IMPORTANT POINT
Grant of stay must be cogent, adequate and by a speaking order.

JUDGMENT

S.B. Sinha, J. —

1. Leave granted.

2. Appellant is a company incorporated and registered under the Companies Act, 1956 (for short, “the said Act”). It is engaged in manufacturing of copper strips and copper foils etc. It has its registered office at 17-20, Industrial Area No.2, AB Road, Dewas, Madhya Pradesh. Respondent is also a company registered and incorporated under the said Act. It has its registered office at Nanubhai Amin Marg, Industrial Area, Vadodara. Respondent used to place orders for supply of copper rods strips and foils from time to time with the appellant. Allegedly, the payments used to be made towards the said supply from time to time. Appellant, inter alia, on the premise that a sum of Rs. 49,03,908.29 was owed to it by the respondent filed a Summary Suit under Order XXXVII of the Code of Civil Procedure, 1908 (for short, “the Code”). An application for leave to defend the suit was filed by the respondent. Appellant contended that as the respondent raised a defence only as regards the rate of interest and not the principal amount, its application should be dismissed. By an order dated 23.08.2007, the application for leave to defend the suit was allowed, subject to the condition that the respondent shall make payment of undisputed and admitted amount of Rs.22,64,789.52. Such deposit was to be made by 22.9.2007. Respondent obtained extension of time to deposit the amount. However, as the said amount was not deposited, the trial court passed a judgment on or about 14.11.2007 decreeing the suit in favour of the appellant. Respondent preferred an appeal thereagainst. An application for stay of the said judgment and decree passed by the trial Court was also filed. By reason of the impugned judgment, the High Court stayed the operation and execution of the decree in its entirety. While doing so, the High Court opined:

“We are conscious of the fact that usually money decrees are not stayed in appeal. At the same time, it is not a universal principle of law that the stay can never be granted in cases relating to money decree. The Court has discretion to grant a stay keeping in view all facts and circumstances of the case, including the manner in which the trial of the suit was conducted and the impugned decree was passed.

We are prima facie of the view that a case for stay of execution of the decree is made out by the appellant on the facts on record. We do not, however, wish to express any opinion on the merits and demerits of the case at this stage, which, in our opinion, will be gone into at the time of hearing of the appeal. For the purpose of grant of stay, we are of the view that a ground for stay, as contemplated under O.41 R.5 CPC is made out. We are, therefore, inclined to stay execution of the decree pending appeal.”

Appellant is, thus, before us.

3. Mr. Shiv Sagar Tiwari, learned counsel appearing on behalf of the appellant would submit that the High Court committed a serious error of law in passing the impugned judgment insofar as it failed to take into consideration that the defendant - respondent had raised no substantive and bona fide defence and that in view of the matter it was not a case where the execution of the decree should have been stayed.

4. Ms. Kamini Jaiswal, learned counsel appearing on behalf of the respondent, on the other hand, would urge that compound interest was not payable and in any event a suit under Order XXXVII of the Code being not maintainable, the manner in which the judgment and decree passed by the learned trial judge being wholly unsustainable, the High Court could not be said to have committed any error of law in passing the impugned judgment.

5. The decree passed by the learned trial judge is a money decree. A conditional leave to defend was granted. The said condition has not been fulfilled. Leave to defend, therefore, would be deemed to have been refused. Correctness of the said order had not been questioned.

The Parliament, by reason of Section 87 of Act 104