http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 3  

CASE NO.: Appeal (civil)  2799-2800 of 2005

PETITIONER: Sihor Nagar Palika Bureau

RESPONDENT: Bhabhlubhai Virabhai & Co.

DATE OF JUDGMENT: 21/04/2005

BENCH: CJI R.C. LAHOTI & G.P. MATHUR

JUDGMENT: J U D G M E N T

(Arising out of SLP (C) Nos.1446-1447 of 2004)

R.C. LAHOTI, CJI.    

       Leave granted.

       The appellant is a statutory body constituted under and  governed by the provisions of the Gujarat Municipality Act, 1963.   It discharges several public utility functions.  In the years 1993- 94, the respondent was given a contract for collection of octroi  on behalf of the appellant on the terms and conditions set out in  the contract. The contract was terminated by the appellant.  The  respondent filed a civil suit alleging wrongful termination/breach  of contract by the appellant and seeking inter alia a decree for  recovery of damages.  The suit ended in a money decree being  passed in favour of the respondent and against the appellant.

       The appellant preferred a First Appeal which is pending in  the High Court of Gujarat. Therein, the appellant moved an  application under Order XLI Rule 5 of the Code of Civil Procedure  seeking stay on the execution of the decree.  On 19.9.2003, the  High Court admitted the appeal for hearing both the parties on  merits and granted a stay subject to the condition that the  appellant shall deposit in the court an amount of Rs.8,78,925/-  with 8 per cent interest on or before 4.11.2003.

       The appellant moved an application seeking variation of  the order dated 19.9.2003. In a detailed application filed by the  appellant, it was pointed out that the appellant was facing  financial difficulty on account of abolition of octroi and was badly  in need of money for carrying out its multifarious public utility  services and activities. The appellant offered to furnish security  to the satisfaction of the Trial Court and appealed to the Court to  suitably modify its earlier order so as to dispense with the  requirement as to deposit of the amount and instead permit  solvent security being furnished.  By order dated 4.11.2003, the  Court declined the appellant’s prayer but at the same time  extended the time for making deposit by eight weeks from the  date of the order and further allowed liberty to the respondent to  withdraw the amount deposited by the appellant, subject to its  furnishing a security to the satisfaction of the Trial Court. Feeling  aggrieved, the appellant has filed this appeal by special leave.

       On 3.1.2004 while issuing notice to the respondent this

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 3  

Court directed the execution of decree against the appellant to  remain stayed subject to the appellant furnishing security of  immovable property to the satisfaction of the Trial Court in place  of depositing the decretal amount in cash as directed by the High  Court.  During the course of hearing, it was pointed out by the  learned counsel for the appellant that the order dated 30.1.2004  has been complied with by the appellant and statement in that  regard has been made on affidavit in this Court.

       Order XLI Rule 1(3) of the 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 XLI 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 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.            In the Memo of Appeal filed by the appellant in the High  Court, very many pleas have been raised.  One of the grounds  taken is that the decree has been passed by the Trial Court  without availability of any legal evidence amounting to proof in  favour of the respondent and hence the decree is ex-facie  erroneous.  The grounds urged in favour of the prayer for stay  set out for the consideration of the High Court as an Appellate  Court have been briefly noticed hereinabove.  We do not propose  to deal with the merits of the pleas so urged lest it should  prejudice the hearing  of the appeal in the High Court.  Suffice it  to observe that a case for grant of stay was made out even in  the opinion of the High Court and the dispute which survived lay  in a narrow compass : Whether to insist on deposit in cash or  permit a security being furnished?

       In the facts and circumstances of the present case and  having taken into consideration the respective submissions made  by the learned counsel for the parties in very many details, we  are satisfied to hold that the High Court ought to have permitted  furnishing of security instead of insisting on deposit in cash of  the amount as directed by the High Court.  It is not the case of  the respondent that in the event of the appeal being dismissed  the decretal amount may not be recovered from the appellant.  On the other hand, the appellant has made out a prima facie  strong case for the hearing of the appeal on its merits and  further a case that public interest would be better served by the  amount being retained by the appellant during the pendency of  the appeal. While making these observations, we should not be  understood as having made any observation touching the merits  of the case amounting to pre-judging any of the issues arising  for decision in the appeal and ex abundanti cautela we clarify  that the appeal shall be heard by the High Court on its own  merits uninfluenced by anything said in this order.  The appellant  has already furnished security of immovable property to the  satisfaction of the Trial Court pursuant to the order dated

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 3  

31.2.2004 passed by this Court.   

       The appeals are allowed.  The impugned orders of the High  Court are set aside and instead the interim order dated  30.1.2004 passed by this Court is substituted in place thereof.   No order as to the costs.