In a significant judgment that settles the law on grant of stay of execution of money decrees, the Hon’ble Supreme Court of India dismissed the Special Leave Petition in the matter of “Lifestyle Equities C.V. & Anr. vs Amazon Technologies Inc.¹,” upholding the Hon’ble Delhi High Court’s decision to grant an unconditional stay of a money decree exceeding Rs. 336 crores. The judgment, authored by Justice J.B. Pardiwala, comprehensively examines and clarifies the principles governing the grant of stay of execution of money decrees by appellate courts under Order XLI Rule 5 of the Code of Civil Procedure, 1908 (CPC), particularly addressing whether an unconditional stay can be granted and under what circumstances. The Hon’ble Apex Court undertook an exhaustive analysis of the legislative history of the relevant provisions, principles of statutory interpretation, and judicial precedents to settle the law on this critical procedural issue.

FACTUAL MATRIX

The Petitioners, Lifestyle Equities C.V. (an Amsterdam-based company) and its licensee, claimed proprietary rights over the well-known trademark “Beverly Hills Polo Club” (BHPC), featuring a distinctive logo of a charging polo pony with a mounted rider wielding a raised polo stick. The Petitioners, along with their subsidiaries and licensees, engaged in manufacturing and sale of various lifestyle products under the BHPC mark.

Alleging trademark infringement, the Petitioners instituted Civil Suit (COMM) No. 443 of 2020 in the Hon’ble Delhi High Court against three defendants, including Amazon Technologies Inc. (Defendant No. 1), seeking permanent injunction, delivery up of infringing materials, damages of Rs. 2,00,05,000/- (or such amount as found due), and rendition of accounts of profits. The plaint specifically stated that the damages figure was approximate and subject to further court fees based on amounts proved during trial.

FINDINGS OF THE LD. SINGLE JUDGE GRANTING DAMAGES

After the suit was instituted, the Ld. Single Judge issued summons on 12.10.2020 and granted an ex parte ad-interim injunction against all defendants for alleged infringement of the BHPC mark, noting that Amazon Technologies Inc. (Defendant No. 1) had not appeared despite advance notice. During the proceedings, Defendant No. 1 (Amazon Tech) was proceeded ex parte on 20.04.2022. Defendant No. 2 (Cloudtail) had the suit decreed against it for Rs. 4,78,484/- on 02.03.2023 and Defendant No. 3 (ASSPL) was deleted on the same date.

Thus, Amazon Tech became the sole remaining defendant, and the suit was ultimately decided ex parte against it. The Hon’ble Court decreed the suit in favour of the plaintiffs and against Amazon Tech on 25.02.2025, granting a Permanent injunction, Damages of USD 38.78 million (Rs. 336.02 crore), comprising of lost royalties and increased advertising/promotional expenses along with Costs of Rs. 3,23,10,966.60 plus court fee. The Total liability amounted to Rs. 339.25 crore (approx.). The decree further provided that if the amount was paid within three months, no interest would apply; otherwise, 5% annual interest would accrue from the date of judgment until full realization.

APPEAL BEFORE THE DIVISION BENCH AND ITS OUTCOME

Being dissatisfied with the judgment and money decree, the Defendant filed RFA (O.S.) (COMM) No. 11 of 2025 before the Division Bench of the Delhi High Court. In the appeal, Defendant also moved an application under Order XLI Rule 5(1) and Rule 5(3) CPC seeking a stay of the operation of the judgment and money decree. After hearing both sides, the Division Bench granted an unconditional stay on 01.07.2025, staying the damages and costs without requiring any deposit. Amazon was only directed to file an undertaking to comply with the judgment if it eventually lost the appeal. The Bench also clarified that its observations were purely prima facie.

SPECIAL LEAVE PETITION BEFORE THE SUPREME COURT

Aggrieved by the Division Bench’s order granting an unconditional stay on the execution of the ex-parte money decree passed by the Ld. Single Judge, the plaintiffs approached the Hon’ble Supreme Court by way of a Special Leave Petition.

SUBMISSIONS ON BEHALF OF THE PETITIONERS (LIFESTYLE EQUITIES)

Violation of Mandatory Provisions: The Division Bench committed an egregious error in granting unconditional stay in flagrant disregard of the mandatory provisions of Order XLI Rule 5(1) and Rule 5(3) of the CPC.

Mandatory Deposit Requirement: Relying on Sihor Nagar Palika Bureau v. Bhabhlubhai Virabhai & Co.², it was submitted that Order XLI Rule 1(3) mandatorily requires the appellant to deposit the decretal amount or furnish security, and under Rule 5(5), such deposit or security is a condition precedent for stay of execution.

