Bailabel Type : non-bailable

Description

Order 25 of the Civil Procedure Code (CPC) deals with the issue of security for costs in civil suits. The concept of security for costs refers to the provision under which the court may require a party, usually the plaintiff, to deposit an amount as security for the payment of the defendant’s costs in case the plaintiff's suit is unsuccessful. This is intended to protect the defendant from incurring unnecessary expenses in case the plaintiff’s claim is found to be unmeritorious, and the defendant has to bear the costs of the litigation.

This provision ensures that if a party is not able to pay the costs of the suit, particularly if the opposing party wins the case, there is a financial security to cover such costs. Security for costs is typically sought in cases where there is concern that the plaintiff might not be able to pay if the defendant is successful, such as when the plaintiff is a foreign national, a pauper, or otherwise lacks financial resources.

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Key Provisions of Order 25

Rule 1: Security for Costs Against the Plaintiff

1. Circumstances for Security: The court may order the plaintiff to provide security for the defendant’s costs in certain circumstances, such as:

   • If the plaintiff is a foreign national residing outside India.
   • If the plaintiff is a pauper or claims to be indigent (unable to pay court costs).
   • If the plaintiff is likely to be unable to pay the costs of the suit due to financial instability.
   • If the plaintiff is not domiciled in India, and there is a risk that they may abscond or not be traceable within India.

2. Order of the Court:

   • The defendant must apply to the court for security for costs, specifying the grounds on which the application is made.
   • The court will decide whether security should be provided and may order the plaintiff to deposit a sum of money or provide other forms of security as the court deems fit.

Rule 2: How Security Should Be Provided

1. Form of Security:
   Security may be provided in the form of money deposited with the court or other valuable assets. It may also take the form of a bank guarantee or a surety bond, depending on the court’s discretion.

2. Court’s Discretion:
   The court has discretion in determining the form and amount of security to be provided. The amount of security may be based on the estimated costs of the defendant or the nature of the case, and the court may assess whether it is reasonable in the given context.

Rule 3: Application for Security

1. Defendant’s Application:
   The defendant may apply to the court for an order requiring the plaintiff to furnish security for costs. This application can be made before or after the suit has been filed, but typically, it is made early in the proceedings when there is a reasonable concern about the plaintiff’s ability to pay the costs.

2. Time for Furnishing Security:
   If the court orders security for costs, the plaintiff will be given a specified time to deposit the security. If the plaintiff fails to provide the required security within the time allowed, the court may dismiss the suit.

Rule 4: Refusal or Failure to Furnish Security

1. Dismissal of the Suit:
   If the plaintiff fails to deposit the security as ordered by the court, the court has the authority to dismiss the plaintiff’s suit. The dismissal will be with costs, meaning the defendant will be entitled to recover costs from the plaintiff.

2. Consequences of Non-Compliance:
   If the security is not provided within the time prescribed by the court, it effectively amounts to the plaintiff’s failure to pursue the suit, and the case is dismissed. This serves as a safeguard for the defendant to ensure that they are not burdened with the costs of a suit that may be frivolous or filed by a party unable to meet its financial obligations.

Rule 5: Security for Costs in Appeals

1. Application in Appeals:
   Security for costs can also be required in the case of appeals. If the appellant (the person filing the appeal) is likely to be unable to pay the costs of the respondent in case the appeal is unsuccessful, the respondent may apply for security for costs in the same manner as in a regular suit.

2. Providing Security for Appeals:
   In appeals, the appellant may be required to furnish security to the satisfaction of the court. If the appellant fails to provide the security, the court may dismiss the appeal or take other measures as it deems fit.

Punishment

Dismissal of the Suit:
If the plaintiff fails to furnish security for costs as ordered by the court, the suit can be dismissed. This means that the plaintiff cannot proceed with the litigation unless the required security is deposited. The dismissal is usually with costs to the defendant.

Appeal Rejection:
In case of an appeal, if the appellant does not provide the required security, the appeal may be dismissed or rejected, as the court may consider the failure to provide security as a ground for discontinuing the appeal.