Act.”
(Emphasis supplied)

117.On the strength of the above reasoning, this Court held that the
exemption from furnishing security could not be applied to the
arbitration proceedings. The Court clarified that while courts must
have due regard to the CPC, they are not rigidly bound by its
provisions. The CPC serves as a guiding framework rather than a strict
mandate because the Arbitration Act being a self-contained Act is to be
first applied by the court.
Page 50 of 73


118.Although not explicitly stated by the Court as a reason for its decision,
yet this Court did note the consequence of accepting the contention
that Order XXVII Rule 8A was applicable. The result would be that
wherever the government was the judgment-debtor in the arbitration
proceedings, it would be entitled to an unconditional stay on the mere
filing of an application under Section 36(2).

119.While Pam Developments ( supra ) relied on the phrase “due regard”
appearing in the first Proviso to decline the rigid application of an
exemption from furnishing security provided under the CPC it could
also be argued that insisting on a conditional stay in all cases of a
money award would be a rigid application of Order XLI Rule 5. This is
because Rule 5 mandates the furnishing of security or deposit as a
condition for granting stay. Relying on Pam Developments ( supra ), it
could possibly be argued that “due regard” to the provisions of CPC,
especially Order XLI Rule 5, would not mean a mandatory grant of
conditional stay in all cases. This is because the provisions of the Act,
especially Section 36, would have to be first applied wherein a
discretionary power is vested in the court.

120. If the first Proviso has to be interpreted as done in Pam Developments
( supra ) and merits of the award have to be considered on a prima facie
level as done in Sepco Electric ( supra ), it is difficult to rule out the
existence of an unconditional stay in cases outside the second Proviso.
A closer analysis of the decision in Sepco Electric ( supra ) and this
Court’s interpretation of the first proviso in Pam Developments ( supra )
suggests that unconditional stays can be granted even in cases outside
the second Proviso.

Page 51 of 73

121.At this stage, we must look into one decision of the Bombay High Court
in the case of ITD Cementation India Ltd. v . Urmi Trenchless
Technology Pvt. Ltd. , reported in 2020 SCC OnLine Bom 10611 ,
wherein the High Court after referring to and relying upon Pam
Developers ( supra ) observed as under:
“11. The provision of Section 36(3) are clear, that
one must have regard to the provisions of the
Code of Civil Procedure 1908 (“ CPC ”) and
specifically the provisions of Order 41 Rule 5
while addressing the question of stay. The words
‘have due regard’ have received judicial
interpretation. Certainly there is no blanket
prohibition barring a Court from unconditionally
staying either a money award or a money decree.
The three-fold requirement of Order 41 Rule 5(3)
will have to be kept in mind. But, as the Supreme
Court held in Pam Developers Private
Limited v. State of West Bengal (2019) 8 SCC 112
the provisions of Order 41 Rule 5 are for
guidance. They do not indicate that a Section 36
Court lacks all discretion to grant an
unconditional stay. That said, it is equally well
settled that a strong and exceptional case must
be made for unconditional stay of a money decree
or a money award. The three matters to consider
under Order 41 Rule 5(3) are (a) whether the
Applicant will be put to a substantial loss if stay
is refused; (b) whether there is a delay in making
the application and (c) whether the Applicant has
furnish sufficient security to satisfy any ultimate
decree. There is a delay, though slight. I do not
see how the question of substantial loss arises.
The fact that it has suffered an Award is neither
here or there. The third requirement is that the
party applying for stay must show sufficient
security. There is no such attempt made.”
(Emphasis supplied)


122.In such circumstances referred to above, we find it difficult to subscribe
to the submission of Mr. Gaurav Pachnanda, that even for the purpose
of grant of benefit of unconditional stay of money decree under Order
Page 52 of 73

XLI Rule 5 of the CPC, the judgment-debtor has to make out more than
a prima facie case of fraud or corruption and not solely on the basis of
an extreme or egregious view on the merits of the adjudication.

123.We once again clarify that the analogy of Section 36 of the Arbitration
Act sought to be applied is inappropriate. The decision of this Court in
Pam Developments ( supra ) should also be understood and confined
only to matters relating to arbitration, more particularly, Section 36 of
the Arbitration Act.

