Award of cost under Code of Civil Procedure

According to Black’s Law Dictionary “costs is a pecuniary allowance made to the successful party for his expenses in prosecuting or defending a suit or a distinct proceeding with a suit”[1]. Cost are an allowance to the party for expenses incurring in prosecuting or defending a suit, an incident to the judgment. In England the term is also used to designate the charges which an attorney or solicitor is entitled to make and recover from his client, as his remuneration for professional services, such a legal advice, attendances, drafting, conducting legal proceedings etc.

Section 35:Section 35 of the Code of Civil Procedure contains the provision as to costs. The cost of an incident to all suits are in the discretion of the Court and the court shall have full power to determine by order out of what property and what extent such costs are to be paid. All necessary direction for these purposes will be given by the court. Where the Court directs the costs are not to follow the events the court shall give it in writing.

Section 35-A:Section 35-A deals with compensatory costs in respect of false and vexatious claims and defence. If in any suit or proceedings, any party objects to the claim or defence on the ground that the claim or defence on any part of it , as against the objector , is false or vexatious and if thereafter as against the objector, such claim or defence is disallowed, abandoned or withdrawn in whole or in part , the Court if it thinks fit may , after recording its reasons for so holding make an order for payment to the objector by the party by whom such claim or defence was put forward , of costs by way of compensation. No court can make any such order for payment of an amount exceeding three thousand rupees or exceeding the limits of the pecuniary jurisdiction , whichever amount is less. The amount of any compensation awarded under this section in respect of false claim or defence has to be taken into account in any subsequent suit for damages or compensation of such claim or defence.

Section 35-B:Section 35-B was amended in the Code of Civil Procedure by amendment act of 1976. It provides for costs for causing delay. Where separate defenses have been raised by the defendant or group of defendants payment of such costs shall be a condition precedent to the further prosecution of the defense by such defendants as have been ordered by Court to pay such costs.

The cost ordered to be paid under sub-section (1) shall not, if paid, be included in the costs awarded in the decree passed in the suit, but if such costs are 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.

General Rule: It is a general rule to award costs is at the discretion of the court. Normally, in civil proceedings “costs shall follow the event”.[2]

Kinds of costs:
The code provides for the following kinds of costs:
1) General costs-Section 35;
2) Miscellaneous costs-Order 20-A;
3)Compensatory costs for false and vexatious claim or defences-Section 35-A;
4) Costs for causing delay-Section 35-B.

(1) General costs: Section 35:
The object of section 35 is to awarding costs to a litigant is to secure to him the expenses incurred by him in the litigation.[3]It neither enables the successful party to make any profit out of it nor punishes the opposite party.[4]The general rule relating to cost is that cost should follow the event, i.e. a successful party must get the costs and the losing party should pay the other side.[5]

Principals:
The primary rules in respect of award of general cost are as under:
a) Costs are at the discretion of the court.The said discretion must be exercised on sound legal principles and not by caprice, chance or humour. No hard and fast rules can be laid down and the discretion must be exercised considering the facts and circumstances of each case.

b) Normally, costs to follow the event and the successful party are entitled to costs unless there are good grounds for depriving him of that right.[6]To put it differently the loser pays costs to the winner. However it does not always depend on who wins and losses in the end. Even a successful party may be deprived of costs if he is guilty of misconduct or there are other reasons to do so.[7]Sub-section (2) of section 35 expressly provides that when the court orders that cost should not follow the event, it must record reasons for doing so.[8]

(2) Miscellaneous costs: Order 20-A:
Order 20-A makes specific provisions with regard to the power of the court to award costs in respect of certain expenses incurred in giving notices, typing charges, inspecting of records, obtaining copies and producing witnesses.

(3) Compensatory costs: Section 35-A:
The object of Section 35-A is to provide for compensatory costs. This section is an exception to the general rule on which Section 35 is based, that the “costs are only in indemnity, and never more than indemnity”.[9]This section intended to deal with those cases in which Section 35 does not afford sufficient compensation in the opinion of the court. Under this provision, if the court is satisfied that the litigation was inspired by vexatious motive and was altogether groundless, it can take deterrent action.[10] This section only applies to the suit and not to the appeals or to the revisions.

