Case Overview
Facts: Lifestyle Equities C.V., headquartered in Amsterdam, along with its Indian licensee, owned the registered trademark “Beverly Hills Polo Club (BHPC)” used for apparel, shoes, accessories, furniture, and personal care products. Amazon Technologies Inc. was accused of facilitating sales of counterfeit goods bearing a mark identical or deceptively similar to the BHPC logo.
The Suit
In 2020, Lifestyle filed a commercial suit (CS(COMM) 443/2020) in the Delhi High Court, alleging trademark infringement and passing off. The company sought:
- Permanent injunction
- Delivery-up of infringing goods
- Damages of Rs. 2.00 crore
The suit named three defendants — Amazon Technologies Inc. (Defendant 1), Cloudtail Pvt. Ltd. (Defendant 2), and Amazon Seller Services Pvt. Ltd. (Defendant 3).
Defendant No. 1 did not appear and was proceeded ex parte. An interim order dated 12 October 2020 restrained all defendants from using the BHPC mark. The suit was decreed ex parte against Amazon Technologies Inc. on 25 February 2025, granting damages of Rs. 336 crores, costs of Rs. 3.23 crores, and a permanent injunction based on an alleged computation of damages worth USD 38.78 million.
The Appeal
Amazon appealed before the Division Bench of the Delhi High Court (RFA(O.S.)(COMM) 11/2025), which stayed execution of the money decree without requiring deposit of the decretal amount, subject to an undertaking to comply if the appeal were dismissed. Lifestyle Equities then filed a Special Leave Petition (SLP) before the Supreme Court challenging this “unconditional stay.”
Procedural Details
The matter reached the Supreme Court through SLP (C) No. 19767 of 2025 under Article 136 of the Constitution.
Issues Raised in the SLP
- Whether the Delhi High Court erred in not insisting upon deposit/security under Order XLI Rule 1(3), Rule 5(3), and Rule 5(5) CPC while granting stay of a money decree.
- Whether an unconditional stay was legally sustainable.
The Dispute
The central issue was reconciling two competing legal principles:
- The CPC rule that an appeal does not automatically stay execution, and stay requires adequate cause and security.
- The High Court’s discretionary power to grant conditional or unconditional stay in exceptional cases.
Lifestyle argued that the stay was unlawful due to lack of mandatory deposit. Amazon countered that valid service of summons was never effected and the decree suffered from procedural irregularities, inflating damages far beyond the original Rs. 2 crore claim without amendment or notice.
Reasoning of the Court
Purpose of Order XLI Rules 1 & 5 CPC
The Court traced the 1976 amendments introducing sub-rule (3) in Rule 1 and sub-rule (5) in Rule 5, requiring deposit/security for stay. The purpose was to prevent abuse of the appellate process while maintaining equitable discretion in exceptional cases.
Whether Deposit/Security is Mandatory
The Court held that the requirement is directory, not mandatory. Non-deposit bars stay but does not invalidate the appeal. Unconditional stay may be granted in exceptional cases where enforcement would be unjust or impossible.
Scope of Judicial Discretion
An unconditional stay can be justified only if the decree is:
- Patently illegal or perverse
- Facially untenable
- Affected by fraud or manifest injustice
Service of Summons
The Supreme Court agreed that Amazon Technologies was never validly served. There was no affidavit of service or proof of electronic notice as directed earlier. Proceeding ex parte without proper service constituted a foundational illegality, vitiating jurisdiction.
On Damages and Maintainability
The Court found that the decree inflated damages from Rs. 2 crore to Rs. 336 crore without amendment or notice, violating Order VII Rules 2 and 7 CPC. The absence of pleadings or evidence supporting enhancement rendered the decree perverse.
License and Liability Findings
The High Court rightly noted that Amazon Technologies merely licensed its “SYMBOL” brand and had no role in the alleged infringement. The inference that all Amazon entities formed one “cohesive commercial entity” lacked any evidence.
Analogy with Arbitration Act
The Court rejected reliance on Section 36(3) of the Arbitration Act, clarifying that the power to grant unconditional stay under Order XLI Rule 5 CPC exists independently but should be exercised rarely in extreme situations.
Protection of Due Process
The Court reaffirmed that valid service of summons is the foundation of jurisdiction. Absence of service allows a defendant to avoid liability regardless of procedural lapses by counsel or co-defendants.
Judgment and Decision
The Supreme Court upheld the Delhi High Court’s order dated 1 July 2025, dismissing the SLP. It found no reason to interfere, holding that the Division Bench correctly identified procedural irregularities and lack of jurisdiction. The stay of execution was thus justified even without deposit.
The Court emphasized that unconditional stay is an exception, permissible only to prevent grave injustice. In this case, irregularities included:
- Absence of valid summons
- Unexplained escalation of damages
- Lack of findings of infringement against Amazon
- Misreading of license agreement
Final Holding
| Case Title | Lifestyle Equities C.V. & Another Vs. Amazon Technologies Inc. |
|---|---|
| Order Date | 7th October 2025 |
| Case Number | Civil Appeal No. 19767 of 2025 |
| Neutral Citation | 2025 INSC 1190 |
| Court | Supreme Court of India |
| Hon’ble Judges | J.B. Pardiwala J. and K.V. Viswanathan J. |
The Court reiterated that unconditional stay of a money decree is permissible only in exceptional circumstances, upholding fairness and due process over procedural rigidity.
Disclaimer
The information provided serves the public interest by offering insights into judicial reasoning. Readers are advised to exercise discretion while interpreting this summary. The content may reflect subjective interpretation.
Written By
Advocate Ajay Amitabh Suman, IP Adjutor [Patent and Trademark Attorney], High Court of Delhi
