Indian Judiciary is excessively overburdened and the pendency of cases is
bound to increase in the aftermath of the ongoing pandemic when Courts are
hearing only urgent matters, if at all. Several urgent steps are long needed to
reduce the Courts' case load and one such step is for the Courts to effectively
implement the regime of costsŁ as provided under Sections 35, 35A and 35B of
Code of Civil Procedure, 1908 (hereinafter referred to as śCPC').
The concept of Costs:
The term costs is not defined in the CPC. As per Halsbury's Laws of England "Costs
signifies the sum of money which the court orders one party to pay another party
in respect of the expenses of litigation incurred. Except where specifically
provided by the statute or by rule of Court, the costs of proceedings are in the
The principle underlying the levy of costs was very well articulated in
Manindra Chandra Nandi vs. Aswini Kumar Acharjya
"... We must remember that whatever the origin of costs might have been, they
are now awarded, not as a punishment of the defeated party but as a recompense
to the successful party for the expenses to which he had been subjected, or, as
Lord Coke puts it, for whatever appears to the Court to be the legal expenses
incurred by the party in prosecuting his suit or his defence...
The theory on which costs are now awarded to a plaintiff is that default of the
defendant made it necessary to sue him, and to a defendant is that the plaintiff
sued him without cause; costs are thus in the nature of incidental damages
allowed to indemnify a party against the expense of successfully vindicating his
rights in court and consequently the party to blame pays costs to the party,
Thus, the cardinal principle for levy of costs is that the party to blame pays
to the party without fault.
Basic provisions on Costs in the CPC - Sections 35, 35A and 35B:Section 35:
Section 35 (1) stipulates that subject to prescribed conditions and provisions
of law, the Court shall have full power to determine by whom and to what extent
costs are to be paid.
Section 35(2) clarifies that where the Court directs that any costs shall not
follow the event, the Court shall state its reasons in writing.
The Commercial Courts Act, 2015 has amended certain provisions of the CPC
(including Section 35) where it applies to any suit in respect of a
commercial dispute of a Specified Value. The amendment gives clarity on the
manner and extent of imposition of costs by the Commercial Courts.
Section 35A: Compensatory costs in respect of false or vexatious claims or
Section 35A (1) stipulates that if in any suit or other proceedings [excluding
an appeal or revision] any party objects to the claim or defence on the ground
that it is false or vexatious to the knowledge of the party making it, and if
thereafter, such claim or defence is disallowed, abandoned or withdrawn, the
Court may make an order for the payment to the objector by the party by whom
such claim or defence has been put forward, of cost by way of compensation.
Section 35A (2) inter-alia provides that Court shall not make any such order for
the payment of an amount exceeding three thousand rupees or exceeding the limits
of its pecuniary jurisdiction, whichever amount is less.
Section 35A (3) clarifies that no person against whom an order has been made
under this section shall, by reason thereof, be exempted from any criminal
liability in respect of any claim or defence made by him.
Section 35A (4) provides that the amount of any compensation awarded under this
section shall be taken into account in any subsequent suit for damages or
compensation in respect of such claim or defence.
The Commercial Courts Act, 2015 has amended Section 35A by omitting sub-section
2. Thus the Courts are no longer restricted to order costs only upto rupees
three thousand for any Suit in respect of a commercial dispute of a Specified
Section 35B: Costs for causing delay
Section 35B (1) stipulates that if on any date fixed for the hearing of a suit
or for taking any step therein, a party to the suit fails to take the required
step or obtains an adjournment for taking such step, the Court may make an order
requiring such party to pay to the other party such costs as would, in the
opinion of the Court, be reasonably sufficient to reimburse the other party in
respect of the expenses incurred by him in attending the Court on that date, and
payment of such costs, on the date next following the date of such order, shall
be a condition precedent to the further prosecution of:
- The suit by the plaintiff, where the plaintiff was ordered to pay such
- The defence by the defendant, where the defendant was ordered to pay
Section 35B (2) provides that the aforesaid costs, if paid, shall not be
included in the costs awarded in the decree passed in the suit; but, if not
paid, a separate order shall be drawn up indicating the amount of such costs and
the names and addresses of the persons by whom such costs are payable and the
order so drawn up shall be executable against such persons.