124. We are of the view that if fraud or corruption or something analogous
to the same is only to be seen for the purpose of granting benefit of
unconditional stay of execution of money decree then in such
circumstances, the decree holder may argue that although there may
not be a valid service of summons to the defendant/judgment-debtor
yet, the same by itself would not be sufficient to grant the benefit of
unconditional stay of execution of money decree. This would lead to
nothing but serious miscarriage of justice.
vi. Relevant aspects which the High Court looked into for the
purpose of granting unconditional stay
125.The first thing that the Division Bench of the High Court looked into
was that the suit had proceeded in the absence of the respondent
herein. In the aforesaid context, the findings recorded by the Division
Bench may be looked into:
“168. We also find prima facie substance in the
contentions of Mr. Nigam and Mr. Kaul that the
manner in which, after excluding all defendants
from the proceedings, the entire trial of the suit,
arguments and rendition of judgment took place
solely in the presence of the plaintiff Lifestyle,
may not sustain legal scrutiny.

Page 53 of 73

169. The learned Single Judge has repeatedly
observed, in the impugned judgment, that
Amazon Tech was deliberately staying away
from the proceedings despite being aware of their
pendency, and has relied, for the said purpose,
on the order dated 5 September 2022 passed in
the suit. A reading of the order discloses that the
appearance of Counsels are noted only for
Defendant 2 Cloudtail and Defendant 3 ASSPL.
The mere fact that learned Senior Counsel
appearing for Cloudtail advanced a submission,
on behalf of his client as well as on behalf of
Amazon Tech, that they were willing to suffer
reasonable damages, cannot be seen as proof of
Amazon Tech being aware of the proceedings or
deliberately refraining from participating therein.
Even prior to this date, Amazon Tech had been
proceeded ex parte on 20 April 2022. As a matter
of fact, therefore, Amazon Tech was never present
before the learned Single Judge on any date of
hearing.

170. When one peruses the orders passed in the
suit, vis-à-vis the notings of the Registry, it
becomes apparent that, in fact, no summons in
the suit were ever served on Amazon Tech. This,
to our mind, is a serious infirmity, which may
plague all other proceedings. Amazon Tech was
proceeded ex parte, by the learned Single Judge,
on 20 April 2022. In the order passed by the
learned Joint Registrar on 7 July 2021, which
was the immediately preceding effective date, it
was specifically noted that there was no report
regarding service of the suit on Amazon Tech. In
the circumstances, Lifestyle was directed to file
an affidavit of service. No affidavit of service was
filed by Lifestyle, between 7 July 2021 and 20
April 2022. The only affidavit of service which
was filed by Lifestyle was of 25 March 2021. That
affidavit enclosed, by it, an email dated 8 March
2021. No email, after 8 March 2021, was sent by
Lifestyle to Amazon Tech. There is no question of
the summons having been served by the email
dated 8 March 2021, as the delay in filing process
fee was condoned only on 16 April 2021. After 16
Page 54 of 73

April 2021, the summons have never been sent to
Amazon Tech, by any means of communication
including email. It was for this reason that the
order dated 7 July 2021 of the learned Joint
Registrar required Lifestyle to file an affidavit of
service. This was never done. As such, it is
apparent that the learned Single Judge was in
error in proceeding ex parte against Amazon Tech
by order dated 20 April 2022.

171. In fact, even before us, Mr. Pachnanda, with
characteristic candour and forthrightness, did not
seek to contend that formal service of summons
on Amazon Tech, as directed by the Court while
issuing summons on 12 October 2020, ever took
place. His submission is, however, that, prior to
issuance of summons by the Court on 12 October
2020, as well as by way of attachment to the
email dated 8 March 2021, all the documents
relating to the suit, as well as applications filed
therewith, were forwarded to Amazon Tech.
Besides, due compliance with the requirements of
the proviso to Order XXXIX Rule 13 of the CPC
was also ensured. In these circumstances, Mr.
Pachnanda’s submission is that the learned
Single Judge was correct in holding that Amazon
Tech deliberately absented itself from the
proceedings and cannot, now, therefore, seek to
raise a grievance that it was proceeded ex parte.

172. We cannot, in law, accept the submission.

173. The law does not require a defendant to
enter appearance in a suit, unless summons in
the suit are served on it. The Commercial Courts
Act, 2015 contains strict provisions in that regard.
No amount of service, on the defendant, of the
papers relating to the suit, by the plaintiff, absent
actual summons issued by the suit, can compel a
defendant, in law, to enter appearance. The law
does not permit a defendant to be proceeded ex
parte, even before summons in the suit are served
on it. This is plain, and elementary. The learned
Single Judge could not, therefore, have proceeded
against Amazon Tech ex parte on 20 April 2022,
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even before formal summons in the suit had been
served on it. In doing so, it appears that the
learned Single Judge was not made aware of the
order passed by the learned Joint Registrar on
the immediately preceding date, i.e. 7 July 2021,
in which it was specifically noted that there was
no report regarding service of the suit on Amazon
Tech. In holding that Amazon Tech had not
appeared despite service and, therefore,
proceeding against Amazon Tech ex parte,
therefore, we are of the opinion that the learned
Single Judge materially erred in law and on facts.

