Appellate court may grant unconditional stay of money decree in exceptional cases, Supreme Court upholds Delhi HC stay against automatic deposit rule

A Bench of Justices J.B. Pardiwala and K.V. Viswanathan heard a Special Leave Petition challenging a Division Bench order of the Delhi High Court that stayed execution of a money decree in a trademark suit against Amazon Technologies Inc. The appeal arose from a Delhi High Court order which, while admitting an appeal by the judgment-debtor, granted an unconditional stay of a Rs. 336.02 crore decree without insisting on deposit of the decretal amount. The central question was whether the High Court erred in staying execution of a money decree under Order XLI Rule 5 CPC without conditional deposit or security.

The Supreme Court dismissed the petition and declined to interfere with the impugned High Court order. The Court held that deposit of the decretal amount was not an absolute precondition to entertain an appeal and that Order XLI conferred a judicial discretion to grant or refuse stays; in “exceptional” circumstances an appellate court could grant an unconditional stay. The Court, in its reasoning, observed: “the benefit of stay of execution of a money decree may be granted by the Appellate Court unconditionally, if it: i. is egregiously perverse; ii. is riddled with patent illegalities; iii. is facially untenable; and/or iv. such other exceptional causes similar in nature.” The Court reiterated that the power to stay under Order XLI Rule 5 required satisfaction that “substantial loss may result”, that the application was made without “unreasonable delay”, and that appropriate “security has been given”, but clarified that “security” need not always mean cash deposit and may include property, bond or an undertaking.

Background Lifestyle Equities C.V., proprietor of the Beverly Hills Polo Club trademark, sued Amazon-related entities alleging trademark infringement, passing off and copyright violation and initially sought damages of Rs. 2,00,05,000. The suit progressed largely ex parte against Amazon Tech, and a Single Judge ultimately decreed permanent injunction and compensatory damages of USD 38.78 million (recorded as Rs. 336,02,87,000) plus costs. Amazon Technologies appealed and moved under Order XLI Rules 5(1) and 5(3) CPC for a stay of execution. The Delhi Division Bench found prima facie infirmities in the trial process and decree: it recorded that there was “nothing on record to establish valid service of ‘summons’” on Amazon Tech and observed that the Single Judge had awarded massive damages that were not pleaded or supported by evidence and that no sustainable finding of Amazon Tech’s complicity in infringement appeared on record. The High Court stayed operation of the decree subject to an undertaking from Amazon Tech and clarified its observations were prima facie for the limited purpose of adjudicating the stay application.

On appeal to this Court, the petitioners argued that Order XLI Rule 1(3) and Rule 5(5) CPC made deposit or security a mandatory pre-condition to stay of a money decree and relied on precedents urging deposit. Respondent counsel submitted that jurisprudence, including this Court’s decisions in Malwa Strips and Kayamuddin, permitted discretionary exemption in exceptional cases and that the Division Bench had looked into service irregularities, dramatic post-pleading enhancement of damages and absence of pleaded liability against Amazon Tech. The Supreme Court reviewed legislative history and relevant precedents (including Sihor Nagar Palika, Malwa Strips, Pam Developments and Sepco Electric), held that the CPC provisions were to be read as conferring judicial discretion and affirmed the High Court's order. The Court emphasized that its dismissal of the petition did not foreclose adjudication of the main appeal on merits and that parties remained free to press all contentions in the Regular First Appeal.

Case Details: Case No.: 2025 INSC 1190 (Petition for Special Leave to Appeal (C) No.19767 of 2025) Case Title: Lifestyle Equities C.V. & Anr. v. Amazon Technologies Inc. Appearances: For the Petitioner(s): Mr. Mukul Rohatgi, Sr. Adv.; Mr. Gaurav Pachnanda, Sr. Adv. For the Respondent(s): Dr. Abhishek Manu Singhvi, Sr. Adv.; Mr. Neeraj Kishan Kaul, Sr. Adv.; Mr. Arvind Nigam, Sr. Adv.