S. 35. Costs.

MP Jain: The Code of Civil Procedure including Limitation Act, 1963, 5th ed MP Jain
Medha Kolhatkar

MP Jain: The Code of Civil Procedure including Limitation Act, 1963, 5th ed > MP Jain: The Code of
Civil Procedure including Limitation Act, 1963, 5th ed > The Code of Civil Procedure > PART I Suits
in General > Costs

The Code of Civil Procedure

PART I SUITS IN GENERAL

COSTS

934S. 35. Costs.

(1) 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.
(2) Where the Court directs that any costs shall not follow the event, the Court shall state its reasons
in writing. 935[(3)* * *]

AMENDMENT FOR COMMERCIAL DISPUTE OF A SPECIFIED VALUE

Substitution of new section for Section 35.—For Section 35 of the Code, the following section shall
be substituted, namely:

“35. Costs.—(1) In relation to any commercial dispute, the Court, notwithstanding anything
contained in any other law for the time being in force or Rule, has the discretion to determine:

(a) whether costs are payable by one party to another; (b) the quantum of those costs; and (c) when
they are to be paid.

Explanation.—For the purpose of clause (a), the expression “costs” shall mean reasonable costs
relating to:

(i) the fees and expenses of the witnesses incurred;

Page 2 of 10

S. 35. Costs.

(ii) legal fees and expenses incurred; (iii)any other expenses incurred in connection with the
proceedings.

(2) If the Court decides to make an order for payment of costs, the general rule is that the
unsuccessful party shall be ordered to pay the costs of the successful party:

Provided that the Court may make an order deviating from the general rule for reasons to be
recorded in writing.

ILLUSTRATION
The Plaintiff, in his suit, seeks a money decree for breach of contract, and damages. The Court holds
that the Plaintiff is entitled to the money decree. However, it returns a finding that the claim for
damages is frivolous and vexatious.

In such circumstances the Court may impose costs on the Plaintiff, despite the Plaintiff being the
successful party, for having raised frivolous claims for damages.

(3) In making an order for the payment of costs, the Court shall have regard to the following
circumstances, including:

(a) the conduct of the parties; (b) whether a party has succeeded on part of its case, even if that
party has not been wholly successful; (c) whether the party had made a frivolous counterclaim
leading to delay in the disposal of the case; (d) whether any reasonable offer to settle is made by a
party and unreasonably refused by the other party; and (e) whether the party had made a frivolous
claim and instituted a vexatious proceeding wasting the time of the Court.

(4) The orders which the Court may make under this provision include an order that a party must
pay:

(a) a proportion of another party’s costs; (b) a stated amount in respect of another party’s costs; (c)
costs from or until a certain date; (d) costs incurred before proceedings have begun; (e) costs
relating to particular steps taken in the proceedings; (f) costs relating to a distinct part of the
proceedings; and (g) interest on costs from or until a certain date.”

HIGH COURT AMENDMENT

Page 3 of 10

S. 35. Costs.

Calcutta.—Omit sub-section (2) vide Cal. Gaz. Pt. I, dated April 20, 1967.

COMMENT.—

Object of awarding costs.—

The object of awarding costs is to secure to a litigant the expenses which he has incurred and not to
punish the opposite party. The costs to be awarded under this section are in the judicial discretion of
the Court. This judicial discretion is to be exercised on sound legal principles. Ordinarily, the
successful party is entitled to his costs. In other words, costs follow the event. When both the parties
are guilty of acts of bad faith, both may be deprived of their costs.

Section 35 lays down that the costs of an incidental to all suits shall be in the discretion of the Court.
The Court can order by whom and out of what property, the costs are to be paid. The section clearly
provides that “costs shall follow the events”. It means that the successful party is entitled to the
costs, unless the Court in its discretion orders otherwise, either because that party is guilty of
misconduct, or because there is some other good cause for not awarding costs to him. Thus,
successful party will not get his costs if he succeeds on a small part of his claim, but fails on the most
important and larger part of it or if the party has raised an unnecessary issue, or placed a burden on
the defendant which ought not to have in the litigation, etc. The costs may be disallowed if there is
vindictive nature of the proceedings are launched by a client against his pleader for professional
misconduct.
Similarly, a landlord who deliberately mis-states the areas of the land in a rent suit may be deprived
of costs, though he is successful in his suit.