174. This, by itself, is a lapse serious enough to
vitiate all proceedings in the suit after 20 April
2022, at least insofar as the appellant Amazon
Tech is concerned. It also, therefore, suffices,
even by itself and independent of all other
considerations, as enough to justify
entertainment of the present appeal without
requiring any deposit of the decretal amount to be
made by Amazon Tech.

175. We also find considerable substance in the
submission of learned Senior Counsel for the
appellant Amazon Tech that, in any event, all
these developments took place at a time when the
damage claimed by Lifestyle were only to the
tune of ₹ 2,00,05,000/-. Enhancement of these
damages are necessarily to be proceeded by an
amendment of the plaint, of which Amazon Tech
had to be put on due notice. This was never done.
In fact, the written submissions filed by Lifestyle,
which enhanced the damages, earlier computed
at ₹ 20,005,000/– to ₹ 3780 crores, were also not
served on the Appellant Amazon Tech. In
accepting the enhancement of the claim for
damages, therefore, we agree with learned Senior
Counsel for the appellant Amazon Tech that the
learned Single Judge has not acted strictly in
accordance with the law.

176. In some circumstances, we are also of the
opinion that lifestyle cannot seek sanctuary
behind Order VII Rule 2 or Order VII rule 7 of the
Page 56 of 73

CPC, or even Rule 120 of the IPD Rules. Order VII
Rule 2, in fact requires a plaint, seeking recovery
of money, to state the precise claimed amount.
The proviso to Order VII Rule 2 applies only in
cases of suits for mesne profits, or for an amount
which would be found on rendition of accounts
between the Plaintiff and the Defendant, or for
movables in the possession of the defendant or
debts of which the value cannot be reasonably
estimated at that stage. The present suit does not
fall within any of these categories. The suit does
not claim mesne profits, or value of movables in
the possession of the defendants, or any debt of
which the value was not ascertainable. Moreover,
para 86 of the impugned judgment records the
submission of Lifestyle that it was not pressing
for its prayer for rendition of accounts. In that
view of the matter, the proviso to Order VII Rule 2
of the CPC would not apply, and the main
provision, which requires the precise claim to be
quantified in the suit, would apply with all force.
The precise amount quantified in the suit was
₹
only 2,00,05,000/–. There is, therefore,
substance in the contention of learned Senior
Counsel for Amazon Tech that, without an
amendment of the plaint, the damages could not
have been enhanced, much less to ₹ 3780 crores.

177. Order VII Rule 7, plainly, does not apply, as
it exempts a plaintiff from requiring to claim
“general or other relief”, apart from the specific
relief sought in the plaint.

178. In any event, what lies at stake, here, is
something far more empirical. The question that
is required to be addressed is whether (i) a claim
for damages, assessed in the plaint at ₹
2,00,05,000/–, could be inflated to ₹ 3780 crores
merely in written submissions filed by the
plaintiff after conclusion of arguments, without
amending the plaint and without even serving a
copy of the written submissions on a defendant
against whom the enhanced damages were
claimed and (ii) the Court would, in such
circumstances, have awarded damages in excess
Page 57 of 73

of ₹ 336 crores, without any prior opportunity to
the concerned defendant to contest the proposed
judgment.”


126.The second relevant aspect that the Division Bench looked into was
the fact that there were no pleadings of infringement against the
respondent herein worth the name. In this regard, the following
observations are relevant:
“156. Mr. Sai Deepak, appearing on behalf of
Lifestyle and supplementing the submissions
advanced by Mr. Pachnanda, sought earnestly to
convince us that the requisite factual basis or
alleging involvement of Amazon Tech in the
infringement of Lifestyle’s registered trademark,
is forthcoming in the plaint. We are unable to
agree.

157. We have already set out, from para 29 of the
present judgment on words, the relevant
averments contained in the plaint. We do not find,
therein, any prima facie sustainable allegation of
involvement, by Amazon Tech, in any
infringement of Lifestyle’s registered trademark.
158. Para 41 of the plaint alleges that Amazon
Tech is, under its brand ‘SYMBOL’,
“manufacturing, offering for sale and/or selling
products which bear the infringing logo mark.
These allegations are completely defeated by the
assertions in the replication filed by Lifestyle, to
the written statement of Cloudtail – also
reproduced supra – that it was Cloudtail
manufacturing and selling the apparel bearing
the mark, and, thereby, infringing Lifestyle’s
registered trademark.

