Case Note & Summary
The defendant, owner of the vessel m.t. CHEM LILY, filed a Notice of Motion seeking an order directing the plaintiff, Alpha Oil International, to deposit Rs. 24 lakhs as security for costs, and to dismiss the suit if the plaintiff failed to furnish such security. The defendant argued that the plaintiff had received US$ 2,60,000 from the erstwhile demise charterers and appropriated part of it towards its claim, but had not disclosed when this amount was received, and that the defendant had been renewing the bank guarantee furnished for release of the vessel. The court noted that the power to order security for costs under Order XXV of the Code of Civil Procedure, 1908, is discretionary and should be exercised only when the plaintiff's suit is prima facie frivolous or vexatious or the plaintiff is not residing in India. The court found that the plaintiff, though a foreign company, had already furnished security for the claim, and the suit was not shown to be frivolous or vexatious. The court also observed that the defendant had furnished security without prejudice and was disputing liability. The court dismissed the Notice of Motion, holding that no case was made out for ordering security for costs.
Headnote
A) Civil Procedure - Security for Costs - Order XXV CPC - Application for security for costs - Court held that the power to order security for costs is discretionary and should be exercised only when the plaintiff's suit is prima facie frivolous or vexatious or the plaintiff is not residing in India - In the present case, the plaintiff is a foreign company but has furnished security for the claim, and the suit is not shown to be frivolous - Hence, application dismissed (Paras 1-6).
Issue of Consideration
Whether the defendant is entitled to an order directing the plaintiff to deposit security for costs under Order XXV of the Code of Civil Procedure, 1908, and whether the suit should be dismissed for non-compliance.
Final Decision
Notice of Motion dismissed. No order as to costs.
Law Points
- Security for costs
- Admiralty jurisdiction
- Frivolous or vexatious litigation
- Order XXV CPC
- Section 151 CPC
Case Details
2014 LawText (BOM) (04) 64
Notice of Motion No.381 of 2014 in Admiralty Suit No.14 of 2008
Mr. Bimal Rajasekhar along with Ashwin Shankar for plaintiff; Mr. Prashant Pratap, Sr. Advocate along with Ashwini Sinha for defendant
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Nature of Litigation
Admiralty suit for recovery of bunker supply claim; defendant filed application for security for costs.
Remedy Sought
Defendant sought an order directing plaintiff to deposit Rs. 24 lakhs as security for costs and dismissal of suit for non-compliance.
Filing Reason
Defendant alleged that plaintiff had received payment from third party and appropriated it towards claim without disclosure, and that plaintiff was a foreign company.
Previous Decisions
The vessel was arrested and released upon furnishing security of USD 460,000 + interest at 6% p.a. by the defendant.
Issues
Whether the defendant is entitled to an order for security for costs under Order XXV CPC.
Whether the suit should be dismissed if security is not furnished.
Submissions/Arguments
Defendant submitted that the plaintiff had received US$ 2,60,000 from demise charterers and appropriated US$ 1,88,408.20 towards its claim without disclosure, and that the plaintiff is a foreign company not residing in India.
Plaintiff opposed the application, arguing that the suit is not frivolous and that security for the claim has already been furnished.
Ratio Decidendi
The power to order security for costs under Order XXV CPC is discretionary and should be exercised only when the plaintiff's suit is prima facie frivolous or vexatious or the plaintiff is not residing in India. In this case, the plaintiff is a foreign company but has furnished security for the claim, and the suit is not shown to be frivolous. Hence, no case for security for costs is made out.
Judgment Excerpts
The power to order security for costs is discretionary and should be exercised only when the plaintiff's suit is prima facie frivolous or vexatious or the plaintiff is not residing in India.
In the present case, the plaintiff is a foreign company but has furnished security for the claim, and the suit is not shown to be frivolous or vexatious.
Procedural History
Admiralty Suit No.14 of 2008 was filed by plaintiff for recovery of bunker supply claim. The vessel was arrested and released upon furnishing security. Defendant filed Notice of Motion No.381 of 2014 seeking security for costs. The motion was heard and dismissed on 8th April 2014.
Acts & Sections
- Code of Civil Procedure, 1908: Order XXV
