Radhika M
Generally, costs are imposed by the court on an unsuccessful party in a litigation. It is imposed to satisfy the reasonable expenses incurred by the successful party by participating in the litigation. Awarding of costs in no way mean, awarding profit to a party. The sole purpose of the imposition is to cover what has been spent by the party in litigation. Section 35 of the Civil Procedure Code, 1908 (hereinafter called as Code) deals with the imposition of costs by the courts.
Three types of costs are discussed under section. They are
1. General Costs provided under section 35
2. Compensatory costs in respect of vexatious claims under section 35A
3. Costs for causing delay under section 35B
The explanation provided for section 35 says that, cost means reasonable expenses incurred by a party for producing witnesses, legal fees and other expenses bore by him in connection with the suit. It is up to the discretion of the court to impose costs. It also determines the quantum of costs and as to when it should be paid. The general rule is that an unsuccessful party in the litigation must pay costs to the successful party. But there are always exceptions and the court have full discretion to order otherwise.
While making an award of costs, the court shall take into consideration of facts like:
1. Conduct of parties throughout the litigation
2. Whether the party has succeeded any part of his case (need not to be wholly successful)
3. Whether any parties have made frivolous claims or counterclaims
4. Whether there was any offer to a reasonable settlement, which was rejected by the other party
5. Whether there has been any attempt to cause delay in the disposal of the case.
An order of costs may include:
1. A part of another party’s costs
2. A stated amount in another party’s costs
3. Costs from a particular date
4. Expenses incurred before the proceedings began
5. Costs incurred for taking any step
6. Costs relating to the distinct part of the proceedings
7. Interests from a particular date
Illustration
The Plaintiff ‘A’ sues ‘B’ the defendant for trespassing into his land. Later the court finds that the land is a ‘no man’s land’ and the plaintiff is already aware of the fact. Here, the court can impose costs on the plaintiff.
Compensatory costs
The general rule is that costs are not punitive in nature. It is not imposed as a penalty but rather as a relief to the successful party in the suit. But the compensatory costs provided under section 35A, up to an extent carry a penal character. The section provides that if a party to the suit makes frivolous or vexatious claims or counterclaims against the other party and later such claim or counter claim is disallowed or abandoned or withdrawn, then such party may order to provide costs to the other party by way of compensation.
Illustration
‘A’ sues ‘B’ for defamation. Later the court finds that ‘B’ has not made such a statement and ‘A’ had strained relations with B. The court may impose costs on ‘A’ by way of compensation that may be paid to ‘B’. Compensatory costs are not allowed in an appeal or a revision petition. The compensatory costs ordered to be paid shall not exceed Rs.3000 or the pecuniary jurisdiction of the
concerned court whichever is less.
The awarding of compensatory costs will not exclude a party from the criminal liability. Further, the amount awarded as a way of compensatory costs will be considered in a subsequent suit for damages in relation to such vexatious claims. Exemplary costs awarded when there are frivolous claims, and the court thinks that the precious time of judiciary is used for personal vendetta
Costs for causing delay
Section 35B of the Code says that costs can be imposed upon a party who has caused delay in disposing the suit. Such kind of costs can be imposed when a party was supposed to take a step in relation to the proceedings, which he failed to do. Also, when the party obtains an adjournment for taking such step and expenses have been incurred by the other party in appearing before the court, then the court may impose costs upon the court who obtained an adjournment. Such imposition of costs act as a condition precedent for further prosecution of plaintiff or the defendant (that is, prosecution of the person who was ordered to pay).
Illustration
‘B’ defendant in a suit, was summoned to the court for cross-examination. But the plaintiff and his counsel failed to appear before the court and sought an adjournment. Costs may be imposed on the plaintiff for causing delay. Compensation in relation to arrest, attachment, and injunction Section 95 of the Code says that if an attachment or arrest or injunction against the defendant
was ordered in furtherance of an application made by the plaintiff but later was found to be on insufficient grounds, then the court may order that compensation be paid to the defendant.