159. Para 41 goes on to state that ASSPL was
selling products of Amazon Tech on its platform
under the trademark ‘SYMBOL’, bearing the
infringing mark. This allegation, again, is
incorrect. The products sold by ASSPL were not of
Amazon Tech, but of Cloudtail. The only
connection of Amazon Tech, with the said
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products, was the ‘SYMBOL’ mark, which
Cloudtail affixed on the said apparel under
license from Amazon Tech. This does not, in any
way, connect Amazon Tech with the infringing
mark.

160. In fact, after making such bald and
unsubstantiated allegations, Lifestyle, in the
same para 41 of the plaint, acknowledges that it
was not certain about the actual relation between
Amazon Tech, Cloudtail and ASSPL. Obviously,
the allegations against Amazon Tech, regarding
its complicity in the affixation of the mark on the
apparel sold by Cloudtail on the ASSPL platform,
were merely shots in the dark, without any
knowledge of the actual state of affairs. In fact,
para 46 of the plaint acknowledges the fact that
the invoice, raised by ASSPL, with respect to the
apparel purchased by Lifestyle, only contained
the name and details of Cloudtail. Despite this,
para 48 of the plaint alleges that it was an
“admitted case of Defendant No 3 (ASSPL) that
orders for the infringing product of the Defendant
No 1 (Amazon Tech) are being fulfilled by
Defendant No 2 (Cloudtail)”, without any such
“admitted case” being available on record. The
plaint does not disclose where this “admission” is
to be found.

161. At this juncture, we may also refer to the
affidavits dated 21 July 2022 and 1 September
2022 of ASSPL, on which Mr. Pachnanda sought
to place reliance as supporting the finding of the
learned Single Judge, in the impugned judgment,
that Amazon Tech, Cloudtail and ASSPL
constitute a “cohesive commercial entity”. We find
no such inference being forthcoming from the
affidavits. In any case, we are not concerned,
here, with the interlink, as commercial entities,
between Amazon Tech, Cloudtail and ASSPL.
They are, admittedly, independent commercial
entities, as was, in fact, noted by the learned
Single Judge in the order dated 12 October 2020,
reproduced in para 19 of the impugned
judgement. What is to be seen is whether there
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was any material to indicate involvement of
Amazon Tech in the allegedly infringing activities
of Cloudtail. There is, in fact, none.

162. Apart from this, the plaint only refers,
repeatedly, to the infringing mark as belonging to
Amazon Tech and has having been adopted by it.
No factual basis for these allegations is
forthcoming.

163. We have already explained, in para 18 to 26
supra, why it cannot be said that any substantial
allegation of involvement, by Amazon Tech, in the
allegedly infringing activities of Cloudtail, by
affixation of the mark on the apparel sold by it,
can be said to exist.

164. This, therefore, is not merely a case in which
damages have been awarded against Amazon
Tech without any finding, by the learned Single
Judge, of involvement, in the alleged infringing
activities, but is, in fact, a case where no such
pleadings exist.”


127.The third aspect which the Division Bench looked into was one
relating to no pleadings for the purpose of claiming Rs.
3,36,02,87,000/- towards damages. In this regard, the findings
recorded are:
“136. Leave alone the fact that there were no
₹
pleadings, claiming 336,02,87,000/-, there
were also no pleadings on the basis of which is
claim could be supported or sustained. The
learned Single Judge has herself ventured into an
exercise of computing the awardable damages as
₹ 336,02,87,000/-, without the said exercise
being supported by any pleadings of Lifestyle.
The position that has resulted is, therefore, that
(i) the pleadings of Lifestyle only justified
damages of ₹ 2,00,05,000/–,
(ii) without amending its pleadings, Lifestyle, in
its written submissions before the learned Single
Judge, worked out the damages to which it was
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allegedly entitled as approximately ₹ 3780 crores,
and
(iii) the impugned judgment decrees in favour of
Lifestyle and against Amazon Tech, ₹
336,02,87,000/-, again on the basis of a
computation solely devised by the learned Single
Judge, not pleaded by the parties and
unsupported by any pleading on record.
137. Mr. Pachnanda sought to submit that the
damages to which the Plaintiff is entitled need not
be specifically computed and claimed in the
pleadings. The submission, in our view, begs the
issue. This is not merely a case where there are
no pleadings, supporting the damages of ₹ 3780
crores, claimed by Lifestyle in its written
submissions, or the damages of ₹
336,02,87,000/-which ultimately came to be
awarded by the learned Single Judge. Even the
basis for the claim of ₹ 3780 crores, all for the
amount of ₹ 336,02,87,000/-which was
ultimately awarded, is not to be found anywhere
in the pleadings of Lifestyle.
138. The basis for the claim for damages are, at
all costs, to be contained in the pleadings of the
Plaintiff. It cannot be reserved for evidence. It is a
legal truism that evidence cannot traverse the
pleadings.”

