Holding

In the absence of an application for stay, the High Court could not direct the appellant to deposit money under Order XLI Rule 1(3), and such a condition cannot be imposed for admission of the appeal; the direction is vacated.

Summary

The appellants filed an appeal against a money decree. The Kerala High Court, invoking Order XLI Rule 1(3) of the CPC, directed the appellants to deposit Rs.5,00,000 in the trial court even though no application for a stay of execution had been filed. The appellants contended that such a direction was impermissible. The Supreme Court held that, in the absence of a stay application, the High Court cannot impose a deposit condition under Order XLI Rule 1(3) and that non‑deposit cannot be a ground for dismissing the appeal itself; it may only affect the stay of execution. Consequently, the High Court’s direction was vacated and the appeal was allowed without any order as to costs.

Issues considered

Whether a High Court may invoke Order XLI Rule 1(3) of the CPC and direct a deposit when no application for stay of execution is filed.
Whether non‑compliance with a deposit direction under Order XLI Rule 1(3) can justify dismissal of the appeal itself.
Whether a condition of deposit can be imposed as a prerequisite for admission of an appeal under Section 96 CPC.

Legislation cited

Code of Civil Procedure, 1908s. Order 41 Rule 11, s. Order 41 Rule 5(5), s. Order XLI Rule 1(3), s. Section 96

Subjects

appeal against money decreeOrder XLI Rule 1(3)stay of executionconditional depositcivil proceduredismissal of appealinterim relief

Judgment

[2008) 2 S.C.R. 28

A B.P. AGARWAL AND ANR.
v.
~ DHANALAKSHMI BANK LTD: AND ORS.
(Civil Appeal No. 922 of 2002)
JANUARY 25, 2008
B
[DR. ARIJIT PASAYAT AND P. SATHASIVAM, JJ.]
·.Code of Civil Procedure, 1908:
O.XLI, r. 1(3) - Appeal against money decree - No
c application for stay filed - High Court directed the appellant
to:deposit money in Trial Court within specified time - Held: In
absence of any application for stay, High Court could not have
·passed the order - Direction for deposit accordingly vacated.
High Court, in exercise of jurisdiction under Order
D XLI Rule 1(3) of CPC, directed the appellant to deposit a
sum of Rs.5,00,000/- in Trial Court within a particular time.
The contention of the Appellant is that the High Court
could not have referred to Order XLI Rule 1(3) in the
absence of any application for stay.
E
Allowing the appeal, the Court
HELD: 1.1: Non-compliance with the direction given
regarding deposit under sub-rule (3) of Rule 1 of Order
XLI would result in the Court refusing to stay the execution
F of the decree. The application for stay of the execution of
the decree could be dismissed for such non-compliance
but the Court could not give a direction for the dismissal
of the appeal itself for such non-compliance. [Para 4]
[30-E, F]
G 1.2. In case the appellant prays for stay of the
execution of the decree or for any order by way of an
interim relief during the pendency of the appeal; it is open
for the Court to impose any condition as it may think fit
and proper in the facts and circumstances of the case.
H 28
+-
B.P. AGARWAL AND ANR. v. DHANALAKSHMI BANK 29
LTD. AND ORS. [PASAYAT, J.]
Otherwise imposing a condition of deposit of money A
subject to which an appeal may be admitted for hearing
on merits, is not legally justified and such order cannot
be sustained. [Para 5] [31-E, F]
Kayamuddin Shamsuddin Khan v. State Bank of India
(1998) 8 SCC 676 and Devi Theatre v. Vishwanath Raju B
(2004) 7 sec 337 - referred to.
2. In the instant case there is no direction that in case
of non-payment, the appeal is to be dismissed. In the
absence of any application for stay the High Court could C
not have passed the order impugned. The direction for
deposit as given accordingly stands vacated. [Para 6]
[31-F, G]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 922
of 2002. D
From the final Judgment and Order dated 7.6.2001 of the
High Court of Kerala at Ernakulam in A.S. No. 48 of 2001
B.V. Deepak (for Mis. T.T.K. Deepak & Co.) for the
Appellants.
E
K.V. Mohan (for K.R. Nambiar) for the Respondents.
The Judgment of the Court was delivered by
Dr. ARIJIT PASAYAT, J. 1. Challenge in this appeal is to
the order passed by the Division Bench of the Kera la High Court.
By the impugned order the High Court in exercise of jurisdiction F
under order XLI Rule 1(3) of the Code of Civil Procedure, 1908
(in short the 'CPC') directed the appellant to deposit a sum of
Rs.5,00,000/- in trial court within a particular time. Appellants
question the correctness of the order on the ground that the High
Court could not have referred to Order XLI Rule 1(3~ in the G
absence of any application for stay.