Such an order shall be passed only on an application made by the defendant. Such an application will bar any subsequent suit relating to claiming of damages.
Illustration
The plaintiff ‘A’ obtained an injunction against the defendant ‘B’ from constructing a building in the disputed land. Later it was found the injunction was granted on insufficient grounds. B is entitled to make an application to the court for claiming compensation.
Other provisions
Order 12 Rule 9 – In case of admission of documents or witnesses which are not necessary to the proceeding, the expenses incurred by a party in producing them must be borne by the party giving such notice. Order 20A – The court may order costs relating to expenses incurred in furnishing notices (whether required by law or not), expenses for typing and printing, charges for inspection, for producing witnesses and expenses incurred in obtaining the copies of orders and decrees.
Imposing costs upon petitioner
As discussed earlier, a petitioner can be directed to pay costs as per any of the above preceding provisions. He may be ordered to pay costs if it is found that his claims are frivolous and lacks merit. Costs act as a penalty when the petitioner approaches the court with an ulterior motive and thus abuses the process of law. He may be ordered to pay compensation to the defendant for dragging him to an unnecessary litigation. Even though a maximum of Rs. 3000 only can be imposed by courts in case of civil proceedings, levying high penalty by way of exemplary costs is nowadays practiced by higher courts. High Courts and Supreme Court levy such high costs when writ petitions are frivolous and vexatious and lacks merit.
In the case of Mahavir Institute of Medical Sciences v. Union of India 1 , the petitioner sought permission for conducting admission of third batch of MBBS students which was declined by the Government of India. They approached the SC under Art.32 for issuing writ against the Respondents. The report submitted by the authorities showed that the petitioner hospital had no basic facilities to conduct the classes. In fact, the petitioner showed healthy persons in the hospital as patients in order to get approval of the authorities. The court held that such fraudulent behaviour cannot be allowed and held that petitioners abused the process of law. An exemplary cost of Rs.2 Crore was imposed upon the petitioner.
Later in the case of Ashok Kumar Mittal v. Ram Kumar 2 , both the petitioner and respondent made vexatious claims against each other. High Court opined that the parties took advantage of the judicial system, levied high costs upon both parties. They approached the SC and the court observed that the costs that can be imposed upon the parties are limited to Rs. 3000 by the Code. Even though the court can impose high penalties in case of writ proceedings, the amount is capped in civil proceedings.
In another case Karuna Singh v. State of NCT of Delhi 3 , the petitioner approached SC under Art.32 of the Constitution of India in a matter which involved s.138 of Negotiable Instruments Act. The SC was dismayed with the fact the petitioner had approached the apex court under Art.32 even though she had alternative remedies. The court observed that it was abuse of jurisdiction under Art.32 and imposed Rs.20000 costs upon petitioner.
In the case of Vinod Seth v. Devinder Bajaj 4 , the Supreme Court observed that the imposition of costs should act as a deterrent to vexatious and frivolous claims. It should ensure that procedural laws are complied with and the court is not misled. Costs also act as an indemnity to the successful litigant in the case. The capping of costs at the amount of Rs.3000 renders section 89 of the code as ineffective. In other jurisdictions due to the appropriate and adequate provisions for costs, 90% of the civil cases are persuaded to settle even before they come to the trial. However this doesn’t mean that a person with a bonafide or genuine claim should be discouraged from approaching the court to enforce his rights.
Conclusion
One of the main problems that our legal system currently facing is the overburdened courts. We have variety of issues and areas but comparatively lesser human resource. Since the overburdened courts are equally providing time for all the cases pending before it, a genuine case loses its time to those which could have been easily disposed. People drag others to the courts to satisfy their own personal needs. Also matters which can be easily disposed through an alternative remedy drain the energy of court. So, it is a necessity of time that, such issues should be handled in a strict manner. Those who approach courts with an ulterior motive and
those who deliberately waste time of courts should be punished. Thus, the courts are imposing high costs on such petitioners as a way of compensation. The recent judicial trend is to impose high costs on petitioners who approach the court with a case which lacks merit.
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