This article is written by Sai Manoj Reddy, pursuing Certificate Course in Advanced Civil Litigation: Practice, Procedure and Drafting from Lawsikho.com. The article has been edited by Prashant Baviskar (Associate, LawSikho) and Ruchika Mohapatra (Associate, LawSikho).
Table of Contents
Everyone who has seen or drafted a plaint or some kind of an application or a petition in Civil Practice would have observed that there is always a prayer seeking the court to award “costs to the suit”. This has become a format and is a widely used term but many people do not know where the concept of costs is dealt with and under which statute. Costs in a civil suit are not to be confused with compensation or damages claimed by a party as the two are completely different concepts which will be explained further in this article.
To begin with, the meaning of costs under legal terminology, Costs are monetary/pecuniary allowance that is granted by the court to a successful party in a civil suit towards expenses incurred by such person in prosecuting or defending the suit. Costs in a civil suit are dealt with under Sections 35, 35A, 35B of the Civil Procedure Code (‘CPC’) along with Order XXA of CPC. Under these sections costs are imposed for different reasons like general costs to the successful party, compensatory costs against false and vexatious claims, costs for causing delay, costs for miscellaneous expenses like serving notice, typing etc.
In this article, we will see the types of costs under CPC and understand when a court can impose costs on a party. Further, there will be an analysis on the jurisdiction of High Courts in imposing costs under CPC in the light of the recent judgement of Delhi High Court imposing 20 Lakh rupees as costs against a suit filed by film actress Juhi Chawla.
Why do costs need to be imposed?
It is a well-known fact that Civil Litigation in India is an arduous and lengthy process that takes years for a single case to get resolved. To add fuel to the fire, there are a huge number of civil suits which are false and vexatious being filed every year which is leading to crores of pending cases and an extreme workload on judges.
The concept of imposing costs is to deter litigants from indulging in filing false and vexatious cases and cause unnecessary delay by using dilatory tactics like taking unnecessary adjournments etc. The intention of legislators in providing provisions for costs in CPC is firstly, to indemnify the successful party to the suit by awarding them legal expenses in prosecuting or defending the suit. Secondly, to deter the litigants from filing false and bogus cases. Thirdly, to deter the litigants from causing unnecessary delays.
Existing framework and types of costs under CPC
Provisions regarding imposing costs in civil litigation are enshrined under Sections 35, 35A, 35B and Order XXA of the CPC. The CPC provides for different types of costs under the above sections namely general costs, compensatory costs, costs for causing delay and miscellaneous costs.
General Costs are dealt with under Section 35 of the CPC. This section states that costs can be granted to any party to the suit by the courts under their own discretion. If costs are not granted then the courts need to give reasons for doing so. Costs under this provision are not granted to a successful party to make profit out of them or as a punishment for losing the party. The main objective of this section is to award costs to the successful party to a suit against the expenses he might have incurred for prosecuting or defending the suit.
Compensatory Costs are dealt with under Section 35A of CPC. This section is an exception to the principle of general costs which is to indemnify the successful party. The objective of this section is to deter the false and vexatious cases being filed by the litigants by imposing costs to compensate the other party who has suffered from such false litigation. If the judge is satisfied that the suit is false and vexatious then compensatory costs with a maximum amount of Rs.3000/- can be granted to the victim.
Costs for causing delay are dealt with under Section 35B of CPC. The objective of this section is to deter the parties to the suit to employ delaying tactics. The court can order costs against a party trying to unnecessarily delay the progress of the suit causing a delay in resolution of the matter.
Miscellaneous Costs are provided under Order XXA of the CPC. Under this Order, specific provisions are made giving power to the court to grant costs with respect to miscellaneous expenses like serving notices, typing and printing charges, production of witnesses etc.
It is to be noted that if costs are awarded against a party to a civil suit, it does not mean that he is exempt from any other criminal or civil liability. If a person is found filing a false case, then the victim can file a fresh suit for damages and also criminally prosecute such person even if costs are granted against such person for filing a false and vexatious case.
