Legal Review and Analysis of Lifestyle Equities C V & Anr vs Amazon Technologies Inc 2025 INSC 1190
1. Heading of the Judgment
Case Title: Lifestyle Equities C.V. & Anr. (Petitioners) vs. Amazon Technologies Inc. (Respondent)
Citation: Petition for Special Leave to Appeal (C) No.19767 of 2025 (As reflected in the document, INSC 1190 (2025))
Court: Supreme Court of India
Bench: J.B. Pardiwala and K.V. Viswanathan, JJ.
Date of Judgment: October 7, 2025
2. Related Laws and Sections
The judgment primarily interprets and analyzes the following procedural laws:
Order XLI Rule 1(3) of the Code of Civil Procedure, 1908 (CPC): Pertains to the requirement for an appellant to deposit the decretal amount or furnish security in an appeal against a money decree.
Order XLI Rule 5 of the CPC: Governs the power of the Appellate Court to grant a stay on the execution of a decree.
Order XLI Rule 5(3) of the CPC: Specifies the conditions for granting a stay of execution.
Order XLI Rule 5(5) of the CPC: Stipulates that no stay shall be granted if the appellant fails to make the deposit or furnish security as specified under Order XLI Rule 1(3).
Section 36 of the Arbitration and Conciliation Act, 1996: Discussed in an analogical context to distinguish the principles governing stay of arbitral awards from those governing stay of money decrees under the CPC.
3. Basic Judgment Details
Origin: This Special Leave Petition arose from an order of the Division Bench of the Delhi High Court.
Subject Matter: The core dispute was whether the High Court was justified in granting an unconditional stay on the execution of a money decree for approximately Rs. 339 crores, without requiring the judgment-debtor (Amazon) to deposit the amount or furnish security.
Final Outcome: The Supreme Court dismissed the petition, upholding the Delhi High Court's order granting an unconditional stay of the money decree.
4. Core Principle and Analysis of the Judgment
The central legal issue before the Supreme Court was to define the scope of an Appellate Court's discretion under Order XLI Rule 5 of the CPC to stay the execution of a money decree, and specifically, whether it can grant an unconditional stay without insisting on a deposit or security.
A. The Factual Matrix and the Impugned Order
The petitioners (Lifestyle Equities) had secured a massive money decree against the respondent (Amazon) in a trademark infringement suit. Amazon filed an appeal before the Delhi High Court and sought a stay on the execution of this decree. The Division Bench of the High Court granted the stay but did not require Amazon to deposit the decretal amount. Instead, it only asked Amazon to furnish an undertaking that it would comply with the decree if its appeal failed. Lifestyle Equities challenged this order, arguing that a money decree cannot be stayed unconditionally and that deposit or security is mandatory.
B. The Supreme Court's In-Depth Analysis
The Supreme Court undertook a comprehensive analysis, which can be broken down into several key sub-themes:
i. Interpretation of Order XLI Rule 5: Directory, Not Mandatory
The Court conducted a detailed examination of the legislative history of Order XLI. It noted that while the word "shall" is used in Order XLI Rule 1(3) and Rule 5(5), the provision is directory and not mandatory. Citing its own precedents, including Malwa Strips Pvt. Ltd. v. Jyoti Ltd. (2009) and Kayamuddin Shamsuddin Khan v. State Bank of India (1998), the Court held that the consequence of non-compliance with Order XLI Rule 1(3) is not the dismissal of the appeal, but the disentitlement to a stay of execution. The obligation to deposit is a condition for obtaining a stay, not for maintaining the appeal.
ii. Discretion to Grant Unconditional Stay in "Exceptional Cases"
The Court firmly established that an Appellate Court has the discretionary power to grant an unconditional stay of a money decree, but this power must be exercised sparingly and only in "exceptional cases." It laid down a "lodestar" or guiding principle for what constitutes such an exceptional case. A money decree can be stayed unconditionally if it is:
Egregiously perverse;
Riddled with patent illegalities;
Facially untenable; and/or
Suffers from other exceptional causes of a similar nature.
iii. Distinction from Arbitration Law
The Court addressed and rejected the argument that the principles for unconditional stay under the second proviso to Section 36(3) of the Arbitration Act (which is limited to cases of fraud or corruption) should be imported into the interpretation of Order XLI Rule 5 CPC. It clarified that the two statutory regimes are distinct. The power of a civil court under the CPC is broader and not confined only to grounds of fraud or corruption. Relying on Pam Developments Pvt. Ltd. v. State of West Bengal (2019), the Court held that the provisions of the CPC serve as a guiding framework, not a strict mandate, for arbitration matters, and the analogy is inappropriate in the present context.
