Report No. 54

Order 41, rule 5

41.10. One of the most important aspects of an appeal is the grant of stay of execution of the decree appealed from. In this context, the question whether a stay order operates immediately or only when it is communicated to the Court (or the officer conducting the sale) was examined at length in the Commission's earlier Report1. The Commission, after referring to the conflicting rulings on the subject, expressed the opinion "that ordinarily the order should be effective immediately, and a provision to the contrary may be abused by interested parties attempting deliberately to delay transmission of the order from the appellate Court to the lower Courts". At that time, the Commission did not recommend any amendment on the subject.

1. 27th Report, note on Order 41, rule 5.

41.11. Since then, the Gujarat High Court has held1 that the stay order granted by an appellate Court becomes effective not from the moment of its pronouncement, but from the moment it is communicated to the Court. It was held, therefore, that the decree passed by the Court of Small Causes, before communication of the stay order issued by the High Court (the communication actually took place the next day), was a proper decree. On the fact, it was also held that the signing of the decree by the Judge of the Court of Small Causes after the stay order granted by the High Court had been communicated to it, was not a breach of the stay order, as the judgment had been pronounced before the stay was communicated,

1. Harish Kumar v. Chhunullal, AIR 1966 Guj 281.

Recommendation for amendment of Order 41, rule 5

41.12. We have given some thought to the matter and are of the view that stay should be effective from the date of communication, since the opposite view might create practical complications. At the same time, we think that an affidavit by an advocate based on personal knowledge should be acted upon, until a formal order is received, or until orders to the contrary are received from the court granting stay. We, therefore, recommend that the following Explanation should be added to Order 41, rule 5(1).

"Explanation-Stay ordered by the court of appeal shall be effective from its communication, but an affidavit by a pleader based on his personal knowledge stating that a stay has been ordered by the court of appeal shall be acted upon by the court of first instance, until a formal order is received, or until orders to the contrary are received from the court of appeal".

Order 41, rule 11-Judgment in case of dismissal of appeal without notice

41.13. In the earlier Report1, an amendment was suggested to carry out the recommendation made in the Fourteenth Report2 with reference to Order 41, rule 11. The object was to provide that even where the appellate court dismisses an appeal without notice to the lower court, it shall deliver a formal judgment, and a decree shall be drawn up.

1. 27th Report, note on Order 41, rule 11.

2. 14th Report, Vol I.

41.14. We agree that in such cases, a formal judgment would be useful. The above recommendation should, therefore, be carried out both for the High Court and for the district court when hearing first appeals.

41.15. In the case of the High Court when hearing a second appeal however, the position should be the reverse. Having regard to the restricted scope of second appeals,1 reasons should be required to be recorded if the appeal is admitted2.

1. See section 100 and recommendation relating thereto.

2. See paras. 42.2 and 42.3, infra.

Order 41 rule 5(4)

41.16. The question of stay of execution of decrees during the pendency of appeal has engaged our serious attention, and we propose an important change in this respect.

41.17. An appeal by itself does not operate as a stay of execution. But stay can be granted by the Court passing the decree or by the appellate court, for "sufficient cause".1 The general direction in this respect in the Code is, that stay shall not be granted, unless the court is satisfied about the existence of three circumstances-

(a) likelihood of substantial loss to the applicant for stay, if the stay is not granted;

(b) application without unreasonable delay;

(c) security by the applicant for the due performance of such decree or order as may be ultimately binding upon him.

Sub-rule (3) of Order 41, rule 5 so provides-But sub-rule (4) of the same rule says-

"(4) Notwithstanding anything contained in sub-rule (3), the court may make an ex parte order for stay of execution pending the hearing of the application".

1. Order 11, rules 3(1) and 3(2).

41.18. It is this sub-rule which causes trouble in practice. Once an ex parte order of stay is obtained, the appellant is not interested in prompt disposal of the appeal. Moreover, it is common experience that often the very object of appealing is to obtain stay, particularly in respect of money decrees, and even if the appellant knows that he has no case, he appeals with the above object.

41.19. Having regard to what is stated above, we are of the view that Order 41, rule 5, sub-rule (4), requires radical modification, so that, the remedy provided by it may not be abused. It is against the spirit of sub-rule (4) to grant stay as a matter of course, and it certainly is unjust that stay without the safeguards contemplated by sub-rule (3) should be granted ex parte, even pending the hearing of the application.

Recommendation

41.20. We, therefore, recommend that Order 41, rule 5(4), should be revised as follows:-

"(4) Subject to the provisions of sub-rule (3), the court may make an ex parte order for stay of execution pending the hearing of the application".