Security for Costs (Order XXV)

Order XXV of the Code of Civil Procedure, 1908 is a short Order — two rules — that addresses a single procedural problem. A defendant who is sued by a plaintiff with no recoverable assets within the jurisdiction of the court faces a structural risk: even if he wins the suit and is awarded costs against the plaintiff, he may have no realistic way of recovering them. Order XXV authorises the court, in defined cases, to require the plaintiff to deposit money or furnish security for the defendant's costs as a condition of being allowed to prosecute the suit. Failure to comply leads to dismissal under Rule 2; the dismissal can be set aside under sub-rule (3) on cause shown.

For the judiciary aspirant, the Order is a small but heavily examined block. The mandatory case — a sole plaintiff (or all plaintiffs) residing outside India and having no sufficient immovable property within India other than the suit property — is the only situation in which the court has no discretion. In every other case, the power is discretionary. The dismissal under Rule 2(2) is appealable under Order XLIII Rule 1(o); the order rejecting an application to set aside the dismissal under Rule 2(3) is also appealable under Order XLIII Rule 1(p). The two appellate routes, the discretionary character of the power, and the linkage with Order XLI Rule 10 (security for costs in appeal) are the recurring exam angles.

Statutory anchor and scheme

Order XXV contains two rules. Rule 1 deals with the demand for security for costs at the trial stage. It has six sub-rules. Sub-rule (1) confers a discretionary power on the court, at any stage of the suit, to order the plaintiff to give security for the payment of all costs incurred and likely to be incurred by any defendant. Sub-rule (3) sets out the mandatory case — sole plaintiff or all plaintiffs residing outside India and having no sufficient immovable property within India other than the property in suit. Sub-rule (5) carves the carve-out for a plaintiff suing in a representative capacity. Rule 2 prescribes the consequence of failure to furnish security: the suit is dismissed unless the plaintiff is permitted to withdraw therefrom, and the dismissed plaintiff may apply for the dismissal to be set aside on cause shown.

The Order operates only at the trial stage. The corresponding appellate-stage provision is Order XLI Rule 10, which empowers the appellate court to demand security for the costs of the appeal, of the original suit, or of both, before the respondent is called to answer. Both Orders share the same structural logic: the court secures the eventual costs award against an opposing party who may not be able to satisfy it. The conceptual framework also dovetails with the deposit machinery in Order XXIV on payment into court — both Orders use the device of money parked in court, but for opposite purposes. Order XXIV is the defendant's offer of satisfaction; Order XXV is the plaintiff's compulsory deposit for the defendant's protection.

Rule 1(1) — the discretionary power

Rule 1(1) opens the Order with the general discretionary power. At any stage of a suit, the court may, either of its own motion or on the application of any defendant, order the plaintiff, for reasons to be recorded, to give within the time fixed by it, security for the payment of all costs incurred and likely to be incurred by any defendant. The power is wide. The court may exercise it on its own motion. It may exercise it on the defendant's application. It may exercise it at any stage of the suit — from the moment the plaint is presented to the moment judgment is reserved. The amount of security is fixed by the court, having regard to the likely scale of the defendant's costs.

The discretion under sub-rule (1) is judicial, not arbitrary. The court must record reasons. The factors the courts have routinely taken into account include the financial position of the plaintiff, the residence of the plaintiff (whether within or outside the jurisdiction), the past conduct of the plaintiff in similar litigation, the nature of the claim (whether bona fide or vexatious), and the existence of attachable assets within the jurisdiction. A wealthy resident plaintiff with substantial assets in India will not ordinarily be required to furnish security; an impecunious plaintiff with no traceable assets and a weak case may be required to furnish substantial security as a condition of continuing the suit.

The Rule 1(1) power is not, however, a substitute for the indigent-persons machinery of Order XXXIII. A genuinely poor plaintiff who cannot afford to pay court fees has the separate route of seeking permission to sue as an indigent person; she cannot be visited with a security-for-costs order designed to defeat that route. The discretion under Rule 1 must therefore be exercised with sensitivity to the constitutional commitment to access to justice — courts have consistently held that a security order must not have the practical effect of barring a poor plaintiff from her remedy.

Where the discretion is invoked on the defendant's application, the defendant must point to specific facts — past failures by the plaintiff to satisfy costs orders, residence outside the jurisdiction without disclosed Indian assets, vexatious litigation history — that justify the demand. A bare allegation of poverty is not enough; nor is the mere fact that the plaintiff has lost an interlocutory application. The court must weigh the prejudice to the defendant of an unrecoverable costs award against the prejudice to the plaintiff of being barred from prosecuting an otherwise bona fide claim. The test is balanced and fact-specific, and the order — when made — must record the reasons the court found persuasive.