Difference between costs in a civil suit under CPC and writ proceedings/public interest litigations
The main difference between the costs under CPC and costs in writ proceedings is the maximum limit of the number of costs. Under CPC there is a limit of Rs.3000/- for compensatory costs for false and vexatious cases and other limitations based on the rules framed by respective high courts of each state. Whereas, under writ proceedings and public interest litigations if they are found to be false and vexatious then the High Courts’ have the power to order exemplary costs and there is no limit. There are many examples of false or politically motivated public interest litigations where courts have imposed exemplary costs ranging from a few thousand to a few lakhs.
Juhi Chawla’s Case
Juhi Chawla has filed a civil suit before the Delhi High Court against the roll out of 5G communication technology in India on the grounds of long-term and short-term harm to human, animal and plant life and detrimental impact on the environment at large.
Delhi High Court has imposed a cost of Rs.20,00,000/- (Twenty Lakh Rupees) against the famous film actress Juhi Chawla in the month of June, 2021. This case became quite viral when Juhi Chawla has knowingly or unknowingly shared the meeting link related to the hearing of the case to the public through her social media handle and to add fuel to the fire random strangers have interrupted the court hearings many times and one of them even sung a song from one of Juhi Chawla’s movies. The court observed that this is a case filed for all wrong reasons and for publicity by the actress and valuable judicial time of this Court has been wasted due to the public sharing of meeting links by her.
As the case stands thus, the question that arises is whether the High Court has the power to impose exemplary costs under CPC when there is a statutory limitation to awarding costs under CPC. This will be analysed in the next section of this article.
Analysis on High Courts’ power to impose costs under CPC
Firstly, not all High Courts in India have ordinary original civil jurisdiction and hence civil suits cannot be filed directly in those High Courts. Only Delhi, Bombay, Calcutta, Madras and Himachal Pradesh High Courts have ordinary original civil jurisdiction in India. Hence, civil suits can be filed directly only in these 5 High Courts and all other High Courts only have appellate jurisdiction when it comes to civil suits.
As discussed in the earlier parts of this article, the concept of costs is provided under CPC and there is a limitation on the amount of money that can be imposed as costs for false or vexatious suits filed by a party. The maximum amount that can be awarded as costs for a false and vexatious suit is Rs.3000/- as per Section 35A of CPC.
It is well within the power of the High Court to dismiss the suit for lack of enough court fee or other defects and as a false and vexatious suit and impose costs in tune of Rs.3000/- but imposing anything above that is nothing but judicial overreach. It is pertinent to observe that the High Court cannot take the aid of Article 226 when it is working with CPC under its ordinary original civil jurisdiction and hence it has to abide by the provisions of CPC.
The current case of Juhi Chawla is a clear example of the Delhi High Court not abiding by the provisions of CPC in imposing the costs. In a civil suit filed under CPC, High Courts have very limited power to impose costs and the same has also been reiterated by the Hon’ble Supreme Court time and again in many of its judgements. Ashok Kumar Mittal v. Ram Kumar Gupta & Anr is one such case where Delhi High Court has imposed a cost of 1 Lakh rupees each on Plaintiff and Defendant for lying on oath. The Supreme Court has observed that while dealing with civil suits under CPC High Courts need to abide by the limit set under Section 35A of CPC. Further, the Supreme Court has once again reiterated the ration in Ashok Mittal judgement in the case of Sanjeev Kumar Jain v. Raghubir Saran Charitable Trust where a whopping 45 Lakh rupees was imposed as costs by the Delhi High Court. In this case, the Supreme Court has while setting aside the order related to costs, has strongly observed that the High Court cannot impose exemplary costs in a civil suit ignoring the limit of Rs.3000/- set in the CPC and further ordered the respondent to only pay Rs.3000/- as costs. Again, in the case of Vinod Seth v. Devinder Bajaj, the Supreme Court once again reiterated that the High Court needs to follow the statutory limit provided under CPC in awarding costs. The Supreme Court in this case has also observed that if a suit is governed by CPC, then no court can, merely because it considers it just and equitable, issue directions which are contrary to or not authorized by law.
