Order XXV of the Code of Civil Procedure, 1908, empowers Indian courts to mandate plaintiffs to furnish security for costs under specific circumstances. This provision ensures that defendants are safeguarded against potential financial losses arising from frivolous or vexatious litigation.

1. LEGAL PROVISIONS AND PROCEDURE

• Order XXV Rule 1: At any stage of a suit, the court may, either on its own motion or upon the defendant’s application, order the plaintiff to provide security for the payment of all costs incurred and likely to be incurred by the defendant. This order must be supported by recorded reasons. Notably, if the sole plaintiff, or all plaintiffs in cases with multiple plaintiffs, reside outside India and lack sufficient immovable property within India (apart from the property in dispute), the court is mandated to order such security.

• Order XXV Rule 2: If the plaintiff fails to furnish the required security within the stipulated time, the court shall dismiss the suit unless the plaintiff is permitted to withdraw. However, if the plaintiff can demonstrate sufficient cause for the delay, the court may set aside the dismissal upon appropriate terms and schedule a new date for proceeding with the suit.

2. JUDICIAL INTERPRETATIONS AND CASE LAWS

• Millennium & Copthorne International Limited v. Aryans Plaza Services Private Limited: In this case, the Delhi High Court emphasized the discretionary power of courts in determining the quantum of security to be provided by a plaintiff residing outside India. The court underscored the necessity of adapting legal provisions to contemporary circumstances, ensuring that the requirement for security does not become a tool for oppression.

3. PRINCIPLES AND DOCTRINES

• Principle of Natural Justice: The requirement for security for costs aligns with the principles of natural justice, ensuring that defendants are not unduly burdened by litigation costs, especially when plaintiffs are non-residents without substantial assets in India.

• Doctrine of Forum Non Conveniens: While not directly applicable, the doctrine emphasizes the importance of choosing an appropriate forum for litigation. Requiring security for costs from foreign plaintiffs indirectly discourages forum shopping and ensures that defendants are not disadvantaged by the plaintiff’s choice of jurisdiction.

4. COMPARATIVE ANALYSIS

In jurisdictions like the United Kingdom, courts possess similar powers to order security for costs, especially when plaintiffs are non-residents or lack sufficient assets within the jurisdiction. This comparative perspective highlights the universal recognition of protecting defendants from potential financial hardships due to plaintiffs’ inability to pay costs.

5. CRITICAL ANALYSIS

While Order XXV serves as a protective measure for defendants, it is imperative that courts exercise this power judiciously. The requirement should not become a barrier to justice for genuine plaintiffs. Courts must balance the need to protect defendants with the fundamental right of access to justice for plaintiffs.

6. FUTURE IMPLICATIONS

With the increasing globalization and cross-border transactions, the relevance of Order XXV is more pronounced. Courts must continuously evolve their interpretations to address challenges posed by non-resident litigants, ensuring that the provision serves its intended purpose without stifling legitimate claims.

REFERENCES

• Code of Civil Procedure, 1908. Order XXV.
• Millennium & Copthorne International Limited v. Aryans Plaza Services Private Limited.
• Law Commission of India Report No. 240 on Costs in Civil Litigation.
• “Explaining The Security Of Costs As Provided In The Civil Procedure Code.” Mondaq.