Application of Section 35:
As per Section 35 (1), Court has discretion to order costs. Further, sub-section
(2) is indicative of the legislative policy that ordinarily costs shall be
awarded to the party who succeeds and if it is otherwise, the Parliament
requires the court to record reasons for disallowing costs. Very often, the rule
that costs should follow the event is observed in breach. Many of the cases are
disposed of either by saying "no order as to costs" or "parties to bear their
In the Salem Advocate Bar Association vs. Union of India
, Supreme Court has
The award of the cost of the suit is in the discretion of the Court. In
Sections 35 and 35B, there is no upper limit of amount of cost awardable.
Judicial notice can be taken of the fact that many unscrupulous parties take
advantage of the fact that either the costs are not awarded or nominal costs are
awarded on the unsuccessful party. Unfortunately, it has become a practice to
direct parties to bear their own costs.
In large number of cases, such an order
is passed despite Section 35(2) of the Code. Such a practice also encourages
filing of frivolous suits. It also leads to taking up of frivolous defences.
Further wherever costs are awarded, ordinarily the same are not realistic and
are nominal. When Section 35(2) provides for cost to follow the event, it is
implicit that the costs have to be those which are reasonably incurred by a
successful party except in those cases where the Court in its discretion may
direct otherwise by recording reasons thereof.
The costs have to be actual
reasonable costs including the cost of the time spent by the successful party,
the transportation and lodging, if any, or any other incidental cost besides the
payment of the court fee, lawyer's fee, typing and other cost in relation to the
litigation. It is for the High Courts to examine these aspects and wherever
necessary make requisite rules, regulations or practice direction so as to
provide appropriate guidelines for the subordinate courts to follow.Ł
It is an easily verifiable fact that Courts very often neither pass directions
on costs nor assign any reason for the same. This is clearly in contravention to
the mandate of Section 35 (2). Strengthened by such practice, some litigants,
bereft of the fear of costs being imposed against them, unhesitatingly file
cases as a time buying tactics knowing fully well that their case lacks merit.
The result is harassment of the innocent litigant and piling up of unnecessary
Further, a poor litigant who may have a meritorious case is apprehensive to
litigate as after a long drawn legal battle, even if he manages to get a
favourable order, the expenses he incurs on litigation cannot be recovered in
the absence of directions as to costs. Thus, he prefers not to litigate. In a
scenario where every litigant has a surety that even though it may be time
taking, once he is able to get a favourable order (his case being meritorious)
he shall be compensated for the cost of litigation too, he shall have a greater
faith in the judicial system and more willingness to fight for his rights.
Some High Courts have provided in their Rules certain guidelines to aid the
courts in the calculation of costs so as to ensure that ordered costs are actual
or reasonable. For example the Karnataka High Court Rules provide that cost
shall include loss of income during effective days hearing, conveyance charges
and lodging charges, if any. Delhi High Court Rules provide the estimated
advocate fees on pro rata basis depending upon the claim filed. However Rules
would be rendered otiose if Courts do not change their attitude and start taking
the provision of imposing costs more seriously.
Application of Section 35A:
In National Textile Corp. v. Kunj Behari Lal
 Supreme Court has observed
Frivolous litigation clogs the wheels of justice making it difficult to provide
speedy justice to the genuine litigants.Ł
There are a large number of instances where the parties misuse the law and
mislead the courts by filing false and vexatious pleas. In such instances also,
Courts are reluctant to impose costs. Even if they impose costs, same are
restricted to a partly sum of Rs. 3000/- which in present scenario is miniscule
and hardly a deterrent.
