1987 INSC 0471
                                               Central Bank of India

                                                           Vs

                                            State of Gujarat and Others

                                          Civil Appeal No. 2200 of 1987

                                        (Ranganath Misra, M. M. Dutt JJ)

                                                      11.09.1987

                                                        ORDER

1. Special leave granted.

2. Ordinarily in a matter of this jurisdiction under Article 136 of the 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.

3. 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 defendant 3 and defendant 3 is ordered to pay Rs.
                  59,69,422.59 to the plaintiff with interest at the rate of 6 per cent from the date of the
                  suit till realisation of the amount by the plaintiff. Defendant 3 shall pay the
                  proportionate cost of the suit till realisation of the amount by the plaintiff. Defendant
                  3 shall pay the proportionate costs of the suit to the plaintiff and bear its own. ...

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 operation of the decree was filed by the State of Gujarat being C.A. No. 240 of 1985 but before
any order was made thereon, the appellant decree-holder levied execution of the decree in Execution
Application No. 240 of 1985. On March 5, 1986, the State Government deposited the decretal
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 reversal of the trial court's decree in appeal
it would be difficult for the State Government to recover the amount. On March 21, 1986 the High
Court passed an order of stay of execution in the pending application, C.A. 953 of 1985, and on
April 23, 1986, the impugned order was made direction refund of the amount deposited by the State
Government in the Executing Court. Challenge is to the order directing refund.

4. 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 appellant court may order, not shall execution of a decree be
                  stayed by reason only of an appeal having been preferred from the decree; but the
                  appellate court may for sufficient cause order stay of execution of such decree.

Explanation. -

5. In the absence of an order of stay the decree was executable and the judgment debtor deposited
the decretal dues in the Executing Court. Once the decretal dues had come into Executing Court
there was indeed no justification for the direction to refund the same to the judgment debtor. On the
other, 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.

6. 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 appellant-Bank would re-deposit the amount in the Executing Court within two weeks
of the date of the reversal along with 18 percent 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.

7. Learned counsel for the State of Gujarat contended that the 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 reversed. In case the
State looks for funds, we are sure, the appellant-Bank would consider favorably the request for
accommodation on appropriate terms.

</html