128.The fourth aspect that the Division Bench looked into was the fact
that the learned Single Judge had recorded no findings as regards the
role of the respondent herein in the alleged infringement. The relevant
observations are as under:
“142. With greatest respect, it appears to us that
the impugned judgement is more concerned with
the fact that e-infringement is a new
phenomenon, and that it is very difficult to
identify the actual players in the act. Paras 42 to
44 of the impugned judgment deal with the
menace of e-infringement, and the difficulty in
localising liability in such cases. Para 44, in fact,
refers to intermediary liability, which is of no
particular relevance, as Amazon Tech does not
claim itself to be an intermediary. We may note,
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even at this juncture, that the learned Single
Judge has, in para 99 of the impugned judgment,
observed that Amazon Tech was identifying itself
as an intermediary. This is a prima facie
erroneous finding. At no point of time has Amazon
Tech claimed to be an intermediary. In fact, in
earlier orders passed in the suit, particularly in
the orders dated 2 March 2023 and 7 August
2023 – which the latter was passed by the
learned Single Judge herself – it has been
correctly noted that Defendant 3 ASSPL was
claiming to be an intermediary and was, in fact,
one. In the impugned judgment, therefore, the
learned Single Judge has proceeded on an
apparently mistaken assumption that Amazon
Tech was also claiming to be an intermediary.
143. Returning to the findings in the impugned
judgment, following the adverse observations
regarding the menace of e-infringement is a new
species of trademark infringement, which poses
significant challenges in localising of liability, the
learned Single Judge proceeds, in para 45, to
characterise the present case as a case of e-
infringement – with which there can be no serious
cavil. Following this, however, the learned Single
Judge was on to note that the brand ‘Symbol’,
being used by Cloudtail, was owned by Amazon
Tech. This is also; however, is difficult to
understand how the ownership, by Amazon Tech,
of the brand ‘Symbol’ is of any relevance. The
mark ‘Symbol’ is, quite clearly, not infringing in
nature.
144. In fact, even the plaint in the suit does not so
assert. The case that Lifestyle has sought to build
up, in the plaint, is that, as the infringing mark
figured on the same apparel, which bore the
‘SYMBOL’ mark of Amazon Tech, Amazon Tech
could not escape liability from the tort of
infringement by use of the mark. In our
considered view, the said plea, which has
apparently found favour with the learned Single
Judge in the impugned judgment, has no basis in
law.
145. The learned Single Judge proceeds to lay
considerable stress on order dated 5 September
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2022, passed in the suit, particularly on the
opening sentence of the order, which reads:
“The learned senior counsel for the defendant
no. 2/applicant herein submits that the said
defendant, including for and on behalf of the
defendant no. 1 is willing to suffer a decree of
injunction and also for paying reasonable
damages to the plaintiff.”
The learned Single Judge has treated this
sentence, from the order dated 5 September
2022, as recording some kind of a concession, on
behalf of Amazon Tech, admitting its liability for
infringement and agreeing to pay damages.
Significantly, prior to the passing of this order,
Amazon Tech had already been proceeded ex
parte on 20 April 2022. Even if it were to be
assumed that Amazon Tech had agreed, through
learned Counsel who appeared on behalf of
Cloudtail, to suffer reasonable damages, that
statement, if at all, was made at the stage when
the damages claimed by Lifestyle were of ₹
2,00,05,000/–. In the face of this claim, it would
be preposterous to hold that the order dated 5
September 2022 amounts to an admission, by
Amazon Tech, to suffer damages of ₹
336,02,87,000/-. Before awarding such
damages, therefore, it was incumbent on the
learned Single Judge to render specific findings of
infringement, or at least of complicity in the
infringing activities, by Amazon Tech. With
greatest respect, we do not find this to have been
done.
146. Para 47 of the impugned judgment observed
that Amazon Tech, Cloudtail and ASSPL were
“closely related to or interlinked with each other”.
Para 48 records that “it is a matter of public
knowledge that the www.amazon.in platform is
closely linked with Defendant No. 1”, i.e. the
present appellant Amazon Tech. To a large extent,
it is clear that the impugned judgement proceeds
on the premise that Amazon Tech, Cloudtail and
ASSPL, i.e., all the defendants, were acting in
concert and were one commercial entity.
147. We also find, prima facie, that the learned
Single Judge has, in para 52 of the impugned
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judgment, completely misread the Licensing
Agreement dated 23 December 2015 as fastening
liability on Amazon Tech for infringement
whereas, in fact, it does nothing of the kind. The
learned Single Judge observes that the License
Agreement dated 23 December 2015, between
Amazon Tech and Cloudtail indicated “that
Amazon retains significant control over
Cloudtail’s branding and distribution activities”.
Following this, the learned Single Judge returns
an opinion that “the clauses in the Agreement
clearly diminish Amazon’s liability to distance
itself from the alleged infringement committed by
Cloudtail”, that “the contractual restrictions on
unauthorised trademark use, coupled with
indemnification obligations, provide strong legal
grounds for (Lifestyle) to argue Amazon’s direct
involvement in trademark infringement”, “the
agreement being a license agreement, Defendant
No. 1 being a licensor an Defendant No. 2 being a
licensee, any infringement or unlawful use by the
licensee would also affix liability about the
licensor”, “while licensing the word mark
SYMBOL” Amazon would be unable to distance
itself from the use of the accompanying horse logo
device mark” and that “thus, the consequences of
infringement squarely fall upon Defendant No. 1”.
148. We are, prima facie, unaware of any law
which supports these observations and findings.
The Licensing Agreement dated 23 December
2015 was restricted to the ‘SYMBOL’ mark,
owned by Amazon Tech. Amazon Tech had, by
the agreement, licensed, to Cloudtail, the right to
use the mark ‘SYMBOL’. The agreement does
nothing beyond this. By no stretch of imagination
could be Licensing Agreement be read as
authorising Cloudtail to affix, on the apparel sold
by it, the allegedly infringing mark. In fact, the
Licensing Agreement makes no reference to the
said mark at all, obviously because Amazon Tech
had no concern with the said mark. If, therefore,
Cloudtail did affix the mark on the apparel sold
by it, it certainly did not do so by virtue of any
authorisation or permission granted by the
Licensing Agreement dated 23 December 2015. In
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fact, the Licensing Agreement contained a specific
clause proscribing any infringement, by Cloudtail,
of the trademark of any third party, and
indemnified Amazon Tech in that regard.
149. The observations contained in para 52 of the
impugned judgment, extracted by us earlier in
paragraph 139, are unsupported by law. In a
Licensing Agreement, whereby and whereunder
Amazon Tech had only licensed, to Cloudtail, the
right to use the ‘SYMBOL’ mark, we are unable to
understand how Amazon Tech could be fastened
with liability for use, by Cloudtail, of the mark,
with which the Licensing Agreement – and,
indeed, Amazon Tech itself – had no concern.

