Order XXII Rule 8 CPC: Insolvency of Plaintiff and Dismissal of Suit

Order XXII Rule 8 of the Code of Civil Procedure, 1908 (CPC) explains what happens when a plaintiff becomes insolvent during a civil suit. Insolvency does not automatically terminate the proceedings. The rule also provides a procedure where the assignee or receiver does not continue the litigation or furnish security for costs when required.

Order XXII Rule 8 CPC - Statutory provision

Rule 8(1): Plaintiff's insolvency

The insolvency of a plaintiff in any suit which the assignee or receiver might maintain for the benefit of his creditors, shall not cause the suit to abate, unless such assignee or receiver declines to continue the suit or (unless for any special reason the Court otherwise directs) to give security for the costs thereof within such time as the Court may direct.

Rule 8(2): Procedure where assignee fails to continue suit or give security

Where the assignee or receiver neglects or refuses to continue the suit and to give such security within the time so ordered, the defendant may apply for the dismissal of the suit on the ground of the plaintiff's insolvency, and the Court may make an order dismissing the suit and awarding to the defendant the costs which he has incurred in defending the same to be proved as a debt against the plaintiff's estate.

Meaning and legal effect of Rule 8

Insolvency refers to a legal condition or process concerning a person unable to meet debts, under the insolvency law applicable to that person and proceeding. An assignee or receiver is a person legally authorised to administer or deal with the insolvent person's property or claims. Rule 8 addresses suits that such a person may maintain for the benefit of creditors.

Abatement is the cessation of a suit by operation of procedural law in specified circumstances. Under Rule 8, the plaintiff's insolvency by itself does not cause abatement. Continuation depends on the nature of the claim and the action taken by the assignee or receiver, subject to the court's directions.

When may a suit be dismissed under Rule 8?

1. The plaintiff becomes insolvent while a civil suit is pending.
2. The suit is of a kind that the assignee or receiver could maintain for the benefit of creditors.
3. The assignee or receiver declines, neglects or refuses to continue the suit, or fails to furnish security for costs within the time directed, subject to any special reason accepted by the court.
4. The defendant applies for dismissal on the ground of the plaintiff's insolvency.
5. The court considers the circumstances and may dismiss the suit; dismissal is not described as automatic.

The court may also award the defendant's costs incurred in defending the suit, which may be proved as a debt against the plaintiff's estate, as provided in sub-rule (2).

Security for costs: what does it mean?

Security for costs is financial assurance, in a form and amount directed by the court, intended to cover costs that may be awarded to the opposing party. Under Rule 8(1), the court may direct the assignee or receiver to provide security within a specified time, but may direct otherwise for a special reason. Whether security is appropriate depends on the facts and the governing procedural law.

Practical procedure in a pending civil suit

1. Bring the plaintiff's insolvency and relevant appointment orders to the court's attention.
2. Identify the assignee or receiver and determine whether the cause of action forms part of the estate and can be pursued for creditors' benefit.
3. Seek appropriate directions concerning continuation of the suit and, where applicable, security for costs.
4. If the assignee or receiver fails to comply, the defendant may apply for dismissal under Rule 8(2).
5. The court hears the parties and decides whether to dismiss the suit and whether to award costs.

Rule 8 compared with related CPC provisions

Illustrative example

A plaintiff files a suit to recover money and is subsequently adjudged insolvent under the applicable insolvency law. If the claim can be pursued for creditors' benefit, the insolvency alone does not abate the suit. The court may require the authorised assignee or receiver to continue it and, if appropriate, furnish security for costs. If the assignee or receiver refuses or neglects to comply, the defendant may seek dismissal under Rule 8(2), subject to the court's decision.

Frequently asked questions

Does a civil suit automatically end when the plaintiff becomes insolvent?

No. Order XXII Rule 8(1) provides that insolvency alone does not cause abatement in a suit maintainable by an assignee or receiver for creditors' benefit.

Can the defendant request dismissal of the suit?

Yes. Rule 8(2) permits the defendant to apply where the assignee or receiver neglects or refuses to continue the suit and furnish security as directed. The court has discretion to decide the application.

Can the court order security for costs?

Yes. Rule 8(1) contemplates security for costs within a time fixed by the court, unless the court directs otherwise for a special reason.

Is Order XXII Rule 8 about marriage of a female litigant?

No. Marriage of a female party is dealt with by Order XXII Rule 7. Rule 8 deals with insolvency of a plaintiff.

Official legal sources

Consult the India Code official legislation portal for the Code of Civil Procedure, 1908 (Act 5 of 1908), including its First Schedule, Order XXII, and the Legislative Department for legislative resources. State amendments and the applicable insolvency regime should be checked for the relevant jurisdiction.

This article is general legal information, not legal advice. Applicability may depend on state amendments, case facts and the relevant insolvency framework.