Vinod Seth v Devinder Bajaj

• The plaintiff sought specific performance of an oral agreement under which the defendants were said to have agreed to develop their property with him.
• The learned Single Judge, affirmed by the Division Bench, directed the plaintiff to file an affidavit undertaking to pay Rs 25 lakh to the defendants if the suit failed, as a condition of continuing the suit.

1. Can a civil court direct a plaintiff to undertake to pay damages to the defendant if the suit fails?
2. How should costs operate to discourage speculative suits?

• The Code does not authorise such a direction. It provides for costs (S.35), compensatory costs (S.35A), costs for delay (S.35B) and security for costs (O.XXV), but not for a pre-trial undertaking to pay damages. No contract or substantive law (TP Act, Specific Relief Act) supports it, and S.151 cannot be used to create such a power.
• On costs, the Court observed that costs should follow the result in all cases, that non-levy of costs should be supported by reasons, that the Rs 3,000 ceiling on compensatory costs under S.35A has become ineffective, and that the legislature and the Law Commission should revisit Ss.35 and 35A.
• Result: appeal allowed in part. The direction to file the Rs 25 lakh undertaking was set aside. Instead, the defendants were permitted, despite S.52 of the TP Act, to deal with the suit property, subject to furnishing security of Rs 3 lakh.

A civil court cannot, without an enabling provision, require a plaintiff to undertake to pay damages to the defendant if the suit fails; the remedies for an unjust suit are costs, compensatory costs and a separate suit for damages.