Valid Service of Summons: It was argued that delivery of suit papers and the order dated 12.10.2020 granting ex parte injunction amounted to adequate service, and the Defendant had knowledge of proceedings as per the second Proviso to Order IX Rule 13 CPC. Reliance was placed on Sunil Poddar v. Union Bank of India³ and LT Foods Ltd. v. Saraswati Trading Company⁴.

Inadequacy of Undertaking: A mere undertaking to comply with the decree cannot be termed adequate security.

SUBMISSIONS ON BEHALF OF THE RESPONDENT (AMAZON TECHNOLOGIES INC.)

No Error by Division Bench: The Division Bench painstakingly examined all relevant aspects and, being fully convinced of multiple legal infirmities in the Ld. Single Judge’s decree, rightly exercised discretion to grant unconditional stay.

Malwa Strips Precedent Controls: The decision in Malwa Strips Pvt. Limited v. Jyoti Limited⁵ prevails over Sihor Nagar Palika (Supra), holding that the word “shall” in Order XLI Rule 5 is not mandatory, and exceptional cases warrant unconditional stay without deposit.

Multiple Legal Infirmities: The Division Bench was convinced that no valid summons was served on the Defendant, and the judgment prima facie suffered from various legal infirmities including; shocking enhancement of damages from Rs. 2 crores (as pleaded) to Rs. 3,780 crores (in written submissions) without amendment of plaint or notice to the Defendant; and final decree of Rs. 336 crores based on the Ld. Single Judge’s own computation unsupported by pleadings.

Disproportionate Condition: Given the gross perversities and illegalities in the decree and conduct of proceedings, requiring deposit or security would be wholly disproportionate and excessive.

REJOINDER ON BEHALF OF THE PETITIONERS

In rejoinder, an analogy was drawn from Section 36(3) of the Arbitration and Conciliation Act, 1996, arguing that:

Section 36(3) as Indicator: The second Proviso to Section 36(3) indicates that ordinarily, applying principles of Order XLI Rule 5, courts would not be empowered to unconditionally stay an arbitration award or judgment.

Restriction to Fraud or Corruption: Alternatively, even if the second Proviso permits unconditional stay in cases of fraud and corruption, the discretion under Order XLI Rule 5 should be restricted only to fraud or corruption or grounds taking colour from those, and not merely on egregious view on merits.

SUPREME COURT’S ANALYSIS

The Hon’ble Supreme Court framed the central question for consideration as: Whether the Division Bench of the High Court committed any error in passing the impugned judgment and order granting unconditional stay of execution of the money decree?

Before adverting to the rival submissions, the Hon’ble Apex Court examined the relevant provisions of law and various judicial precedents. The Court’s analysis is structured under the following sub-heads:

1. LEGISLATIVE CONTEXT

The Hon’ble Supreme Court undertook a detailed review of the legislative history behind Order XLI of the CPC, particularly the 1976 amendments that introduced the deposit/security requirement for appeals against money decrees.

1. The Original 1974 Amendment Bill – Bill No. 27 of 1974 sought to amend the CPC to make civil justice faster, fairer, and simpler, guided by principles of natural justice, speedy disposal, and accessibility for litigants unable to afford legal representation. It proposed a new Order XLI Rule 1(3) requiring appellants challenging money-decree orders to deposit the disputed amount or furnish security. An even stricter clause, Order XLI Rule 3(1A) directed that failure to deposit would require the appeal to be rejected outright.
2. Joint Committee’s Intervention (1976) – The Bill was referred to a Joint Committee of Parliament, which expressed concern that a mandatory rejection of the appeal for non-deposit would unfairly bar judgment-debtors who may have valid grounds for appeal but lack financial means. The Committee recommended a more balanced approach, that the appellant’s right to appeal must not be extinguished, and the decree-holder’s right to enforce the decree must still be protected. Accordingly, the proposed Rule 3(1A) was deleted, and instead, a new Order XLI Rule 5(5) was introduced to provide that no stay of execution shall be granted unless deposit or security is furnished.
3. Final Enactment (1976–1977) – Parliament accepted the Committee’s recommendations. The CPC (Amendment) Act, 1976 came into force on 1 February 1977, implementing the revised scheme. Rule 1(3) was modified to apply to all money decrees, not merely execution orders. The harsh provision mandating rejection of the appeal for non-deposit was deleted and Rule 5(5) was added, creating a conditional regime where execution would not be stayed unless deposit or security is provided.
4. Effect of the Legislative Evolution – Summarising this history, the Hon’ble Supreme Court noted that the legislature ultimately chose a balanced framework. The Appeals against money decrees remain maintainable even without deposit, but stay of execution is not ordinarily granted unless deposit or security is furnished.