150. Needless to say, a licence by one party to
another, to do a particular act, cannot render the
first party liable for every infringing or illegal act
committed by the second, in the absence of any
material to indicate that the commission of the
illegal infringing act was also authorised by the
license. The findings in para 52 of the impugned
judgment, in our prima facie view, are contrary to
this principle which, according to us, is practically
fossilized in the law. They, therefore, suffer from
patent illegality.
151. In para 98, the learned Single Judge
observes that the judgment would proceed to
examine, inter alia, “the degree of culpability of
the Defendants”. Paras 98 to 99 proceed,
apparently, to record certain observations
regarding Amazon Tech which, in our view, are
not incriminating in any manner. Before,
however, adverting thereto, the learned Single
Judge observes, in para 98 and in the opening
part of para 99 of the impugned judgment, that
the mark ‘SYMBOL’, of which the right to use had
been licensed by Amazon Tech to Cloudtail, was
used “along with” the infringing mark, on the
apparel sold by Cloudtail. Even if it was, we are
unable to understand how any liability or
responsibility for infringement, on the ground, be
fastened on Amazon Tech. Amazon Tech was not
the manufacturer of the apparel on which the
infringing mark was used. It had never licensed,
Page 65 of 73

to Cloudtail, the right to use the infringing mark,
with which, in fact, it had no concern. In fact,
Cloudtail itself conceded, before this Court on 2
March 2023, that the decision to use the
infringing mark on the apparel sold by was not of
Amazon, but of Cloudtail itself. Unfortunately, the
learned Single Judge has entirely overlooked this
concession, regarding which no objection or
reservation was ever expressed by Lifestyle,
either before this Court on 2 March 2023 or at any
point thereafter. In view thereof, it is plainly
obvious that the affixation, on the apparel sold by
Cloudtail, of the infringing logo, could not
incriminate Amazon Tech in any manner, merely
because the same apparel also happened to carry
the ‘SYMBOL’ mark, the use of which had been
licensed by Amazon Tech to Cloudtail.
152. Para 99 of the impugned judgment proceeds
to observe that Amazon Tech was “one of the most
dominant players in the ecommerce space”, that
it “possesses ways and means to utilise its
dominant presence in the e-commerce space to
promote its own products as also products which
it might otherwise wish to promote”, and that it
had “the leverage through its own platforms to
dilute Plaintiff’s brand/logo by indulging in deep-
discounting of its own products which compete
with the Plaintiff by using a similar mark/logo”.
These findings are, prima facie, entirely in the
realm of presumption and conjecture. They reflect
an impression, by the learned Single Judge, that
Amazon Tech was in a position to indulge in
infringing activities by means such as deep
discounting – with respect to which there is not
even a whisper of an allegation against Amazon
Tech in the entire plaint of Lifestyle – and that,
therefore, it must have done so. On the face of it,
we are of the view that these findings suffer from
perversity in law, and cannot, therefore, sustain.
153. Para 99 goes on further to observe that “it is
well known reality that all 3 Defendants belong
to the Amazon Group of Companies and operate
as a cohesive commercial entity”. This finding has
nothing forthcoming, available on the record, to
support it. There is certainly no pleading to that
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effect. The plaint, filed by Lifestyle, does not
allege, even indirectly, that Amazon Tech,
Cloudtail and ASSPL constituted a “cohesive
commercial entity”. A finding that 3 companies,
which are independent corporate ventures,
constitute a cohesive commercial entity, cannot be
returned without any pleading to that effect. We
are constrained to observe that the learned Single
Judge has, in so holding, made out a case in
favour of Lifestyle which it itself did not plead.
154. There are no other findings, in the impugned
judgment, against Amazon Tech. Of course, the
learned Single Judge has adversely commented