Rule 1(3) — the mandatory case

Sub-rule (3) of Rule 1 — the heart of the Order — is the only mandatory case. It applies where the sole plaintiff (or where there are several plaintiffs, all of them) is residing outside India and the plaintiff (or any of them) does not possess any sufficient immovable property within India other than the property in suit. In such a case, the court "shall" — not "may" — order the plaintiff to give security for the payment of all costs incurred and likely to be incurred by any defendant. The mandatory character of the rule is absolute: where the two conditions are satisfied (foreign residence plus absence of sufficient Indian immovable property other than the suit property), the court has no discretion to refuse the security order.

The two conditions must be cumulative. A foreign-resident plaintiff who owns sufficient immovable property in India (other than the suit property) is outside the mandatory rule. A resident plaintiff with no Indian property is outside it too — the residence test is the gateway. The exclusion of "the property in suit" from the calculation is significant: a foreign-resident plaintiff cannot use the very property she is suing to recover as the asset that obviates the need for security. The reasoning is structural: title to the suit property is the question to be decided by the very suit; treating it as security would beg the question. The same exclusion appears in the parallel proviso to Order XLI Rule 10 — the appellate-stage analogue — confirming that the principle is not local to Order XXV but runs through the Code's security framework. A foreign plaintiff who acquires substantial Indian immovable property after the suit is instituted may apply to have the security order discharged or reduced, and the court's continuing power to revise security at any stage of the suit accommodates such changes in circumstance.

The corresponding rule in place of suing under Sections 15 to 21 — that a plaintiff may sue in any court within whose jurisdiction the cause of action arises — does not affect the security regime. A foreign-resident plaintiff who lawfully invokes the Indian court's jurisdiction over a cause of action arising in India is still within Rule 1(3) if she has no sufficient Indian immovable property other than the suit property. The mandatory rule operates on residence and assets, not on the propriety of the choice of forum.

Rule 1(5) — representative suits and trustees

Sub-rule (5) carves out the position of plaintiffs suing in a representative capacity. Where the plaintiff sues as an executor, administrator, trustee, or in any representative capacity, the court may treat the personal assets of the representative or the assets of the estate as the relevant pool. The rule is intended to prevent the security regime from inadvertently disabling representative actions where the trust or estate is solvent but the trustee personally is not. Conversely, a representative plaintiff who is personally well-resourced cannot rely on personal wealth where the trust or estate is the substantive plaintiff and the trust assets are exposed to the costs award.

The interface with the chapter on parties to a suit, joinder, misjoinder and non-joinder under Order I is constant. Where a plaintiff sues both in personal and representative capacity, the court may calibrate the security demand to reflect both. Where a representative plaintiff is replaced (under Order XXII on death, marriage and insolvency of parties) by a successor trustee, the security order continues against the successor unless the court directs otherwise.

Rule 2 — dismissal on default and restoration

Rule 2 is the consequence rule. Sub-rule (1) directs that, in the event of a plaintiff failing to furnish security within the time fixed by the court, the court shall make an order dismissing the suit, unless the plaintiff is permitted to withdraw therefrom. The dismissal is automatic on the failure to comply — but the alternative of permitted withdrawal under Order XXIII Rule 1 remains open, with the consequences of that Order attaching: a plaintiff who withdraws under Rule 1(1) is permanently barred from a fresh suit; a plaintiff who obtains leave under Rule 1(3) may file a fresh suit on the formal-defect or sufficient-grounds grounds.

Sub-rule (2) preserves the right of appeal: the dismissal under sub-rule (1) is appealable under Order XLIII Rule 1(o). Sub-rule (3) provides the restoration route: where the suit is dismissed under sub-rule (1), the plaintiff may apply for an order to set aside the dismissal, and if the court is satisfied that there was sufficient cause for not furnishing the security within the time allowed, it shall set aside the dismissal upon such terms as to security, costs or otherwise as it thinks fit, and shall appoint a day for proceeding with the suit. The application for restoration must be made within thirty days of the dismissal — Article 122 of the Limitation Act, 1963, the same article that governs setting aside a dismissal under Order IX Rule 9. The order rejecting a Rule 2(3) application is itself appealable under Order XLIII Rule 1(p) — but only "in a case open to appeal".

Form and quantum of security

The Order is silent on the form in which security is to be furnished — that is left to the court's discretion. The common forms are: cash deposit into the court's deposit account; bank guarantee from a scheduled bank; surety bond by a person of means within the jurisdiction; or charge on immovable property of the plaintiff within the jurisdiction. The court may accept any of these and may, on the defendant's objection, scrutinise the sufficiency of the security. Where a surety is offered, the court may require the surety to furnish an affidavit of means and may, in case of doubt, refuse the surety and require cash or bank guarantee instead.