This demonstrates that Parliament intended flexibility, not rigidity by preserving appellate rights while preventing abuse of the stay jurisdiction.

2. JUDICIAL PRECEDENTS AND INTERPRETATIVE PRINCIPLES

1. Principles of Statutory Interpretation – The Hon’ble Supreme Court reaffirmed the settled principles of statutory interpretation, emphasising that Order XLI Rule 5(1) and Rule 5(3) CPC must be construed by giving full effect to the language used. Relying on Mithilesh Singh v. Union of India⁶, the Court reiterated that no word in a statute is surplusage and every expression must be treated as deliberate. Applying the casus omissus rule from Padma Sundara Rao v. State of Tamil Nadu⁷ and the caution in Union of India v. Deoki Nandan Agarwal⁸ the Court held that judges cannot add or supply missing words or fill perceived gaps; the provision must be read as enacted.
2. Application of Principles to Order XLI Rule 1(3) – Applying these principles, the Court held that Order XLI Rule 1(3) clearly indicates that deposit or security is not a condition precedent for filing or maintaining an appeal against a money decree. The Rule merely grants discretion to the appellate court to allow such deposit within a reasonable time, including by invoking Section 148 CPC. The only consequence of non-deposit appears in Rule 5(5), which disentitles the appellant from obtaining a stay of execution. Thus, while deposit/security remains the norm for stay, the legislature did not intend to bar the appeal itself or impose stricter preconditions than those expressly set out.
3. Key Supreme Court Precedents –

Kayamuddin Shamsuddin Khan v. State Bank of India9	The Hon’ble Supreme Court held that non-compliance with Order XLI Rule 1(3) does not render the appeal liable to dismissal. The only consequence is under Order XLI Rule 5(5): the appellate court cannot grant a stay of execution unless deposit/security is furnished. Thus, failure to deposit may lead to dismissal of the stay application, not the appeal itself.
Malwa Strips Pvt. Ltd. v. Jyoti Ltd.10	Reaffirming Kayamuddin, the Hon’ble Supreme Court clarified that although Order XLI Rule 1(3) and Rule 5 use the word “shall,” the requirement of deposit/security is directory, not mandatory. Crucially, the Hon’ble Supreme Court held that appellate courts may grant unconditional stay in exceptional circumstances. Thus, an appellate court retains discretion to stay a money decree even without imposing deposit requirements where justice so demands.
Combined Effect of Kayamuddin and Malwa Strips From these cases, the Hon’ble Supreme Court concluded that Order XLI Rule 1(3) is not a precondition to the maintainability of the appeal, but merely regulates entitlement to a stay. Non-deposit bars stay, but does not extinguish the right to appeal.
Sihor Nagar Palika Bureau v. Bhabhlubhai Virabhai & Co.11	This decision, relied upon by the petitioners, recognises that deposit/security is ordinarily required for stay under Rule 5(5). The Hon’ble Apex Court emphasised that discretion must be exercised judicially, based on the facts of each case. It reinforces the principle that stay orders are not automatic and require careful case-specific evaluation.
Atma Ram Properties (P) Ltd. v. Federal Motors (P) Ltd.12	The Hon’ble Supreme Court explained that the guiding factor under Rule 5 is “sufficient cause”, which requires balancing two competing concerns, i.e., the decree-holder’s right to enjoy the fruits of the decree, and the appellant’s right not to be irreparably prejudiced if the appeal ultimately succeeds. This establishes that stay decisions involve equitable balancing, not mechanical application of rules.

3. MEANING OF “SUFFICIENT CAUSE” UNDER ORDER XLI RULE 5 CPC

The Hon’ble Supreme Court devoted substantial analysis to interpreting the meaning and import of “sufficient cause” under Order XLI Rule 5 of the CPC.