In Ashok Kumar Mittal vs. Ram Kumar Gupta
 Supreme Court observed The
present system of levying meagre costs in civil matters (or no costs in some
matters), no doubt, is wholly unsatisfactory and does not act as a deterrent to
vexatious or luxury litigation borne out of ego or greed, or resorted to as a
`buying-time' tactic. More realistic approach relating to costs may be the need
of the hour.Ł
It is shocking to note that the upper limit of imposing costs for filing false
and vexatious litigation of Rs. 3000/- is yet to be amended in the CPC. Only for
commercial cases under the Commercial Courts Act, 2015 this limit has been
It may be mentioned that the 240th Law Commission Report on Costs in Civil
Litigation had specifically recommended for increasing the limit from Rs. 3000/-
to Rs. 1,00,000/- It had also recommended to substitute the word ścompensatory'
with śpunitive' to portray the true legislative intent. The Law Commission had
further observed that in Section 35A, costs can only be imposed if a party
raises objection that the claim or defence is false and vexatious to the
knowledge of the party by whom it has been put forward. On this, the Commission
had recommended that Courts should have the power to award exemplary costs on
its own if it is of opinion that the claim or defence is false and vexatious;
even if no objection is raised by a party. These amendments are yet to see the
light of the day.
Surprisingly, there have been instances when Courts themselves observed that
case required imposition of costs, yet courts declined to impose costs, for
- In Amarendra Komalam vs. Usha Sinha & Anr., Supreme Court
For the forgoing reasons, the appeal succeeds. Though it is eminently a fit
case for awarding exemplary cost, we refrain from doing so. No costs.
- In Gayatri De vs. Mousumi Cooperative Housing Society Ltd. & Ors.,
Supreme Court held:
The appeal stands allowed. Though this case is eminently a
fit case to award exemplary cost, we, by taking a lenient view of the matter say
- In Sumer vs. State of U. P., the Supreme Court held:
curative petition of this nature deserves dismissal by imposing exemplary cost
on the petitioner, but in the present case, we refrain from imposing cost,
considering that the petition arises out of a criminal appeal.
Such tendency needs to be discouraged and costs should be imposed where it is
patent that frivolous case or appeal is filed as a time buying tactic or more
other flimsy reasons.
It is also seen that Government & Public Sectors Undertakings frequently file
appeals in a perfunctory manner, sometimes inordinately delayed, wasting the
precious time of Courts.
In some instances Courts come down heavily for such lax
attitude and impose exemplary costs, for instance in:
State Of Uttar Pradesh vs Sabha Narain
[SLP (C) Diary No. 25743/2020 judgment
dated 22.01.2021] the SLP was filed with delay of 502 days and the Supreme Court
observed Looking to the period of delay and the casual manner in which the
application has been worded, we consider appropriate to impose costs on the
petitioner(s) of Rs.25,000/- for wastage of judicial time which has its own
value and the same be deposited with the Supreme Court Advocates on Record
Welfare Fund within four weeks.Ł
Such strict measures go a long way in deterring the filing of patently
unmeritorious and delayed appeals especially by state bodies and deserve must be
In one remarkable Judgment, the Supreme Court, anguished at the filing of
totally bogus SLP directed that all personnel including the counsel who advised
the government to file the SLP must pro rata bear the cost of Rs. 10,000/-.
A classic case where Supreme Court, in an extremely well-articulated Judgment
dwelled on the need for curbing unscrupulous litigation is Ramrameshwari Devi &
Ors vs Nirmala Devi & Ors.
 where it was inter-alia observed as under:
34. According to Dr. Mohan, in our legal system, uncalled for litigation
gets encouragement because our courts do not impose realistic costs. The parties
raise unwarranted claims and defences and also adopt obstructionist and delaying
tactics because the courts do not impose actual or realistic costs.
the successful party usually remains uncompensated in our courts and that
operates as the main motivating factor for unscrupulous litigants. Unless the
courts, by appropriate orders or directions remove the cause for motivation or
the incentives, uncalled for litigation will continue to accrue, and there will
be expansion and obstruction of the litigation. Court time and resources will be
consumed and justice will be both delayed and denied.
45. We are clearly of the view that unless we ensure that wrong-doers are
denied profit or undue benefit from the frivolous litigation, it would be
difficult to control frivolous and uncalled for litigations. In order to curb
uncalled for and frivolous litigation, the courts have to ensure that there is
no incentive or motive for uncalled for litigation. It is a matter of common
experience that court's otherwise scarce and valuable time is consumed or more
appropriately wasted in a large number of uncalled for cases.
