The Bombay High Court has delivered a significant ruling on the grant of stay in execution of a money decree under Order 41 Rule 5 of the Code of Civil Procedure, 1908. The Court stayed auction proceedings against a house property without requiring the appellant to deposit the decretal amount, holding that such a condition is not mandatory when substantial questions of law are framed and an exceptional case is made out. This decision reinforces the Supreme Court's precedent in Lifestyle Equities C.V. and Another v. Amazon Technologies Inc., emphasizing that the grant of stay depends on the existence of 'sufficient cause' rather than rigid adherence to deposit requirements.
Background & Facts
The Dispute
The applicants, Shyamabai Dayanand Hurdale and others, challenged the execution of a money decree passed by the Joint Civil Judge, Senior Division, Latur, in Special Civil Suit No. 68 of 2012. The decree was confirmed by the District Judge-2, Latur, in Regular Civil Appeal No. 04 of 2022. The applicants sought stay of the auction proceedings initiated to recover the decretal amount from a house property standing in the name of appellant No. 1, Shyamabai Dayanand Hurdale. The core dispute revolved around whether this property, claimed to be Shyamabai's absolute property, could be attached for a debt allegedly incurred by her husband, Dayanand.
Key Facts
- The respondent, Bhausaheb Prabhu Bawage, filed a suit for recovery of an amount allegedly taken by Dayanand Hurdale, the husband of appellant No. 1
- The suit was decreed on 21.11.2019 by the Joint Civil Judge, Senior Division, Latur, directing recovery of the amount from the applicants
- The decree was confirmed by the District Judge-2, Latur, on appeal on 15.03.2022
- The applicants filed Second Appeal No. 371 of 2024 before the Bombay High Court, which was admitted on 19.11.2024 after framing substantial questions of law
- The Executing Court issued an auction notice for the house property bearing CTS No. 3680, M.H. No. R-8/674/1 (New Revision M.H. No. B3/3739), situated at Signal Camp, Sutmill Road, Latur, scheduled for 01.07.2026
- The applicants claimed that the property was purchased by Shyamabai and not by her husband, and thus could not be attached for his debt
Procedural History
- 12.06.2012: Special Civil Suit No. 68 of 2012 filed by the respondent
- 21.11.2019: Decree passed by the Joint Civil Judge, Senior Division, Latur
- 15.03.2022: First Appeal dismissed by the District Judge-2, Latur
- 19.11.2024: Second Appeal admitted by the Bombay High Court after framing substantial questions of law
- 28.06.2024: Civil Application No. 12380 of 2024 filed seeking stay of auction proceedings
- 29.06.2026: Present order passed by the Bombay High Court
The Parties' Positions
For the Applicants
- Argued that the Second Appeal involved substantial questions of law, particularly whether the property standing in Shyamabai's name could be attached for her husband's debt
- Contended that the auction notice deserved to be stayed as the appeal was admitted and substantial questions were framed
- Relied on the Supreme Court's decision in Lifestyle Equities C.V. and Another v. Amazon Technologies Inc. to argue that deposit of the decretal amount is not a mandatory condition for stay of execution of a money decree
For the Respondent
- Opposed the stay application, arguing that under Order 41 Rule 5 CPC, stay of a money decree cannot be granted without the appellant depositing the decretal amount or furnishing adequate security
- Pointed out that the First Appellate Court had directed the appellant to furnish solvent security to the extent of Rs. 42,00,000 and deposit interest at 6% per annum from the date of the judgment
- Submitted that the direction regarding deposit of interest was set aside earlier only because the respondent stated that the appeal was at the final hearing stage
Relief Sought
The applicants sought stay of the execution, effect, and implementation of the auction proceedings in respect of the house property bearing CTS No. 3680, M.H. No. R-8/674/1, during the pendency of the Second Appeal.
The Legal Issue
The primary legal question was whether Order 41 Rule 5 of the Code of Civil Procedure, 1908 permits the grant of stay of execution of a money decree without requiring the appellant to deposit the decretal amount or furnish security, particularly when substantial questions of law are framed and an exceptional case is made out.