1. No Special Treatment for Money Decrees – The Hon’ble Apex Court held that Order XLI Rule 5 does not distinguish between money decrees and other decrees. The appellate court’s power to stay execution depends solely on whether “sufficient cause” exists. Thus, money decrees are not subject to any separate or stricter standard; they are governed by the same limitations and the same judicial discretion as any other decree.
2. The Three-Fold Statutory Test – Under Rule 5(3), three requirements must ordinarily be satisfied for a stay, i.e. substantial loss would occur if stay is refused, the stay application is made without unreasonable delay or that the applicant has offered security for due performance of the decree.
3. Deposit Requirement is a Rule of Prudence, Not Law – The Hon’ble Supreme Court explained that while courts typically insist on deposit of the decretal amount before staying a money decree, this is only a rule of prudence, not an inflexible rule of law. Citing Central Bank of India v. State of Gujarat¹³, the Hon’ble Apex Court reaffirmed that such practice is advisable and well-established, but not mandatory. Appellate courts may depart from it where justice demands.
4. Meaning of “Sufficient” – Referring to Black’s Law Dictionary, the Hon’ble Apex Court stated that “sufficient” means adequate, enough, or necessary to achieve the intended purpose. Thus, “sufficient cause” must be understood contextually, with reference to the ends of justice.
5. Exceptional Cases Warranting Unconditional Stay – The Hon’ble Supreme Court identified categories of cases where unconditional stay of a money decree may be justified. These include decrees that are egregiously perverse, patently illegal, facially untenable, or characterised by other similarly exceptional defects. Such circumstances bring a case within the scope of “exceptional case,” allowing the appellate court to relax the usual requirement of deposit/security.
6. Security Need Not Be a Cash Deposit – The Hon’ble Apex Court clarified that neither Rule 1(3) nor Rule 5(3) or Rule 5(5) mandates cash deposit as the only form of security. The Rules speak of “security,” not “deposit.” Therefore, security may take the form of a charge on property, a surety bond, or even a binding undertaking by the appellant. The Hon’ble Supreme Court held categorically that Order XLI Rule 5 does not require cash security and allows appellate courts to accept alternative forms of security as appropriate.
7. SERVICE OF SUMMONS & IRREGULARITY IN PROCEEDINGS

The Petitioners argued that emailing the suit papers and the ex parte injunction order to Amazon amounted to “knowledge” of the proceedings under the second proviso to Order IX Rule 13 CPC. The Supreme Court rejected this, holding that the proviso applies only when some form of valid (though irregular) service has actually been effected. Here, there was no proof of any valid service at all, so the proviso could not apply.

Relying on Basant Singh v. Roman Catholic Mission¹⁴ and Sushil Kumar Sabharwal v. Gurpreet Singh¹⁵, the Hon’ble Apex Court held that in this case there was no proof of valid service at all, so the proviso did not apply. The Hon’ble Court noted that Sunil Poddar (Supra) was inapplicable. In that case, parties had already filed pleadings and were aware of transferred proceedings before the DRT but deliberately avoided service. Here, there was no such prior participation or demonstrated awareness, making the factual matrix entirely different.

The Hon’ble Supreme Court reaffirmed the fundamental principle that that proper service of summons is the foundation of jurisdiction in suits in personam. Without valid service or voluntary submission, a court cannot proceed. Emailing documents or mere awareness is not enough. Substituted service is exceptional and allowed only after attempts at personal service fail.

5. INTERPLAY BETWEEN SECTION 36 OF THE ARBITRATION ACT AND ORDER XLI RULES 3 & 5 OF CPC

The Hon’ble Supreme Court clarified that Section 36 of the Arbitration Act has limited relevance to this case, which is governed by Order XLI Rules 3 and 5 CPC. Section 36 was discussed only because the Petitioners argued that an unconditional stay of a money decree should be granted only in cases of fraud or corruption, similar to the second proviso to Section 36(3). The Court rejected this analogy and noted that arbitration stay principles under Section 36 form a separate, self-contained regime, as explained in Pam Developments v. State of West Bengal (2019) and Sepco Electric Power Construction v. Power Mech Projects (2022), and courts retain discretion to grant even unconditional stays in exceptional cases, as recognised in ITD Cementation India Ltd. v. Urmi Trenchless Technology Pvt. Ltd.,¹⁶. Importing the fraud requirement of Section 36 into CPC appeals would improperly narrow the appellate court’s powers and ignore fundamental issues, such as lack of valid service that may independently justify an unconditional stay. Thus, the analogy to Section 36 was deemed misplaced and inappropriate.