on what she perceives as Amazon Tech’s
deliberate absence from the proceedings in the
suit. Even if it were to be presumed, merely for
the sake of argument, that Amazon Tech took a
conscious decision not to participate in the suit
proceedings, that cannot justify mulcting it with
damages of ₹ 336,02,87,000/-.
155. The case, therefore, is one of awarding,
against Amazon Tech and in favour of Lifestyle,
₹
of damages of 336,02,87,000/-, without any
sustainable finding of infringement, or of
complicity in infringement, against Amazon
Tech.”


129. If the Division Bench after looking into all the relevant aspects referred
to above thought fit to grant benefit of unconditional stay of execution
of money decree then, applying the principles of law discussed by us,
it cannot be said that the Division Bench committed any error much
less an error of law in passing the impugned judgment and order.

130.It goes without saying that whatever has been observed by the Division
Bench in its impugned judgment and order is not an expression of any
final opinion but are prima face observations for the purpose of
granting the relief as prayed for by the respondents.

Page 67 of 73

131.It is necessary for us to observe that the Court’s jurisdiction over a
respondent is founded on a valid service of summons. Without a valid
service, the Court cannot acquire jurisdiction over the respondent,
unless the defendant voluntarily submits to it. The original defendant-
respondent must be properly be apprised of a pending action against
him and assured of the opportunity to present his defenses to the suit.
Proper service of summons is used to protect one’s right to due process.

132. In an action strictly in personam , personal service on the defendant is
the preferred mode of service, i.e., by handing a copy of the summons
to the defendant in person. If defendant, for excusable reasons, cannot
be served with the summons within a reasonable period, then
substituted service can be resorted to. While substituted service of
summons is permitted, "it is extraordinary in character and in
derogation of the usual method of service."

133.In the case in hand, what is important for us to note is the Order passed
by the Joint Registrar (Judicial) of the High Court of Delhi dated
01.03.2021 which reads thus:
“CS(COMM)443/2020
“1. Written statement filed by the defendant No.
2 & 3 with affidavit of admission/denial.
2. Replication to the written statement of the
defendant no.3 with affidavit of
admission/denial of the documents has been
filed by the plaintiff.
3. It is submitted by counsel for the plaintiff that
replication and affidavit of admission/denial of
the documents qua the defendant no.2 has also
been filed but the same is lying under scrutiny.
Let necessary steps be taken to ensure that
replication and affidavit of admission/denial of
the documents are placed on record.
4. Affidavit of service filed by the plaintiff reflects
that entire paper book was delivered to the
defendant no.1 through speed post and courier.
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However, from the report of the Registry it
appears that PF was not filed for service of the
defendant no.1 and summons of the suit through
e-mail and Whatsapp were not issued to the
defendant no.1 as per orders of the Hon’ble Court
which is dated 12/10/2020. Let the order be
complied with, and process be Issued, returnable
for the next date.
5. Re-notify the matter for completion of service,
completion of pleadings and admission/denial of
the documents on 22"'' April, 2021.”
(Emphasis supplied)

F. CONCLUSION
134. We summarize our final conclusion on the grant of benefit of stay of
execution of a decree by an appellate court in term of Order XLI as
under: -
(I) Order XLI Rule 5 contains the provision for the grant or refusal
of stay of execution of the decree by the appellate court under
the CPC. It categorically stipulates that mere filing of an
appeal against an order of execution, shall not ipso facto
operate as stay of proceedings. Any execution proceeding or
an order therein, shall be stayed only if a specific, reasoned
order granting such stay is passed by the appellate court, after
proper application of mind.

