Automatic Vacation of Stay Orders in Six Months - A Positive Affirmation

Cases in India can take years to be disposed of. Stay of proceedings on account of interim orders has been greatly responsible for causing inordinate delay in disposal of cases. These orders typically stay effective unless expressly vacated, or until a final order is passed, which then subsumes the interim order. Interim orders that stay proceedings before a subordinate court are often misused by litigants as a dilatory tactic to maintain status quo in their favor. The subordinate courts account for 87% of India’s pending cases.[1] A greater challenge faced by the judiciary and litigants alike is the delay in determination of cases at the appellate level, which in turn leads to endless wait for determination of matters even at the trial stage. The Law Ministry estimates that on an average, a trial is delayed by about 6.5 years due to stay of proceedings by higher courts.[2]

The Hon’ble Supreme Court of India dealt with the issue of undue delay in trials caused by stays in Asian Resurfacing Road Agency v. Central Bureau of Investigation[3] (“Asian Resurfacing”), and noted that once a stay is granted, disposal of petition before the High Court takes a long time. The Hon’ble Supreme Court also emphasised on the accountability of the courts while granting stay of proceedings and held that such matters should be disposed of in two-three months without allowing any adjournments. To ensure a speedy disposal of such cases, the Supreme Court directed that a stay of trial proceedings before civil and criminal appellate/revisional courts ordered by a High Court or a court below High Court shall automatically expire in six months, unless extended by a speaking order. This direction has been reiterated by the Hon’ble Supreme Court on October 15, 2020 in MA No. 1577 of 2020 in Criminal Appeal Nos. 1375-1376 of 2013. This essentially means that once the six-month period is over, the trial courts may resume the proceedings without waiting for any other intimation, unless an express order extending the stay is passed. No contempt proceedings would lie against the presiding officers of trial courts on having proceeded in terms of Asian Resurfacing after a lapse of six months.[4]

Stay automatically vacated only at trial stage of litigation

High Courts and Tribunals were approached with varying interpretations of the Asian Resurfacing judgment. Parties sought an all-encompassing interpretation of the judgment such that the stay of all kinds would stand automatically vacated. In view of this, the scope of the exception created by Asian Resurfacing was clarified by various High Courts. The Karnataka High Court[5], Allahabad High Court[6] and the Andhra Pradesh High Court[7] have respectively, held that the directions in Asian Resurfacing shall apply only when the trial proceedings are stayed. The courts specifically held that there will be no automatic vacation of stay on proceedings before a court post the trial stage when the judgment and decree has been passed. Even at the trial stage, the power of granting stay is to be used only in rare occasions.[8]

Stay by Supreme Court not vacated automatically

The applicability of the judgment to the orders of the Hon’ble Supreme Court was clarified in the judgment of Fazalullah Khan vs. M. Akbar Contractor and Ors.[9] While dealing with the question of eviction proceedings, the division bench held that the directions in Asian Resurfacing would not apply to the interim orders issued by the Hon’ble Supreme Court. It was clarified that if the interim order granted by the Hon’ble Supreme Court is not vacated and continues beyond a period of six months by reason of pendency of the appeal, it cannot be said that the interim order would automatically stand vacated.

Stay on proceedings before quasi-judicial bodies

Since the Asian Resurfacing judgment specifically referred to only stay on proceeding before the civil and criminal trial courts, another issue of interpretation is whether the exception would mutandis mutandis apply to cases before the quasi-judicial bodies and statutory tribunals. In this regard, the Central Board of Indirect Taxes and Customs issued a clarification in July, 2019,[10] that the Asian Resurfacing judgment would not apply on stay of recovery proceedings before the Customs Excise and Service Tax Appellate Tribunal (“CESTAT”). The Board relied upon an opinion issued by the Ministry of Law and Justice, wherein the distinction between ‘Court’ and ‘Tribunal’ in terms of the CPC was highlighted, to conclude that CESTAT would not be constituted a ‘trial court’ and hence is outside the scope of the judgment in Asian Resurfacing. The Bombay High Court[11] and Gujarat High Court[12] have also held that the stay on income tax recovery proceedings, imposed due to an appeal to Commissioner or the High Court, would not be vacated automatically on expiry of six months.

Thus, it is safe to assume that a similar approach can be adopted for other quasi-judicial bodies and tribunals that are not ‘courts’ and do not conduct ‘trials’, such as the NCLT and NCLAT. Any stay on proceedings before such tribunals would continue until vacated or final order is issued.

Conclusion

The Asian Resurfacing judgment paves the way to bring trial-stage litigants to justice faster by controlling one aspect that leads to delays. It is a positive step towards resolution of the problem of delay plaguing the judicial system, which has now become more acute due to the pandemic. The time limit set on staying trials on account of appeals would substantially reduce the total time taken to finally conclude the trial. The reiteration of the Asian Resurfacing judgment reaffirms that the malpractice of delaying disposal of trials by securing stays from a higher court would no longer be feasible, giving way for speedy justice.


[1] Examining Pendency of cases in the Judiciary, PRS India, available at https://www.prsindia.org/theprsblog/examining-pendency-cases-judiciary.

[2] Stay on proceedings delay cases by upto 6.5 years: Study, Times of India, June 22, 2016 https://timesofindia.indiatimes.com/india/Stays-on-proceedings-delay-cases-by-up-to-6-5-years-Study/articleshow/52860273.cms .

[3] (2018) 16 SCC 299.

[4] Sri Niwas Daga vs. Tiwashi Srivastava, 2019 (5) ADJ 438.

[5] Order dated January 10, 2019 in Writ Petition 100648-100649 of 2019 and Order dated March 15, 2019 in R.F.A. No.1344 of 2012.

[6] Dharam Vir Sood vs. Savitri Devi and Ors., S.C.C. Revision No. 205 of 2016, order dated April 5, 2019, 2019 (134) ALR 442.

[7] K. Ranga Prasad Varma vs. Kotikalapudi Sitarama Murthy and Ors., AIR 2020 AP 22.

[8] Ganga Ram Hospital v. State, 2020 SCC OnLine Del 662.

[9] Order dated July 22, 2019 in I.A. No. 27524 of 2019 in Civil Appeal No. 6088 of 2011.

[10] Circular no. F. No. 1080/2/DLA/Tech/Action Taken/2019/3514.

[11] Oracle Financial Services Software Ltd., Mumbai v. Deputy Commissioner of Income Tax-13(1)(1) & Ors., Writ Petition No. 542 of 2019, decided on February 28, 2019.

[12] Commr. of Central Goods and Services Tax vs. Anmol Chlorochem, Civil Application No. 1 of 2019, decided on June 20, 2019.