6. EXAMINATION OF THE HIGH COURT’S ORDER GRANTING UNCONDITIONAL STAY

The Hon’ble Supreme Court examined the four principal aspects that the Division Bench of the High Court looked into while granting unconditional stay of execution of the money decree:

1. First Aspect: Suit wrongly proceeded ex-parte against Amazon Tech – The Hon’ble High Court found that Amazon Tech was never validly served. Despite no proof of service even till July 2021, the Ld. Trial Court proceeded ex-parte in April 2022. The Hon’ble High Court held that proceeding ex parte before service was ever effected was a serious jurisdictional error, enough by itself to justify hearing the appeal without insisting on deposit.
2. Second Aspect: No pleadings of infringement against Amazon Tech – The plaint wrongly alleged that Amazon Tech manufactured and sold infringing products. Lifestyle later admitted that Cloudtail and not Amazon Tech, was responsible. Thus, damages were awarded without any pleading or factual basis establishing infringement or complicity by Amazon Tech.
3. Third Aspect: No pleadings supporting the enormously enhanced damages – The plaint sought only Rs. 2 crore, but the decree awarded Rs. 336 crore based on computations never pleaded, never amended in the plaint, and never served on Amazon Tech. The Hon’ble High Court emphasized the basic rule: pleadings determine the case, and evidence cannot go beyond pleadings.
4. Fourth Aspect: No Findings Establishing Amazon Tech’s Liability – The Ld. Trial Court made no specific findings linking Amazon Tech to infringement. Amazon’s ownership of the SYMBOL mark was irrelevant, as SYMBOL was not infringing, and Cloudtail alone admitted using the BHPC mark. The conclusion that Amazon Tech, Cloudtail, and ASSPL formed a single entity had no pleading or evidence. Thus, the decree imposed liability on Amazon Tech without pleadings, evidence, or findings.

SUPREME COURT’S FINDINGS AND CONCLUSION

The Hon’ble Supreme Court held that the Division Bench committed no legal error in granting an unconditional stay of the money decree after examining all relevant factors. It further clarified that the Hon’ble High Court’s observations were only prima facie, made solely for deciding the stay application, and would not affect the final outcome of the appeal. The Hon’ble Supreme Court summarized its final conclusions on the grant of benefit of stay of execution of a decree by an appellate court in terms of Order XLI as follows:

• Order XLI Rule 5 makes it explicit that filing an appeal does not automatically stay execution. A stay can be granted only when the appellate court issues a specific, reasoned order after applying its judicial mind. Execution continues unless such an order is passed.
• A stay of execution under Order XLI must be specifically prayed, and it lies within the appellate court’s discretion to grant or refuse such stay.
• Order XLI Rule 5(3) requires the appellate court to be satisfied that “sufficient cause” exists before granting a stay, and it must record that satisfaction in its order.
• An appellate court may grant a stay only if “sufficient cause” is shown. Under Order XLI Rule 5(3), this requires examining whether the appellant will suffer substantial loss, whether the application was made without undue delay, and whether adequate security has been offered.
• When granting a stay, the appellate court must give clear and adequate reasons showing its satisfaction that “sufficient cause” exists. Those reasons must explain why maintaining the status quo as it existed on the date of the decree and/or on the date of the stay application should continue, not merely why a stay would be desirable.
• Even though Order XLI Rule 5 uses the word “shall,” a combined reading of Rules 1(3) and 5(5) shows that deposit is not a mandatory condition for granting stay. The appellate court retains discretion to require or dispense with deposit depending on the facts of each case.
• A deposit is not a prerequisite for granting a stay. The appellate court may order stay so long as “sufficient cause” in favour of the appellant is shown, which is the only statutory requirement under Rule 5.
• An unconditional stay may be granted only in exceptional cases. This discretion must be used sparingly and non-arbitrarily, and only where the unique facts genuinely justify such relief.
• A case qualifies as “exceptional” for granting an unconditional stay where the money decree is egregiously perverse, patently illegal, facially untenable, or affected by similarly exceptional defects.
• For deciding a stay under Order XLI Rule 5, it makes no difference whether the decree is a money decree or any other decree, the rule applies equally to both. Although, as a matter of prudence and long-standing practice, courts usually require deposit before staying a money decree. However, this is not mandatory, and the absence of such a condition does not bar the grant of stay.
• Order XLI Rule 5 does not require cash deposit as the only form of security. Security may be provided through property, a bond, or even an appropriate undertaking by the appellant to comply with the decree.

In view of the aforesaid comprehensive analysis, the Hon’ble Supreme Court reached the conclusion that it should not disturb the impugned judgment and order passed by the Division Bench of the High Court. The Hon’ble Apex Court clarified 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 Hon’ble High Court including the Hon’ble Supreme Court’s judgment. 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.

Analysis done by: Mitali Umat