-- ~·Learned counsel forthe respondents on the other hand
supported the order of the High Court.
3. Undisputedly, ·in the present case there was no H
4-\
30 SUPREME COURT REPORTS [2008] 2 S.C.R.

4-
A application for stay filed. A few decisions of this Court being
relevant need to be noted.
4. In Kayamuddin Shamsuddin Khan v. State Bank of
India [1998 (8) SCC 676] the dispute related to Order XLI Rule
1(3) it was held that if the amount is not deposited, the appeal
B could be directed to be dismissed. Obviously reference was to
Order XLlll Rule 5(5). lil paragraphs·6 and 8 this Court observed
as follows: ...,
''6. The learned counsel for the respondent has invited our
attention to sub-rule (3) of Rule 1 of Order XU in the Code
c of Civil Procedure, as amended in the State of
Maharashtra, which reads as under:
"(3) Where the appeal is against a decree for
payment of money, the appellant shall, within such
D time as "the Appellate Court may allow, deposit the
amount disputed in the appeal or furnish such security
in respect thereof as the Court may think fit:
Provided that the Court may dispense with the deposit )"·

or security where it deems fit to do so for sufficient
'
E cause."
• 8. This would mean that nori-compliance with the direction
given regarding deposit under sub-rule (3) of Rule 1 of
Order XLI would result in the Court refusing to stay the
execution of the decree. In other words, the application for
F
. stay of the execution
. of the decree could be dismissed \.
for
such non-compliance but the Court could not g1,ve a
direction for the dismissal of the appeal its~lf for such
non-compliance."
5. Similarly, in Devi Theatre v. Vishwanath Raju [2004 (7)
G sec 337) it was inter alia observed as follows;
-.(
"5. The learned counsel for the appellant submits that
appeal lies from every decree passed by any court
exercising original jurisdiction. The jurisdiction of the court
--·
in first appeal extends to examine the questions of facts
H
B.P. AGARWAL AND ANR. v. DHANALAKSHMI BANK 31
LTD. AND ORS. [PASAYAT, J.]

as well as that of law. It is though true as pointed out by the A
learned counsel for the respondent that under Order 41
Rule 11 CPC it would be open for the court to dismiss the
appeal in limine at the time of admission but even
examining the matter from that point of view we find that
the court while considering the question of admission of B
appeal filed under Section 96 CPC, may admit the appeal
if considered fit for full hearing having prima facie merit.
Otherwise, if it finds that the appeal lacks merits, it may be
dismissed at the initial stage itself. But admission of the
appeal, subject to condition of deposit of some given C
amount, is not envisaged in the provision as contained
under Section 96 read with Order 41 Rule 11 CPC. The
deposit of the money would obviously have no connection
with the merits of the case, which alone would be the
basis for admitting or not admitting an appeal filed under
Section 96 CPC. Further, imposition of condition that failure D
to deposit the amount would result iri dismissal of the
appeal compounds the infirmity in the order of conditional
admission.
6. It is a different matter, in case the appellant prays for
stay of the execution of the decree or for any order by way E
of an interim relief during the pendency of the appeal; it is
open for the court to impose any condition as it may think
fit and proper in the facts and circumstances of the case.
Otherwise imposing a condition of deposit of money
subject to which an appeal may be admitted for hearing F
on merits, is not legally justified and such order cannot be
sustained."
6. In the instant case there is no direction that in case of
non-payment, the appeal is to be dismissed. In the absence of
any application for stay the High Court could not have passed G
the order impugned. The direction fot deposit as given
accordingly stands vacated.
7. The appeal is allowed but without any order as to costs.
B.B.B. Appeal allowed. H