(II) For the grant of stay of execution of a decree in terms of Order
XLI, a prayer to such effect has to be specifically made to the
appellate court and the appellate court has the discretion to
grant an order of stay or to refuse the same.

(III) Order XLI Rule 5(3) of the CPC provides for satisfaction
regarding sufficient cause as a pre-condition for granting
benefit of stay of execution of decree, and it casts an obligation
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upon the appellate court to record its satisfaction for stay of
execution such decree.

(IV) The power of the Appellate Court to order stay of execution of
the decree is circumscribed and made subject to the existence
of a “sufficient cause” in favour of the appellant being shown.
In order to ascertain whether a “sufficient cause” exists for the
grant of stay of execution of a decree under Order XLI of the
CPC, the appellate court as per sub-rule (3) of Rule 5 is
required to examine:-
(i) Whether there will be substantial loss to the party
applying for stay;
(ii) Whether the application has been made without
unreasonable delay; and
(iii) Whether security has been given by the applicant for
due performance of the decree.

(V) For the grant of stay of execution of the decree, the appellate
court is required, after perusing the materials on record, to
assign reasons for its satisfaction regarding the existence of a
“sufficient cause”. Such reasons should be cogent and
adequate. The reasons assigned must indicate the necessity
for the status quo prevailing on the date of the decree and/or
the date of making of the application for stay, to continue by
granting stay, and not merely the reasons why stay should be
granted.

(VI) Although, Order XLI Rule 5 of the CPC, uses the word “shall”,
yet a combined reading of the sum and substance of Rule(s)
1(3) and 5(5) would reveal, that for the grant of stay of
execution, it is not mandatory for the appellate court to impose
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a condition for deposit of the amount in dispute. The aforesaid
provisions make it abundantly clear that the appellate court,
for the grant of stay of execution, has a discretion to impose a
condition of deposit of the amount depending on the facts and
circumstances of each case.

(VII) A deposit is not a condition precedent for an order of stay of
execution of the decree by the appellate court. The only
guiding factor and statutory mandate, for the grant of such
stay of execution as indicated in Rule 5, is the existence of
“sufficient cause” in favour of the appellant, on the availability
of which the appellate court would be inclined to pass an order
of stay.

(VIII) For the grant of benefit of an unconditional stay of execution
of a decree, an exceptional case has to be made out before the
appellate court. This discretion of the appellate court to grant
an unconditional stay of execution of decree must not be
exercised arbitrarily. It must be exercised sparingly and only
if an exceptional case is made out for such stay in view of the
peculiar facts and attending circumstances of the case before
it.

(IX) A lodestar for bringing a case within the purview of
“exceptional case” for the purpose of granting benefit of
unconditional stay of the execution of money decree by the
appellate court would be, if the money decree in question: -
(i) is egregiously perverse;
(ii) is riddled with patent illegalities;

(iii) is facially untenable; and/or
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(iv) such other exceptional causes similar in nature.


(X) For the purpose of the grant or refusal of stay of execution of
the decree under Rule 5 of Order XLI, it is immaterial whether
the decree is a money decree or any other decree. The language
couched in the said provision is very clear. Order XLI, Rule 5
of the makes no distinction between a money decree and other
decrees, and the said provision applies with full rigour in both
instances. Yet as a rule of prudence and established practice
evolved over a period of time, no stay of execution of a money
decree should be granted, except on the condition that the
decretal amount be deposited in the court. However, such
condition for deposit cannot be said to be mandatory and non-
prescription thereof does not operate as a bar to staying the
execution of a money decree.

(XI) There is no provision under Order XLI Rule 5 of the CPC
imposing a mandate to deposit cash security as the only mode
of security for execution of the decree. Security, for the
purpose of the said provision, can be in the shape of property,
bond and or in the form of an appropriate undertaking from
the appellant to abide by the decree, seeking stay of execution.

135.In view of the aforesaid, we have reached the conclusion that we
should not disturb the impugned judgment and order passed by the
Division Bench of the High Court.

136.It is needless to clarify that the main appeal shall be decided on its
own merits and without being influenced in any manner by any of the
observations made in the impugned judgment and order passed by
the High Court including our judgment.
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137.It shall be open for the parties to put forward all contentions available
to them in law at the time of the final hearing of the Regular First
Appeal.

138.Registry shall forward one copy each of this judgment to all the High
Courts.


……………...................J.
[J.B. PARDIWALA]




...................................J.
[K.V. VISWANATHAN]



New Delhi;
th
7 October, 2025.

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