Supreme Court’s Suggestions and 240th Law Commission Report 2012
The Supreme Court of India on one hand is doing its job by not allowing the High Courts to exceed their powers beyond what is provided in the CPC while on the other hand, it kept on suggesting in numerous judgements that there should be change in the maximum limit of costs under CPC on a regular basis and that the present system is outdated and it is not deterring the false and vexatious suits or providing enough for expenses of the successful litigant prosecuting or defending the suit. The Supreme Court has proposed that (i) the upper limit under CPC be increased from the Rs.3000/- to at least Rs.1,00,000/- to effectively deter litigants from instituting false/vexatious suits and (ii) instead of awarding nominal costs, actual realistic costs be imposed, i.e., costs that are practical and costs that a normal advocate in a normal case of a particular nature would charge.
The Law Commission of India in its 240th Report headed by Justice (Retd.) P.V.Reddy has endorsed the suggestions made by the Supreme Court regarding an increase in the upper limit to costs along with many other necessary changes to the current costs regime under the CPC, but till date, there has been no legislative action on these suggestions by the lawmakers.
It is pretty clear that India needs a big-time revamp in the costs regime under CPC and there is no arguing otherwise. The current regime is way outdated as the last amendment was made in the 1970s and the value of money has increased a lot since then. The Legislature needs to take the suggestions by the Supreme Court as well as the 240th Law Commission Report and make necessary changes to the costs regime under CPC and make it more up to date and robust. Further, it is to be noted by the Legislature that while making the changes, aspects like court fees, advocates fees, duration of the proceedings and appropriate restitution for the successful litigant need to be considered. In absence of the necessary reforms the hands of courts are tied and the judges are powerless to dissuade/deter the false and frivolous litigation as the costs under the current regime are nominal.
Nevertheless, the trend that is being followed by courts more importantly by the High Courts with ordinary original civil jurisdiction by awarding exemplary costs by going beyond the Rs.3,000/- ceiling set in the CPC is not a good trend. Yes, it is just and equitable but at the same time it is judicial overreach and it sets bad precedents. This has been explained beautifully by the Supreme Court in Vinod Seth v. Devinder Bajaj where the apex court has quoted Benjamin N. Cordozo:
“The Judge, even when he is free, is still not wholly free. He is not to innovate at pleasure. He is not a knight-errant roaming at will in pursuit of his own ideal of beauty or of goodness. He is to draw his inspiration from consecrated principles. He is not to yield to spasmodic sentiment, to vague and unregulated benevolence. He is to exercise a discretion informed by tradition, methodized by analogy, disciplined by system, and subordinated to “the primordial necessity of order in social life”.
And observed that Judges can innovate, to discipline those whom it considers to be adventurers in litigation, but it has to do so within the four corners of the law. The Apex Court has further observed that “Hard Cases Make Bad Law” and quoted the dissenting opinion of Justice Holmes in Northern Securities Co. v. United States 193 (1903) US 197 that, A lawsuit involving equities that tempt a judge to stretch or even disregard a principle of law at issue but a Judge should not give in and take moral high ground.
Finally, I would like to conclude by stating that orders like the one in Juhi Chawla’s case by Delhi High Court, even if it has done for good purpose to deter the false and vexatious litigation, may lead to the public gradually losing faith in the judiciary and start seeking extra-judicial remedies like seeking the help of goons/mafia or police to settle their claims which will lead to break-down of rule of law. Hence, no order or direction of the High Court, even if it is intended to deter false and frivolous litigation, should lead to obstruction of access to courts and needs to be within the four corners of rule of law.
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