The quantum of security is also discretionary. The court must fix a sum that is realistic in light of the likely costs the defendant will incur — including counsel's fees, court fees, witness expenses, and other recoverable costs under the costs framework treated in the chapter on judgment and decree under Section 33 and Order XX. An excessive security order may be challenged in revision; an inadequate one may be supplemented on later application by the defendant. The court retains the power, throughout the pendency of the suit, to enhance or reduce the security as circumstances require.

The form-and-quantum question also intersects with the Code's broader treatment of court deposits. Where security is furnished by cash deposit, the sum is held in the court's deposit account pending the outcome of the suit. On the suit being decreed in favour of the plaintiff, the deposit is refunded to her — the security obligation has lapsed because the costs award goes the other way. On the suit being dismissed with costs against the plaintiff, the defendant may apply to draw from the deposit in satisfaction of the costs decree, the deposit operating as ready-made attached property without the need for separate execution proceedings. The court's order on the deposit forms part of the final decree and is enforceable in the manner provided in Order XXI on the procedure of execution. Where the security takes the form of a surety bond, the surety becomes liable to the defendant on default, and the bond may be enforced in execution as if it were a decree against the surety — Section 145 of the Code is the substantive route for that enforcement.

Order XXV and Order XLI Rule 10 — appellate-stage security

Order XLI Rule 10 is the appellate analogue. It empowers the appellate court, in its discretion, either before the respondent is called upon to appear or afterwards on the respondent's application, to demand from the appellant security for the costs of the appeal, of the original suit, or of both. The proviso adds a mandatory case parallel to Order XXV Rule 1(3): the court "shall" demand security where the appellant resides outside India and has no sufficient immovable property within India other than the property in suit. Where the security is not furnished in compliance with the order, the court may reject the appeal — and dismissal of an appeal for failure to give security for costs is treated as a dismissal for default within the meaning of Order XLI Rule 22(4), so cross-objections of the respondent do not automatically stand rejected on that ground.

The two security regimes — Order XXV at the trial stage and Order XLI Rule 10 at the appellate stage — together cover the risk of an unrecoverable costs award at every stage of the proceeding. The interface with the chapter on first appeals from original decrees under Order XLI is therefore central. Both Orders also share the same structural feature that the order demanding security is interlocutory in character — it does not finally determine the rights of the parties — but the consequential dismissal on default is appealable as a final order.

Insolvency, abatement, and security

Where a defendant becomes insolvent during the pendency of the suit and the assignee or receiver in insolvency is brought on the record under Order XXII Rule 8, Rule 8(2) of Order XXII triggers a security obligation: the court may require the assignee or receiver to give security for the costs thereof within such time as it directs, and on failure, the defendant may apply for the dismissal of the suit. The obligation parallels Order XXV but operates only on the limited insolvency-substitution facts. Similar principles apply where the appellant becomes insolvent in appeal — the official assignee must give security for costs, failing which the appeal abates and cross-objections cannot be heard. Mul Chand v. Domrie & Co Ltd (1929) (Calcutta) is the working illustration.

The security obligation also surfaces in Order XXXII Rule 6 in suits by minors: where a court makes an order under that rule directing security to be furnished, the provisions of Rule 2 of Order XXV apply so far as may be. The cross-reference imports the dismissal-on-default and restoration-on-cause-shown machinery into the minor-plaintiff regime. The doctrinal coherence is significant: the Code uses Rule 2 of Order XXV as the standard procedural mechanism wherever a security obligation must be enforced.

MCQ angle and recurring distinctions

Three distinctions recur. First, the difference between Rule 1(1) (discretionary security power, exercisable for reasons recorded) and Rule 1(3) (mandatory security where the foreign-residence-plus-no-sufficient-Indian-immovable-property test is satisfied). Second, the difference between Order XXV (trial-stage security) and Order XLI Rule 10 (appellate-stage security). Both have a discretionary head and a mandatory head; both share the same foreign-residence-and-no-Indian-property test for the mandatory limb. Third, the difference between Order XXV (the plaintiff's compulsory deposit for the defendant's protection) and the defendant's voluntary deposit in satisfaction of the plaintiff's claim under Order XXIV. Both park money in court, but for opposite purposes.

Two more points are exam-favourites. The dismissal under Order XXV Rule 2(1) is appealable under Order XLIII Rule 1(o); the order rejecting a Rule 2(3) restoration application is appealable under Order XLIII Rule 1(p) only "in a case open to appeal". The thirty-day limitation under Article 122 of the Limitation Act for the Rule 2(3) restoration application is the same as for setting aside a dismissal under Order IX Rule 9. Mastery of Order XXV sets up the conditional-deposit framework that runs through Order XXIII Rule 1 on withdrawal of suits (the alternative to dismissal-on-default) and the appellate-stage security regime in Order XLI Rule 10 — the same statutory device, deployed at different procedural windows.

