Delhi High Court
Kiran Shoes Manufacturers vs M/S Welcome Shoes Pvt Ltd & Ors on 18 January, 2017
$~5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CS(OS) 1723/2011
KIRAN SHOES MANUFACTURERS ..... Plaintiff
Through: Mr. Pranay Sarkar, Advocate.
versus
M/S WELCOME SHOES PVT LTD & ORS ..... Defendants
Through: Mr. N.K.Kantawala and Mr. P.
Sharma, Advocates.
CORAM:
HON'BLE MR. JUSTICE VIBHU BAKHRU
ORDER
% 18.01.2017
VIBHU BAKHRU, J
1. The disputes involved in the present suit fall under the definition of
'Commercial Dispute' as defined under Section 2(1)(c) of the Commercial
Courts, Commercial Division and Commercial Appellate Division of High
Courts Act, 2015. Accordingly, the Registry is directed to re-number the
present suit as CS (Commercial) and while allotting the new number, the
Registry shall also indicate on the file, the old registration number of the
case.
IA No.11400/2016
2. This is an application filed on behalf of the plaintiff under Order VI
Rule 17 of the Code of Civil Procedure, 1908 (hereafter 'the CPC') for
amendment of the plaint. Mr N. K. Kantawala, learned counsel appearing
for the defendants fairly states that he does not oppose the application for
amendment of the plaint, albeit reserving the right to oppose the averments
made therein.
3. Accordingly, the application is allowed. The amended plaint is taken
on record.
4. Application is disposed of.
CS(OS) 1723/2011
5. The defendants may file their written statement within a period of
four weeks from today. Replication, if any, be filed within a period of two
weeks thereafter.
6. List before the Joint Registrar for admission / denial of the documents
on 08.02.2017.
IA No.16398/2012
7. This is an application filed on behalf of the defendants, inter alia
praying that the plaintiff be directed to secure the cost by depositing a sum
of `25,00,000/- with the Registrar General of this court.
8. Mr Kantawala has drawn the attention of this court to Order XXV
Rule 1 of the CPC which reads as under:-
"1. When security for costs may be required from
plaintiff.- (1) 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:
Provided that such an order shall be made in all
cases in which it appears to the court that a sole plaintiff
is, or (when there are more plaintiffs than one) that all the
plaintiffs are residing out of India and that such plaintiff
does not possess or that no one of such plaintiffs
possesses any sufficient immovable property within India
other than the property in suit."
9. Mr Kantawala further submits that in terms of the proviso to Order
XXV Rule 1 of the CPC, as the plaintiff does not have any immovable assets
in India, it is mandatorily required to secure the defendants as to the costs
incurred or likely to be incurred. He also referred to the order dated
21.12.2011 passed by this court in IA No.12462/2008 in CS(OS)
No.2031/2008 captioned Kiran Shoes Manufacturers v. Shri Sandeep Goel
and Ors. wherein the plaintiff had agreed to furnish appropriate security to
the extent of `5,00,000/-.
10. Mr Sarkar, the learned counsel for the plaintiff disputes the above
proposition. He referred to the decision of a coordinate bench of this court in
Alberto-Culver USA Inc v. Nexus Health & Home Care (P) Ltd.: 2009
(41) PTC 197 (Del.) wherein this court had held that it is not mandatory that
in every case, the court must direct the plaintiff to furnish security for costs.
11. The plaintiff is a foreign entity and it is admitted that plaintiff does
not have any immovable assets in this country. Although it is stated that the
plaintiff has a large turnover in India, it is not disputed that the plaintiff does
not have a bank account in India. In these circumstances, the apprehension
of the defendants that it would be difficult for the defendants to recover the
costs, if any, that may be awarded in its favour is merited.
12. The question whether the proviso to Order XXV Rule 1 of the CPC is
mandatory or not must be considered in the context of the express language
and the object of the said proviso. The rationale of the said proviso is clearly
to ensure that the defendant is not put to any inordinate inconvenience of
enforcing the award of costs in another jurisdiction. The use of the word
shall also indicates that the proviso is mandatory.
13. The decision of this court in Alberto-Culver USA Inc (supra) does
not address the language of the proviso to Order XXV Rule 1 of the CPC;
apparently, the decision turns on the language of the main provision itself.
Undisputedly, it is not mandatory to direct that the plaintiff provide security
for costs in each and every case. On the contrary, the court is required to
record reasons in writing if the court feels that such an order is necessary.
However, the proviso is couched in affirmative terms. It is applicable only
in cases where the plaintiff(s) are overseas entities and do not possess
sufficient immovable assets in India. If these two conditions are satisfied
then the defendant would have to be secured for the costs that it may incur.
This is also the view expressed by the Coordinate Bench of this court in S.
A. Brothers and Co. and Anr. v. John Bartholomow & Son Ltd. & Others:
2000 (88) DLT 425. The said decision was also not noticed by this court in
Alberto-Culver USA Inc (supra).
14. In these circumstances, the plaintiff is directed to provide security for
costs to the extent of `5,00,000/- to the satisfaction of the Registrar General
of this court within a period of four weeks.
15. The application is disposed of.
VIBHU BAKHRU, J
JANUARY 18, 2017
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