Whether mere filling of appeal results in stay of decree or order ? The provisions of CPC (Civil Procedure Code, 1908), and Court’s decisions say it does not.
Mere filing of appeal does not result in stay of decree or order.
An appeal itself does not operate as stay of decree or order.
The answer to this question as whether filing of appeal results in automatic stay is provided in Order 41 Rule 5 of CPC in plan and clear language.
Filing of Appeal is not automatic stay of decree or order
Order 41 Rule 5 (1) CPC provides:
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.
So, the filing of appeal does not automatically operate as a stay of decree or order appealed from, unless Appellate court passes an order of stay.
Further, an execution of the decree is not stayed only because of the reason of filing of appeal against the decree of order, unless the Appellate court expressly stay the execution of the decree on Appellant filing an application for stay of decree or order.
Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd
In Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd. (2005) 1 SCC 705 while dealing with the provisions of Order 41 Rule 5 CPC the Hon’ble Supreme Court observed as under:-
“Mere preferring of an appeal does not operate as stay of 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 the appellate court and the appellate court has discretion to grant an order of stay or to refuse the same.”
“To secure an order of stay merely by preferring an appeal is not a statutory right conferred on the appellant. So also, an appellate court is not ordained to grant an order of stay merely because an appeal has been preferred and an application for an order of stay has been made.”
Similar view was taken by Delhi High Court in the case of Ram Singh & Ors. vs Sohinder Singh Bedi
Thus, it is clear that the filing of appeal is not a stay of decree or order or the appeal is not automatic stay of decree or order.
Unless a stay application praying for stay on the execution of the decree or order is filed and a stay of decree or order to that effect is granted by the Appellate Court, mere filing of appeal does not operate as a stay.
Stay of decree or order by Executing court
Order 41 Rule 5(2) contains a provision where an Executing Court can also stay the execution of the decree or order.
Every decree or order need to be executed by ‘Executing court’.
‘Executing court’ is that court which either passed the decree or order; and / or before which an application for execution of the decree or order is filed.
Order 41 Rule 5(2) provides:
(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.
Thus, provided the application for stay of execution of the decree or order is filed before the court which passed the decree or Executing Court before the expiration of the time allowed for filing of appeal, such court when sufficient cause is shown for stay, can stay the execution of such decree or order.
“The only guiding factor, indicated in Order 41 Rule 5 CPC 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.”
Application for stay and condition of granting stay
The Application for stay must disclose sufficient cause for seeking the stay of decree or order. The facts related substantial or irreparably loss, likelihood of appeal going in favour of Appellant, there is no other efficacious remedy available etc., may be some of the grounds on which a stay of decree or order can be sought from the Appellate Court.
Further, the application for stay of decree or order must be made without unreasonable delay. And, Appellant may have to furnish security for due performance of such decree or order.
Order 41 Rule 5(3) provides:
(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.
“Dispossession, during the pendency of an appeal of a party in possession, is generally considered to be “substantial loss” to the party applying for stay of execution within the meaning of Order 41 Rule 5(3)(a) CPC.”
“The condition that may be imposed under Order 41 Rule 5(3)(c) is not the only condition which the appellate court can impose. The power to grant stay is discretionary and flows from the jurisdiction conferred on an appellate court which is equitable in nature.”
“an application for order of stay must do equity for seeking equity. Depending on the facts and circumstances of a given case, an appellate court, while passing an order of stay, may put the parties on such terms the enforcement whereof would satisfy the demand for justice of the party found successful at the end of the appeal.”
“while passing an order of stay under Order 41 Rule 5 CPC, the appellate court does have jurisdiction to put the applicant on such reasonable terms as would in its opinion reasonably compensate the decree-holder for loss occasioned by delay in execution of decree by the grant of stay order, in the event of the appeal being dismissed and insofar as those proceedings are concerned. Such terms, needless to say, shall be reasonable.”
“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.”
[Atma Ram Properties (P) Ltd. Vs. Federal Motors (P) Ltd.]
[Ram Singh & Ors. vs Sohinder Singh Bedi]
Ex-parte stay of decree or order
‘Ex-parte’ is a Latin word which mean ‘in absence of a party’ or ‘in the absence of a party which is involved in the matter’
Order 41 Rule 5(4) provides:
(4) Subject to the provision of sub-rule (3), the Court may make an ex parte order for stay of execution pending the hearing of the application.
Thus, if the conditions i.e. showing sufficient cause for seeking the stay of decree or order, substantial or irreparably loss is likely to be caused to the party applying for stay of the execution of the decree or order, application for stay of decree or order is made without unreasonable delay, and Appellant agreeing to furnish security for due performance of such decree or order, if asked by the Appellate Court, the Appellate court can pass Ex-parte order for stay of decree or order / the execution proceeding pending hearing of the stay application.
How Stay of decree or order by Appellate court operates
As per Order 41 Rule 5 (1) CPC, the stay of decree or order shall be effective from the date of the communication of the such order to the Executing Court.
An affidavit sworn by Appellant, based on his personal knowledge stating that an order for stay of execution of the decree or order has been made by the Appellate court with brief component of the order, and that Appellant is going to submit a valid copy of such stay order within reasonable time shall be sufficient communication under Order 41 Rule 5 (2) CPC
Appeal from an order made in execution of the decree
Order 41 Rule 8 CPC provides:
8. Exercise of powers in appeal from order made in execution of decree.—The powers conferred by rules 5 and 6 shall be exercisable where an appeal may be or has been preferred not from the decree but from an order made in execution of such decree.
Thus, appeal can also be against the order made by the Executing court in the execution of decree or order as per the provisions of Order 41 Rule 8 of CPC.
Mere filing of appeal does not bar the executing court for go ahead and execute the decree or order.
For stay of decree or order, the person appealing must file specific application for stay of decree or order on sufficient grounds, and without any undue delay.
Application for stay of decree or order can also be filed before Executing Court.
If any condition is imposed by the court granting stay of decree or order, the Appellant need to comply such condition. If condition imposed is not complied, the stay order on execution decree or order can be vacated by the Court.