Order 9 Rule 7 CPC | Security Deposit for Ex Parte Recall Must Be Proportionate to Claim Amount : Himachal Pradesh HC

The Himachal Pradesh High Court recently addressed the scope of conditions that a trial court may impose while recalling an exparte order under Order 9 Rule 7 of the Code of Civil Procedure (CPC). The Court held that while trial courts have discretion to impose conditions, such conditions must be reasonable and proportionate to the claim amount. This judgment clarifies the limits of judicial discretion in interlocutory proceedings and reinforces the principle that procedural orders must not impose undue financial burdens on parties.

Background & Facts

The Dispute

The respondent, Devinder Kumar, filed a civil suit before the Civil Judge, Barsar, seeking recovery of Rs. 5,00,000 from the petitioner, M/s Escorts Kubota Ltd. (formerly M/s Escorts Construction Equipments Ltd.), on account of deficiency of services and torts. The suit also claimed interest at 11% per annum until realization of the amount.

Key Facts

• The plaintiff filed the suit (Civil Suit No. 237 of 2015) on an unspecified date
• Notices issued to the defendant under Order 5 Rule 20 CPC were published in the newspaper Amar Ujala on 28.12.2019
• Despite publication, the defendant failed to appear, leading to an exparte order dated 24.05.2022
• The defendant claimed ignorance of the suit and filed an application under Order 9 Rule 7 CPC to recall the exparte order
• The defendant also filed an application under Section 5 of the Limitation Act for condonation of delay in filing the recall application
• The defendant contended that its registered office was at 15/5, Mathura Road, Faridabad, Haryana, and not at the address mentioned in the suit (Plot No. F-77/C, Road No. I, VKI Area, Jaipur, Rajasthan)
• The defendant alleged it became aware of the suit only on 20.09.2025, when summoned to produce records

Procedural History

• 19.11.2019: Trial court allows application under Order 5 Rule 20 CPC for publication of notice
• 28.12.2019: Notice published in Amar Ujala
• 24.05.2022: Trial court passes exparte order against the defendant
• Post-20.09.2025: Defendant files application under Order 9 Rule 7 CPC for recall of exparte order, along with an application under Section 5 of the Limitation Act for condonation of delay
• 26.11.2025: Trial court allows the recall application but imposes conditions, including a security deposit of Rs. 9,00,000
• Post-26.11.2025: Defendant files the present petition under Article 227 of the Constitution challenging the condition of Rs. 9,00,000

The Conditions Imposed by the Trial Court

The trial court, while allowing the recall application, imposed the following conditions:

1. The defendant was directed to pay costs of Rs. 5,000 to the plaintiff for expenses incurred towards publication and witness examination
2. The defendant was to bear the process fee and diet money for any witness recalled for cross-examination. Failure to do so would result in the defendant being presumed to admit the witness's testimony
3. The defendant was to ensure the presence of plaintiff’s witness No. 7 (Dealing Head/Manager of the defendant Company) along with relevant records as directed by the court
4. The defendant was to deposit Rs. 9,00,000 as security for the possible decreetal amount and interest
5. Compliance with all conditions was required on or before the next hearing date, with only one opportunity granted for the same
6. Shamsher Singh, who filed the applications, was recognized as the defendant’s authorized representative, subject to filing a formal authorization letter/resolution
7. Failure to comply with any condition would result in adverse orders, including forfeiture of the right to file a written statement or participate further in the proceedings

Relief Sought

The petitioner sought the following reliefs:

• Quashing of the condition directing deposit of Rs. 9,00,000 as arbitrary and unreasonable
• Permission to join the proceedings without the impugned condition

The Legal Issue

The central question before the High Court was whether a trial court, while recalling an exparte order under Order 9 Rule 7 CPC, can impose a security deposit condition that exceeds the claimed amount in the suit, and if so, under what circumstances.

Arguments Presented

For the Petitioner

• The condition of depositing Rs. 9,00,000 was arbitrary, unreasonable, and without legal justification
• The trial court erred in imposing a condition that could only be justified under Order 38 Rule 5 CPC, which requires fulfillment of specific statutory provisions
• The impugned condition was disproportionate to the plaintiff’s claim of Rs. 5,00,000
• The petitioner argued that the trial court had exceeded its jurisdiction by imposing a financial burden unrelated to the merits of the recall application

For the Respondent

• The defendant had deliberately avoided appearance despite publication of notice, justifying the exparte order
• The recall application was a tactic to delay proceedings, and the condition of Rs. 9,00,000 was reasonable as security for the possible decree
• The trial court had wide discretion under Order 9 Rule 7 CPC to impose conditions, and the High Court should not interfere under Article 227 unless the order was patently illegal or perverse
• The respondent contended that the petitioner had failed to demonstrate any illegality in the trial court’s order

The Court's Analysis

The High Court observed that while the trial court had jurisdiction to impose conditions under Order 9 Rule 7 CPC, such conditions must be reasonable and proportionate to the circumstances of the case. The Court noted:

"The learned trial Court was within its jurisdiction to impose a cost for recalling the exparte order, to permit the defendant to join the proceedings. However, considering the fact that the suit was filed for recovery of Rs. 5,00,000 only, the condition to deposit a sum of Rs. 9,00,000 as security is liable to be modified."

The Court emphasized that Order 9 Rule 7 CPC does not empower trial courts to impose unreasonable financial conditions that effectively prejudge the merits of the case. While the trial court had broad discretion to ensure the defendant’s bona fides, the condition must not exceed the claimed amount unless justified by exceptional circumstances.

The Court also distinguished the impugned condition from those under Order 38 Rule 5 CPC, which deals with attachment before judgment and requires a higher threshold of proof, such as the defendant’s intention to delay or defraud creditors. The trial court had not applied this standard, making the condition legally unsustainable in its original form.

The Verdict

The High Court partially allowed the petition and modified the trial court’s order dated 26.11.2025 as follows:

• The condition directing the defendant to deposit Rs. 9,00,000 was set aside
• The defendant was instead directed to deposit Rs. 5,00,000, matching the plaintiff’s claimed amount
• The deposited amount was to be invested in a Fixed Deposit Receipt (FDR) and not disbursed to any party until the final disposal of the suit
• All other conditions imposed by the trial court, including payment of costs and ensuring witness presence, were upheld
• The petition was disposed of with these modifications, and pending miscellaneous applications were also disposed of

What This Means For Similar Cases

Security Deposit Conditions Must Be Proportionate

• Trial courts must ensure that conditions imposed under Order 9 Rule 7 CPC are reasonable and proportionate to the claimed amount
• A security deposit exceeding the plaintiff’s claim is legally unsustainable unless justified by exceptional circumstances, such as evidence of fraud or deliberate delay
• Practitioners should challenge disproportionate conditions under Article 227, arguing that they prejudge the merits of the case

Trial Courts Have Discretion, But Within Limits

• While trial courts have broad discretion to impose conditions for recalling exparte orders, this discretion is not unfettered
• Conditions must not act as a substitute for substantive adjudication or impose undue financial burdens on parties
• The judgment reinforces that procedural orders must not exceed the scope of the relief sought in the suit

Strategic Considerations for Defendants

• Defendants seeking recall of exparte orders should anticipate conditions such as costs or security deposits
• If a condition is disproportionate, defendants can approach the High Court under Article 227 for modification
• The judgment provides a precedent for arguing that security deposits must align with the claimed amount unless exceptional circumstances exist