iv. Validity of Service of Summons as a Critical Factor
The Supreme Court concurred with the High Court's prima facie finding that there was a "serious infirmity" in the service of summons upon Amazon. It emphasized that a court's jurisdiction over a defendant is founded on valid service. Without it, all subsequent proceedings are vitiated. The Court distinguished the precedent of Sunil Poddar v. Union Bank of India (2008), noting that in this case, there was no evidence of formal summons being served as per the court's direction, making the ex parte proceedings fundamentally flawed.
v. Prima Facie Findings Justifying the Unconditional Stay
The Supreme Court endorsed the Delhi High Court's prima facie findings, which collectively created an "exceptional case" warranting an unconditional stay. These findings included:
Invalid Ex Parte Proceedings: The suit was decreed ex parte without valid service of summons.
Lack of Foundational Pleadings: The plaint contained no substantive allegations or factual basis to fasten liability for trademark infringement on Amazon.
Astronomical and Un-pleaded Damages: The decree awarded Rs. 336 crores, a sum vastly exceeding the Rs. 2 crores claimed in the plaint, without any amendment to the pleadings to support this enhanced claim.
Absence of Findings on Liability: The trial court's judgment contained no sustainable finding of infringement or complicity by Amazon, instead relying on erroneous interpretations of a licensing agreement and presumptions about Amazon's market dominance.
5. Final Outcome and Supreme Court's Directions
The Supreme Court dismissed the Special Leave Petition, refusing to interfere with the High Court's order. It summarized its conclusions into eleven key principles governing the grant of stay of execution under Order XLI CPC:
No Automatic Stay: Filing an appeal does not automatically stay execution.
Specific Prayer Required: A stay must be specifically prayed for.
Satisfaction of "Sufficient Cause": The court must record its satisfaction that "sufficient cause" exists for a stay.
Triple Test under Rule 5(3): The court must examine: (i) substantial loss to the applicant, (ii) no unreasonable delay in applying, and (iii) provision of security for due performance.
Cogent Reasons Mandatory: The order granting stay must be reasoned.
Deposit Not Mandatory: The word "shall" in the rules is not mandatory; the appellate court has discretion on whether to impose a deposit as a condition.
"Sufficient Cause" is the Guiding Factor: The existence of "sufficient cause" is the primary statutory mandate for a stay.
Unconditional Stay in Exceptional Cases: An unconditional stay can be granted, but only in exceptional cases and the discretion must not be exercised arbitrarily.
The "Exceptional Case" Test: An exceptional case exists if the decree is egregiously perverse, patently illegal, or facially untenable.
No Legal Distinction for Money Decrees: The law makes no legal distinction between money decrees and other decrees for stay purposes. However, as a rule of prudence and established practice, a stay on a money decree should ordinarily be conditional upon deposit. This practice is not a legal mandate.
Modes of Security: Security is not limited to a cash deposit. It can be in the form of property, a bond, or a solemn undertaking.
The Court clarified that its observations and those of the High Court were prima facie and would not influence the final outcome of the main appeal.
6. MCQs Based on the Judgment
Question 1 In the case of Lifestyle Equities C.V. vs Amazon Technologies Inc., the Supreme Court held that the use of the word "shall" in Order XLI Rule 1(3) and Rule 5(5) of the CPC, concerning the deposit of the decretal amount for staying a money decree, is?
a) Mandatory and leaves no discretion to the court.
b) Directo1ry and allows for judicial discretion.
c) Applicable only in cases involving fraud.
d) Automatically void if not complied with.
b) Directory and allows for judicial discretion.
Question 2 According to the Supreme Court's judgment in Lifestyle Equities C.V. vs Amazon Technologies Inc., which of the following is NOT a criterion for an Appellate Court to treat a case as "exceptional" for granting an unconditional stay of a money decree?
a) The decree is egregiously perverse.
b) The decree is riddled with patent illegalities.
c) The judgment-debtor is a large multinational corporation.
d) The decree is facially untenable.
c) The judgment-debtor is a large multinational corporation.
Blog Posts
