CENTRAL BANK OF INDIAversusSTATE OF GUJARAT & ORS.

A                       CENTRAL BANK OF INDIA
                                        v.
                       STATE OF GUJARAT & ORS.

                            SEPTEMBER •ll, 1987
B
     [RANGANATH MISRA AND MURARI MOHON DUTT, JJ.)

         Code of Civil Procedurtr--0.41, r. 5(])-Exercise of power to stay        1
    execution of a decree--When an amount has been deposited pursuant to
    an order of execution the appellate court cannot order its refund to the
    judgment-debtor.
c                                                                                !
        The respondent filed a first appeal in the High Court against a
  decree and an application for stay of its operation. Before any order
  was made in the stay application, the appellant, who was the decree-
                                                                                 {
  holder, levied execution, pursuant to which the respondent deposited
  the decretal amount in the executing court. The responden( moved the
D
  High Court for an order stay of further proceedings in execution. The
  High Court passed an order of stay in the application already pending
  before it and directed refund of the amount deposited in the executing
  court to the respondent. The appellant challenged the order of refund.

          Allowing the appeal,                                                   ~
E                                                                                 '
          HELD: In the absence of an order of stay. under 0.41, r. 5(1)
    C.P.C., the decree was executable and the judgment-debtor deposited
    the decretal dues In the executing court. Once the decretal dues had
    come into the executing court there was indeed no justiftcation fbr the
    direction to refund the same to the judgment-debtor. On the other
F
    hand, the High Court could in its discretion either direct payment of the    )-
    amount to the decree-holder subject to terms safeguarding the interest
    of the judgment-debtor in the eventuality of reversal of the decree or
    direct the amount to be deposited or Invested on terms of interest so that
    on the disposal of the First Appeal appropriate directions could be
    given. [IOSD-F)
G
          CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2200
    of 1987.
                                                                                 ~

         From the Judgment and Order dated 1123.4.1986 of the Gujarat
    High Court in C.A. No. 953 of 1985.
H

                                       106
               CENTRAL BANK v. STATE OF GUJARAT                       107

    Soli J. Sorabjee, M.V. Singhvi, Mrs. Manik Karanjawala, N.J.             A
Mehta, R.F. Nariman, D.M. Shah and Rajan Karanjawala for the
Appellant.

     Dr. Y.S. Chitale, T.U. Mehta, P.H. Parekh, Suresh Daluja,
M.N. Shroff and Girish Chandra for the Respondents.
                                                                             B
     The following Order of the Court was delivered:

                               ORDER

      Special leave granted.

      Ordinarily in a matter of this jurisdiction under Article 136 of the
                                                                             c
Constitution would not have been permitted to be invoked but having
heard learned counsel for the parties we are of the view that in the
facts and circumstances of this matter, the order of the High Court
should be reversed by allowing the appeal.
                                                                             D
      The appellant, a nationalised Bank, obtained a decree in Civil
Suit No. 1169 of 1977 from the City Civil Court at Ahmedabad against
several defendants including the State of Gujarat. So far as the
defendant-State is concerned, the decree ran thus:-

                  "The suit is partly decreed against the defendant E
            No. 3 and the defendant No. 3 is ordered to pay
            Rs.59,69,422.59 to the plaintiff with interest at the rate of
            6% from the date of the suit till realisation of the amount
            by the plaintiff. The defendant No. 3 shall pay the propor-
            tionate costs of the suit to the plaintiff and bear its own
                            "                                             F

The State of Gujarat has filed a First Appeal in the High Court of
Gujarat being First Appeal No. 1993 of 1983 against the decree and it
is pending disposal. An application for stay of execution of the opera-
tion of the decree was filed by the State of Gujarat being C.A. No. 953
of 1985 but before any order was made th~reon, the appellant decree- G
holder levied execution of the decree in Execution Application No.
240 of 1985. On 5th of March, 1986, th~ State Government deposited
the decreetal amount of Rs.88,92,280 in the Executing Court and
moved the High Court for an order of stay of further proceedings in
execution and for restraining the decree-holder from withdrawing the
amount from the Executing Court by alleging that in the event of H
    108                    SUPREME COURT REPORTS             [1988] 1 S.C.R.

A   reversal of the trial court's decree in appeal it would be difficult for the
    State Government to recover the amount. On 21st of March, 1986, the
    High Court passed an order of stay of execution in the pending appli-
    cation, C.A., 953 of 1985, and on the 23rd of April, 1986, the
    impugned order was made directing refund of the amount deposited by
    the State Government in the Executing Court. Challenge is to the·
B   order directing refund.

          Order 41 Rule 5( 1) of the Code of Civil Procedure provides:-

                      "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
c               be stayed by reason only of an appeal having been prefer-
                red from the decree; but the Appellate Court may for suffi-
                cient cause order stay of execution of such decree.

                Explanation . ., ..................................... ".
D
         In the absence of an order of stay the decree was executable and
  the judgment-debtor deposited the decreetal dues in the Executing
  Court. Once the decreetal dues had come into the executing court
  there was indeed no justification for the direction to refund the same
  to the judgment-debtor. On the other hand, the High Court could in
E its discretion either direct payment of the amount to the decree-holder          -t
  subject to terms safeguarding the interest of the judgment-debtor in
  the eventuality of reversal of the decree or direct the amount to be
  deposited or invested on terms of interest so that on the disposal of the
  First Appeal appropriate directions could be given.

F        In the impugned order which in the setting of the matter appears
  to be long one, the High Court has referred to many aspects which                ).
  perhaps were not necessary but we do not propose to go into the same.
  We allow the appeal, reverse the order of refund and direct that the
  amount shall be paid to the decree-holder subject to the condition that
  in the event of the decree of the trial court being reversed the
G appellant-Bank would redeposit the amount in the executing court
  within two weeks of the date of the reversal along with 18 per cent of
  interest on the amount from the date the money is withdrawn till the
  date of depositing. The appellant is a nationalised bank and we see no           _.._
  justification to demand any security from it. There will be no order for
  costs.
H
                          CENTRAL BANK v. STATE OF GUJARAT                  109

                  Learned counsel for the State of Gujarat contended that the A
            State is facing acute drought condition and is looking for funds to meet
            the emergency. This of course was stated as a ground in support of the
            plea that the refund directed by the High Court should not be re-
            versed. In case the State looks for funds, we are sure, the appellant-
            Bank would consider favourably the request for accommodation on B
            appropriate terms.

            H.L.C.                                              Appeal allowed.




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