54. While imposing costs we have to take into consideration pragmatic realities
and be realistic what the defendants or the respondents had to actually incur in
contesting the litigation before different courts. We have to also broadly take
into consideration the prevalent fee structure of the lawyers and other
miscellaneous expenses which have to be incurred towards drafting and filing of
the counter affidavit, miscellaneous charges towards typing, photocopying, court
55. The other factor which should not be forgotten while imposing costs is for
how long the defendants or respondents were compelled to contest and defend the
litigation in various courts. The appellants in the instant case have harassed
the respondents to the hilt for four decades in a totally frivolous and
dishonest litigation in various courts. The appellants have also wasted judicial
time of the various courts for the last 40 years.
56. These appeals are consequently dismissed with costs, which we quantify as
Rs.2,00,000/- (Rupees Two Lakhs only). We are imposing the costs not out of
anguish but by following the fundamental principle that wrongdoers should not
get benefit out of frivolous litigation.
Though the Court has expressed that it is imposing cost not out of anguish, yet
the observations as highlighted above clearly portray the miserable state of
affairs and Courts distress on the situation of mounting frivolous litigations.
Application of Section 35B:
Though the provision exists to impose costs on seeking adjournment, same is
routinely ignored and matters are adjourned for personal difficulties of the
advocates, clients and witnesses etc. and matters drag on for years. Its high
time that Courts strictly apply this provision and all adjournments be granted
with costs (subject of course to very rare exceptions).
Supreme Court in Vinod Seth vs Devinder Bajaj & Anr
. observed that Section
35B providing for costs for causing delay is seldom invoked and that it should
be regularly employed to reduce delay.
240th Law Commission Report also recommends that:
When Courts ought to show restraint on imposition of costs:
- There should be a minimum cost for adjournments.
- If both sides seek adjournment, cost should go to Judicial
While imposing heavy costs, Courts must also look into the paying capacity of
the litigant and ensure that a poor client does not suffer. Supreme Court in
Vinod Seth v. Devinder Bajaj observed that no person with genuine claim
should suffer and costs must not to deter a person of the weaker section
In Sanjeev Kumar Jain vs Raghubir Saran Charitable Trust
Court had pragmatically observed that the assessment of costs has developed into
a detailed and complex procedure in developed countries and in some instances
costs awarded are more than the amount involved in the litigation itself.
However in India it is not possible or practical to spend the amount of time
that is required for determination of actual costs
as done in those
countries, when we do not have time even to dispose of cases on merits. If the
Courts have to set apart the time required for the elaborate procedure of
assessment of costs, it may even lead to an increase in the pendency of cases.
There can be no disagreement with the above observations. However, Judges have
the acumen to arrive at a realistic value of costs, without following the
scrupulous processes of developed countries, depending on the number of
hearings, the prevalent average advocate fees in that court etc. Hence though
actual or exact figure may not be arrived at, the costs ordered should reassure
the successful party that it has not suffered by litigating his just cause.
Though imposition of just costs in every matter will require devoting of some
more time by the judges in each case, which may appear to be counter-productive
initially, but once it becomes a practice it will go a long way in discouraging
the frivolous litigation and reduce the pendency of cases.
- Halsbury's Laws of England, 4th Edn., Vol 12, P 414
- ILR(1921) 48 Cal 427
- Section 16 read with Schedule of the Commercial Courts Act, 2015 (w.e.f.
- Section 2 (1) (i) of the Commercial Courts Act, 2015
- Section 2 (1) (i) of the Commercial Courts Act, 2015
- 240th Law Commission Report ô Costs in civil litigation [para 4.2 (d)]
- [(2005 6 SCC 344)]
- AIR 2010 Del 199
- Except Suits under Commercial Courts Act, 2015
- (2009) 2 SCC 656
- (2005) 11 SCC 251
- (2004) 5 SCC 90
- (2005) 7 SCC 220
- State of Kerala vs. Thressia & Anr. (1995) Suppl. (2) SCC 449]
- CA Nos. 4912-4913/2011 (Arising out of SLP(C) Nos. 3157-3158/2011) ô
Judgment dated 04.07.2011
- Dr. Arun Mohan was the Amicus Curiae in the matter
- (2010) 8 SCC 1
- JT 2011 (12) SC 435