Arguments Presented
For the Applicant
- Relied on Lifestyle Equities C.V. and Another v. Amazon Technologies Inc. to argue that the appellate court has discretion to grant stay without imposing a condition of deposit, depending on the facts and circumstances of the case
- Contended that the Second Appeal involved substantial questions of law regarding the attachment of Shyamabai's property for her husband's debt, which required adjudication
- Submitted that the auction proceedings, if allowed to proceed, would cause irreparable harm to the applicants
For the Respondent
- Argued that Order 41 Rule 5 CPC mandates that stay of a money decree cannot be granted without the appellant depositing the decretal amount or furnishing security
- Highlighted that the First Appellate Court had already directed the appellant to furnish security and deposit interest, indicating that the respondent had a strong case
- Contended that the applicants had not made out an exceptional case warranting unconditional stay of the auction proceedings
The Court's Analysis
The Court examined the provisions of Order 41 Rule 5 CPC and the principles laid down by the Supreme Court in Lifestyle Equities C.V. and Another v. Amazon Technologies Inc. The Court noted that while the appellate court ordinarily insists upon furnishing security while granting stay of execution of a decree, deposit of the decretal amount is neither an inflexible nor a mandatory requirement. The grant of stay is dependent upon the existence of 'sufficient cause' within the meaning of Order 41 Rule 5 CPC.
The Court observed that the Supreme Court had summarized the legal position in paragraph 138 of Lifestyle Equities, which includes the following key points:
"138.1. Order 41 Rule 5 contains the provision for the grant or refusal of stay of execution of the decree by the appellate court under 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."
"138.4. 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 41 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."
"138.6. Although, Order 41 Rule 5 CPC, uses the word 'shall', yet a combined reading of the sum and substance of Rules 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 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."
"138.8. 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."
"138.9. 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 (iv) such other exceptional causes similar in nature."
Applying these principles, the Court found that the applicants had made out a prima facie case for grant of interim protection. One of the substantial questions of law framed by the Court pertained to whether the house property standing in the name of appellant No. 1 could be proceeded against for recovery of the loan amount allegedly borrowed by her husband, particularly when the property was claimed to be her absolute property. The Court held that this question required consideration at the final hearing of the Second Appeal and that the auction proceedings, if allowed to proceed, would cause irreparable harm to the applicants.
The Verdict
The Bombay High Court partly allowed the civil application and stayed the execution, effect, and implementation of the auction proceedings in respect of the applicant's house property bearing CTS No. 3680, M.H. No. R-8/674/1 (New Revision M.H. No. B3/3739), situated at Signal Camp, Sutmill Road, Latur, during the pendency of the Second Appeal. The Court clarified that the stay was confined only to the aforesaid house property and did not extend to any agricultural land or other property.
What This Means For Similar Cases
Discretion Over Mandatory Deposit
This judgment reinforces that Order 41 Rule 5 CPC does not mandate deposit of the decretal amount as a precondition for stay of execution of a money decree. Practitioners can argue that the appellate court has discretion to grant stay based on the existence of 'sufficient cause', which includes:
- Substantial loss to the appellant if stay is not granted
- Timely filing of the stay application
- Furnishing of security, which need not necessarily be in the form of cash deposit
Exceptional Cases Warrant Unconditional Stay
- The Court may grant unconditional stay if the decree is egregiously perverse, riddled with patent illegalities, or facially untenable
- Practitioners should highlight any substantial questions of law framed in the appeal to argue that the case falls within the 'exceptional' category
- Emphasize the irreparable harm that would result from allowing the execution proceedings to continue
Property Attachment for Third-Party Debts
- This case establishes an important precedent for disputes involving attachment of property for debts incurred by third parties, particularly spouses
- Practitioners can argue that property standing in the name of one spouse cannot be automatically attached for the debts of the other spouse, especially when the property is claimed to be absolute and not benami
- The judgment underscores the need for specific pleadings and proof regarding benami transactions before shifting the burden onto the property owner
