DISCRETION OF COURT IN AWARDING COSTS SUBJECTS TO CONDITIONS AND LIMITATIONS

[Mr. M. GOVINDARAJAN]

Sec. 35, Sec. 35A and Sec. 35B of Civil Code Procedure provide for the payment of costs under various circumstances.  Sec.35 provides that subject to such conditions and limitations as may be prescribed, and to the provisions of any law for the time being in force, the costs of and incident to all suits shall be in the discretion of the court, and the court shall have full power to determine by whom or out of what property and to what extent such costs are to be paid, and to give all necessary directions for the purposes aforesaid. The fact that the Court has no jurisdiction to try the suit shall be no bar to the exercise of such powers.  Where the court directs that any costs shall not follow the event, the court shall state its reasons in writing. In 'Mahindra V. Aswini (1920) 48 Cal. 427, 441 the Court held that the object of awarding cost is to indemnify a party against the expense of successfully vindicating his rights in Court.

                        The following are to be considered by the Court in awarding costs as per the various decisions of the High Courts and Supreme Court:

·        The costs of suits and applications shall be in the discretion of the Court; such discretion must be a judicial discretion o be exercised on legal principles, not be chance, medley, nor by caprice, nor in temper;

·        In the exercise of this discretion the court is not confined to the consideration of the conduct of the parties in the actual litigation itself, but may also take into consideration matters which led up to and were the occasion of that litigation;

·        The discretion conferred upon the court by this section is very wide;

·        The court may disallow costs to a successful party as where the rate of interest claimed by the plaintiff and allowed to him.

Sec. 35A of the Code provides for compensatory costs in respect of false or vexatious claims of defence. It provides that if in any suit or other proceedings (including an execution proceeding but excluding an appeal or a revision) any party objects to the claim or defence on the ground that the claim or defence or any part of the party by whom it has been put forward, and if thereafter, as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part, the Court, if it so thinks fit, may, after recording its reasons for holding such claim or defence to be false or vexatious, make an order for the payment to the objector by the party by whom such claim or defence has been put forward, of costs by way of compensation.   No court shall make any such order for the payment of amount exceeding three thousand rupees or exceeding the limits of its pecuniary jurisdiction.  Sec. 35 B of the Code provides for awarding costs for causing delay.

                        The power of the court in awarding costs is very wide. But at the same time it is subject to conditions and limitations. This has been confirmed by the Supreme Court in their judgment in 'Ashok Kumar Mittal V. Ram Kumar Gupta' - 2009 (234) ELT 193(SC).

                        In this case the petitioner filed a suit for specific performance of an alleged agreement of sale deed. The trial court dismissed the suit by judgment and decree. The High Court dismissed the petitioner's appeal.  Both courts held that the petitioner had not approached the court with clean hands and that he had failed to prove any concluded contract for sale. The High Court found that the defendants in the suit were also not above board in their conduct. It found that both sides were guilty of having lied on oath and deserved to be prosecuted. On the ground that courts were over-burdened with litigation, the High Court decided that instead of directing prosecution, heavy costs should be levied on both the petitioner and respondents to be paid to the state which spends money on providing the judicial infrastructure. It then proceeded to impose exemplary costs of Rs.1,00,000 on the petitioner and Rs.1,00,000/- on the respondents and directed that the costs should be deposited with the Delhi High Court Legal Services Committee.

                        The present appeal is filed before Supreme Court aggrieved against the order of the High Court. The appellant contended that levying costs of rupees one lakh against the petitioner was not warranted. The appeal before the High Court arose out of a civil suits, costs were being governed by Sections 35 and 35A of the Code of Civil Procedure and cannot exceed what is leviable under those provisions.

                        The Supreme Court held that the award of costs is discretionary but subject to the conditions and limitations as may be prescribed and the provisions of any law for the time being in force. Under Sec. 35A compensatory costs for vexatious claims and defences may not exceed toRs.3,000/- The primary object of levying costs is to recompense a litigant for the expense incurred by him in litigation to vindicate or defend his right. The main point taken into consideration by Supreme Court is when an appellant or a plaintiff has already paid the prescribed court fee in regard to the appeal or suit, to the state at the time of institution, it is debatable whether any costs can be awarded to the state by way of penalty, in a litigation between two private parties.  Courts will have to act with care while opening new frontiers.

                        The Court further held that where the issue is governed and regulated by Sections 35 and 35A of the Code, there is no question of exercising inherent power contrary to the specific provisions of the Code.  Sec. 35A seems to suggest that even where a suit or litigation is vexatious, the outer limit of exemplary costs that can be awarded, in addition to regular costs, shall not exceed Rs.3,000/- It is also to be noted that huge costs of the order of Rs. Fifty thousand or Rs. One lakh, are normally awarded only in writ proceedings and public interest litigations, and not in civil litigation to which Sec. 35 and 35A are applicable. The principles and practices relating to levy of costs in administrative law matters cannot be imported mechanically in relation to civil litigation governed by the Code.

                        The Court further held that in so far as this case is concerned, even though the order relating to costs may not strictly be correct, we do not propose to interfere with the same, in exercise of jurisdiction under Article 136, as the order has not resulted in any injustice.

                        The Supreme Court referred to the two aspects of the order of the High Court relating to costs.  The first is, whether a court, having reached a conclusion that a party deserves to be prosecuted for perjury, should let him off with what it considers to be a stiff penalty by way of costs, on the ground that the courts are overburdened with work.  This question involves moral and ethical issues.

                        The second aspect relates to the recipient of the costs. The High Court specifically stated that it had decided to saddle the parties with heavy costs to be paid to the state which spends money on judicial infrastructure. The Court ordered to pay the costs to the Delhi High Court Legal Services Committee, a statutory authority.  It is not a state. Once the court held that costs had to be paid to the state, it should have directed payment of the costs to the state and not the High Court Legal Services Committee. No litigant should be made to feel that heavy costs are being levied in some cases by judges to create a corpus or expense fund for the High Court Legal Services Committee or the State Legal Services Authority. The Court directed that the payment received by the Committee should be paid to the State.