Is it mandatory for NRI litigant to furnish security under Order XXV Rule 1(1) of CPC: Delhi High Court refers question to larger bench

A single-judge of the Delhi High Court recently referred a case to a larger bench to interpret and pass an authoritative decision on whether Order XXV Rule 1(1) of the Civil Procedure Code (CPC) is mandatory in nature [Communication Components Antenna Inc v Ace Technologies Corp and Ors]..The provision says that in all cases where the plaintiff is residing outside India and does not possess any immovable property in India, the court shall direct the plaintiff to deposit security for payment of costs incurred or likely to be incurred by the defendant for contesting the suit..Single-judge Justice Amit Bansal was dealing with a suit filed by Communication Component Antenna against Ace Technologies Corporation.An application was moved by the Ace Technologies under the Order XXV Rule 1(1) seeking a direction to the plaintiff to deposit ₹ 8 crore as security.However, the counsel appearing for the plaintiff argued the word ‘shall’ in the provision has to be read as ‘may’ and therefore, it is not mandatory for the plaintiff to deposit security for costs with the court in all cases where the plaintiff resides outside India and does not own any immovable property in India.After considering the arguments and cases cited, Justice Bansal noted that there appeared to be a clear inconsistency in the views expressed by different coordinate benches of the court on the issue.The Court observed that while in some cases, the judges have held the provision to be mandatory in nature, in others it has been said that the condition is not mandatory and the court has a discretion.“Let the matter be placed before Hon’ble the Chief Justice for constitution of a Larger Bench/Division Bench for consideration of the interpretation of Order XXV Rule 1(1) of the CPC,” the judge ordered..The bench framed the following questions:Whether it is mandatory for the court to direct the plaintiff residing outside India and not possessing any sufficient immovable property within India, to furnish a security in terms of Order XXV Rule 1(1) of the CPC for payment of costs incurred or likely to be incurred by the defendant or whether the Court can exercise discretion in this regard?Whether the proviso to Order XXV Rule 1(1) of the CPC is only applicable in respect of the suits relating to immovable property?.Advocates J Sai Deepak, Sidhant Goel, Mohit Goel and Deepankar Mishra appeared for the plaintiff.Senior Advocate Sandeep Sethi along with advocates Vineet Rohilla and Rohit Rangi appeared for the defendants..[Read Order]