2008 (12) TMI 837 - SC - Companies Law

Summary

Issues:
1. Stay of execution of a money decree in a civil suit under Order XXXVII of the Code of Civil Procedure.
2. Interpretation of provisions of Order XLI Rule 1(3) and Rule 5 of the Code.
3. Discretion of the appellate court in granting stay of execution of a money decree.
4. Consideration of exceptional circumstances for granting stay of execution of a money decree.

Analysis:

1. The case involved a dispute between two companies regarding non-payment for the supply of copper strips and foils. The appellant filed a Summary Suit under Order XXXVII of the Code, and the respondent raised a defense only concerning the rate of interest. The trial court granted conditional leave to defend, which was not fulfilled by the respondent, leading to a money decree in favor of the appellant.

2. The judgment discussed the provisions of Order XLI Rule 1(3) and Rule 5 of the Code, emphasizing the requirement for the appellant to deposit the disputed amount or furnish security as directed by the Appellate Court. The court clarified that while the provisions are discretionary, non-compliance could result in the dismissal of the stay application but not the entire appeal.

3. The appellate court's discretion in granting stay of execution of a money decree was highlighted, emphasizing the need for a judicial exercise of such discretion based on the facts and circumstances of the case. The court cited previous judgments to support the view that a strong case must be presented for a stay of execution, and reasons for granting stay must be cogent and adequate.

4. The judgment underscored the importance of exceptional circumstances for staying the execution of a money decree. It noted that the High Court failed to consider whether an exceptional case was made out for granting a stay and did not assess the potential undue hardship to the respondent. The court directed the respondent to deposit a specified amount within a set period and furnish security for the remaining amount, highlighting the need to comply with the order; otherwise, the decree would be immediately executable.

In conclusion, the Supreme Court allowed the appeal with specific directions regarding the stay of execution of the money decree, emphasizing the importance of complying with the court's orders and the need for exceptional circumstances to warrant a stay of execution.