Order 38 Of CPC | Failure To Deposit The Security Amount Would Not Result In Forfeiture Of The Right To File A Written Statement: Karnataka High Court

The Karnataka High Court held that the failure to deposit the security amount would not result in forfeiture of the right to file a written statement under Order XXXVIII of the Civil Procedure Code (CPC).

The Court allowed a Writ Petition challenging the order of the Trial Court whereby the Application seeking permission to file a written statement under Section 151 of the CPC was rejected.

“Order XXXVIII of CPC would not prohibit filing of written statement nor the Court could deny filing of written statement. If the petitioner/defendant fails to furnish security, consequences for not depositing security amount as ordered is different and not depositing the security amount would not result in forfeiting his right to file written statement”, Justice S.G Pandit observed.

Advocate Giridhar S.V appeared for the Petitioner (Defendant in original suit), and Advocate Honakhande Basagowda Pandit appeared for the Respondent (Plaintiff in original suit).

The Court observed that it has the power to issue a warrant for the arrest of the defendant under Order XXXVIII Rule 1 of the CPC if it believes that the defendant intends to delay the plaintiff, avoid court proceedings, or obstruct or delay the execution of any decree that may be passed against them. The Court noted that if arrested, the defendant must appear before the court to show cause why they should not furnish security for their appearance.

Furthermore, the Court noted that per Sub-rule (2) of Order XXXVIII of the CPC, if the defendant fails to show cause, the court shall order them to either deposit money or other property sufficient to answer the claim against them or to furnish security for their appearance during the pendency of the suit. If the defendant shows cause, the court must consider it and pass orders in terms of sub-rules (5) or (6) of Order XXXVIII of CPC, the Court asserted.

“Under Order XXXVIII Rule 1 of CPC, the Court is empowered on satisfying that the defendant with an intent to delay the plaintiff or to avoid any process of the Court or to obstruct or delay the execution of any decree that may be passed against him, issue warrant to arrest the defendant and bring him before the Court to show cause why he should not furnish security, for his appearance. Sub-rule (2) of Order XXXVIII of CPC would state that where the defendant fails to show cause, the Court shall order him either to deposit in Court money or other property sufficient to answer the claim against him or to furnish security for his appearance at any time when called upon during the pendency of the suit. When cause is shown by the defendant, the Court is required to consider the cause shown and shall have to pass order in terms of sub-rules (5) or (6) of Order XXXVIII of CPC. In the case on hand, on the application of the respondent/plaintiff filed under Order XXXVIII Rules 1, 2, 4 and 5 of CPC, the trial Court directed the defendant to furnish the security to the extent of suit claim and the trial Court has not passed or issued warrant to arrest the defendant. When the cause is shown by the defendant, it is appropriate for the trial Court to consider the cause shown and pass orders on the application filed under Order XXXVIII Rules 1, 2, 4 and 5 of CPC”, the Court observed. 

The Court held that the Respondent had applied under Order XXXVIII Rules 1, 2, 4, and 5 of CPC, and the Trial Court had directed the defendant to furnish security to the extent of the suit claim. However, the Court held that the Trial Court failed to consider the cause shown by the petitioner/defendant filed under Order XXXVIII Rules 1, 2, 4, and 5 of CPC.

Accordingly, the Court allowed the Petition and set aside the impugned order.

Cause Title: M/S. Mysore Trade Links v M/S. Bava Industries

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