One last point on practice. The defendant's application for security under Rule 1(1) should ordinarily be made at the earliest opportunity — typically with or shortly after the written statement is filed. A defendant who waits until the close of evidence before seeking security exposes himself to the criticism that the application is tactical rather than genuine, and the court may refuse the order on that ground alone. The same caution applies in appeal under Order XLI Rule 10: the application should be made before the respondent is called upon to answer or shortly thereafter; a late application risks rejection. Timely invocation, accompanied by a specific factual foundation about the plaintiff's residence, assets, and litigation history, is the procedural posture most likely to yield an order. The discipline echoes the broader norm in the Code that procedural rights must be asserted promptly or are at risk of being treated as waived.

Frequently asked questions

When is an order for security for costs under Order XXV Rule 1 mandatory?

Only in the single case set out in Rule 1(3): where the sole plaintiff (or where there are several plaintiffs, all of them) is residing outside India and the plaintiff (or any of them) does not possess any sufficient immovable property within India other than the property in suit. Both conditions must be cumulative — foreign residence and absence of sufficient Indian immovable property other than the suit property. The exclusion of the suit property from the calculation is significant; a foreign-resident plaintiff cannot rely on the very property she is suing to recover. In every other case, the power under Rule 1(1) is discretionary and must be exercised for reasons recorded.

What happens if the plaintiff fails to furnish the security within the time fixed by the court?

Rule 2(1) directs that the court shall make an order dismissing the suit, unless the plaintiff is permitted to withdraw therefrom under Order XXIII Rule 1. The dismissal is automatic on failure to comply. Sub-rule (2) makes the dismissal appealable under Order XLIII Rule 1(o). Sub-rule (3) preserves the restoration route: the plaintiff may apply within thirty days (Article 122 of the Limitation Act) for the dismissal to be set aside on showing sufficient cause for not furnishing the security in time. If the court sets aside the dismissal, it does so on such terms as to security, costs or otherwise as it thinks fit, and appoints a day for proceeding with the suit.

Is the order rejecting a Rule 2(3) restoration application appealable?

Yes, but only in a case open to appeal. Order XLIII Rule 1(p) makes appealable an order under Rule 2 of Order XXV rejecting an application (in a case open to appeal) for an order to set aside the dismissal of a suit. The phrase "in a case open to appeal" qualifies the right — where the underlying suit was of a value or kind from which an appeal would have lain against the decree, the rejection of the restoration application is also appealable. Where the original suit was not appealable (for example, certain small-cause suits), the rejection of the restoration application is also not appealable. The structure mirrors the appealability rules elsewhere in Order XLIII.

Is Order XXV the same as Order XXIV?

No — they are opposites. Order XXIV deals with payment into court by the defendant in satisfaction of the plaintiff's claim — a unilateral deposit by the defendant designed to limit interest and costs exposure on a debt or damages claim. Order XXV deals with the plaintiff's compulsory deposit for the defendant's protection — security for costs, designed to ensure that if the defendant ultimately wins and is awarded costs against the plaintiff, the costs are recoverable. Both Orders use the device of money parked in court, but for opposite purposes. The procedural mechanics — court receipt, custody, refund — are common to both, but the underlying purpose is reversed.

Can a plaintiff sue as an indigent person and still be ordered to give security for costs?

No, not ordinarily. A genuinely poor plaintiff who has been granted permission to sue as an indigent person under Order XXXIII has by definition been found by the court to lack the means to pay court fees. To impose a security-for-costs order on such a plaintiff would defeat the access-to-justice purpose of Order XXXIII. The court's discretion under Order XXV Rule 1(1) must be exercised consistently with the constitutional commitment to access to courts; an indigent-person plaintiff cannot be required to furnish security as a condition of continuing the suit. The mandatory rule under Rule 1(3) — for foreign-resident plaintiffs without sufficient Indian property — operates independently of indigency status, but is confined to its own narrow conditions.

How does Order XXV interface with Order XLI Rule 10?

Order XXV operates at the trial stage; Order XLI Rule 10 operates at the appellate stage. Both have a discretionary head and a mandatory head. Order XLI Rule 10(1) gives the appellate court a discretionary power to demand security for the costs of the appeal, of the original suit, or of both. The proviso to Rule 10(1) sets out the mandatory case: where the appellant resides outside India and has no sufficient immovable property within India other than the property in suit, the court shall demand security. The mandatory test is identical to Order XXV Rule 1(3). Failure to furnish appellate security leads to rejection of the appeal, treated as a dismissal for default within Order XLI Rule 22(4).