The following conditions must exist before this section can be applied:[11]
a) the claim or defence must be false or vexatious;

b) objections must have been taken by the other party that the claim or defence was false to the knowledge of the party raising it ; and

c) such claim must have been disallowed or withdrawn in whole or in part.

Maximum amount:
The maximum amount that can be awarded by the court is Rs 3000.But the person against whom an order has been passed is not exempt from any criminal liability. In a subsequent suit for damages or compensation for false claim or defense, the court will take into account the amount of compensation awarded to the plaintiff under this section.[12]

Other Liability:
A person against whom a order of costs is made is not exempted from any other liability in respect of false claim or defense made by him.

Appeal:
An order awarding compensatory costs is appealable .[13]But no appeal lies against an order refusing to award compensatory costs.[14]Since such an order can be termed as “case decied”,a revision lies.[15]

(4) Costs for causing delay: Section 35-B:
Section 35-B is added by the Amendment Act of 1976. It is inserted to put a check upon the delaying tactics of litigating parties. It empowers the court to impose compensatory costs on parties who are responsible for causing delay at any stage of the litigation. Such costs would be irrespective of the ultimate outcome of the litigation.[16]the payment of cost has been a condition precedent for further prosecution of the suit, if the party concerned is a plaintiff and the defence , if he is a defendant.[17]
The provisions of this Section are mandatory in nature and therefore the court should not allow prosecution of suit or defence, in the event of partly failing to pay costs as directed by the court. If a party is unable to pay costs due to circumstances beyond his control , such as strike of advocates or staff , declaration of the last day for payment of costs as holiday, etc. the court can extend the time.[18]
Very recently in Ashok Kumar v. Ram Kumar[19] , the Supreme Court observed that the present system of levying meagre costs in civil matters is wholly unsatisfactory and does not act as a deterrent to luxury litigation . More realistic approach relating to costs is the need of the hour.

Conclusion
After going through the provisions of C.P.C. I come to the conclusion that Sections 35,35-A,35-B and Order 20 were formed with the objective of awarding costs in order to avoid delay in disposal of suit and to check unnecessary adjournments[20].Under section 35 court can award cost even suo motu and also there is no ceiling limit of amount of cost. The cost ordered should be actual reasonable costs including cost of the time spent by successful party, the transporting, lodging or any incidental cost besides the payment of court fee , lawyer’s fee and any other cost relating to the litigation[21].The award of costs should always be according to the discretion of the court.

Bibliography-
1) Takwani,C.K. Civil Procedure(Eastern Book Company) 6th Edition.
2) Singh, Avtar Code of Civil Procedure(Central Law Publication) 2008.
3) Ray, Sukumar The Code of Civil Procedure(Universal Law Publishing Co.) 2008.
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[1] Apperson v. Insurance Company 38 N.J. Law
[2] C.K. Thakker, Code of civil procedure (Lawyer’s edition ) Vol. 1 at pp.645-47.
[3] Nandlal Tanti v. Jagdeo Singh AIR 1962 Pat 36.
[4] N.Peddanna Ogeti v. Katta V. Srinivasayya Setti Sons AIR 1954 SC 26.
[5] Tungabhadra Industries Ltd. V. Govt. of A.P. AIR 1964 SC 1372.
[6] Jugraj Singh v. Jaswant Singh(1970) 2 SCC 386
[7] Col.A.S. Iyer v. V. Balasubramanyam (1980) 1 SCC 634.
[8] Jugraj Singh v. Jaswant Singh (1970) 2 SCC 386.
[9] Gundry v. Sainsbuy (1910) 1 KB 645.
[10] T. Arvindanam v. T.N. Satyapal (1977) 4 SCC 467.
[11] S. 35-A(1).
[12] S. 35-A(3),(4).
[13] S. 104(1)(ff)
[14] S. 104 (1),Proviso.
[15] Purna Chandra v. Secy. Of State AIR 1937 Pat 477.
[16] Statement of objects and Reasons.
[17] Hakmi v. Pitamber AIR 1978 P&H 145.
[18] Anand Prakash v. Bharat Bhushan (2009) 2 SCC 656.
[19] (2009) 2 SCC 656.
[20] S.M.Sangma v. K.Sangma AIR 1988 Gau 74.
[21] Salem Advocate Bar Association v. Union of India AIR 2005 SC 3353.

The  author can be reached at: sujay_ilnu@legalserviceindia.com