When a respondent is not contesting its case, costs would not be awarded, but an exception would
be carved out and in a suitable case costs should be awarded on persons that set the law in motion,
had benefits thereof and remained obviously ex parte.936

Where the costs were awarded not as a condition precedent to allowing the amendment but by way
of exercise of the discretionary power of the Court to award costs to the opposite party, the plea of
estopple arising from acceptance of costs so as to preclude the party from challenging the validity of
the order cannot be invoked.937

Award of costs by Court is discretionary. Where judgment is silent about incidence of costs it shall be
presumed that Court did not intend to determine costs aspect instead intended that parties should
be left to bear their own costs.938

Imposition of costs is in the discretion of Court. Appellate Court would not interfere when Court has
imposed costs in light of facts.939

Costs should be real and compensatory and not merely symbolic. Exemplary costs can be awarded
where appeal is devoid of any merit.940

The award of costs is entirely in the discretion of the Court941 subject, however, “to such conditions
and limitations as may be prescribed” and to the “provisions of any law for the time being in force.”

A High Court has discretion to award costs according to the facts and circumstances of each case.942

Page 4 of 10

S. 35. Costs.

Where intricate constitutional questions when decided by the Supreme Court, it should be an
exception to the conventional rule of costs unless other circumstances warrant.943

Apart from the provisions of section 35 the High Court has wide discretion in exercise of its inherent
powers to award costs in suitable cases if it finds it necessary in the interest of justice to do so.944

Advocate was ordered to pay costs personally.—

An advocate presented a petition under Article 32 for a writ of habeas corpus on behalf of a lady and
appeared as her next friend. The petition did not disclose that he made any attempt to consult the
person who he said was the husband of the lady nor did he show that he made any attempt to
contact either the lady or even her uncle. He had three hearings in the Court, despite the warning he
was given about costs and the Attorney-General was also asked to appear. When the arguments
were fully concluded and he found that the Court was against him he asked for permission to
withdraw the petition. That was refused and petition dismissed. The advocate was held to pay the
costs personally.945

In Rafiq v Munshilal, AIR 1981 SC 1400 : (1981) 2 SCC 788. The Supreme Court on further appeal, set
aside the dismissal of the appeal and further directed that the costs be recovered from the
appellant’s counsel who absented himself. It was observed further that a party should not suffer for
misdemeanour or inaction of his counsel. (Order LXI rule 17, O LXIII rule 1).
Where an ex parte decree was passed as the advocates had gone on strike, restoration was allowed
subject to payment of costs by the party. The party was held entitled to recover costs from the
advocate concerned.946

A separate suit for costs incurred but not awarded will be barred on the principle of res judicata.

An appeal for costs lies only in two matters namely, where the order as to costs involves a matter of
principle or proceeds upon a misapprehension of fact or law and secondly where no discretion is
exercised in making such an order.

Costs—meaning explained.—

The expression “costs of any proceedings or costs incidental to any proceedings” means costs of any
proceedings such as may be determined at the conclusion of the hearing. It does not include costs
payable in advance or to be incurred in future by a party. An order, therefore, directing the party to
a proceeding to pay the travelling and halting allowances of another party irrespective of the final
decision is not warranted by law.947

Some leading rules for awarding costs.—

(i) Normally costs shall follow the event and it is not the rule that costs should be left to be borne by
the parties.948 However, the costs may not be awarded by the Court if it is satisfied in this respect
on account of some good reasons. This means that the successful party is entitled to costs unless he
is guilty of misconduct or there is some good cause for not awarding costs to him.

Page 5 of 10

S. 35. Costs.

(ii) Where a party successfully enforces a legal right and in no way misconducts himself, he is entitled
to costs as a matter of right.949 (iii)If a plaintiff substantially succeeds, he is entitled to his costs
though he may not have got the precise form of relief he wanted.950 Where he sets up a false case,
he was deprived of his costs.951 (iv) If a plaintiff recovers a less amount than he claimed in the plaint
his costs should be apportioned according to the amount recovered and not according to the sum
claimed.952 (v) A person wrongfully made a party should get his costs.953 (vi) Where both the
parties advanced pleas far in excess of their legal rights each party will be made to bear his own
costs.

The following parameters must be taken into consideration while imposing the costs. These factors
are illustrative in nature and not exhaustive:

(i) At what stage the amendment was sought. (ii) While imposing the costs, it should be taken into
consideration whether the amendment has been sought at a pre-trial or post-trial stage. (iii)The
financial benefit derived by one party at the cost of other party should be properly calculated in
terms of money and the costs be awarded accordingly. (iv) The imposition of costs should not be
symbolic but realistic. (v) The delay and inconvenience caused to the opposite side must be clearly
evaluated in terms of additional and extra Court hearing compelling the opposite party to bear extra
costs. (vi) In case of appeal to higher Courts, the victim of the amendment is to bear considerable
additional costs.

All these aspects must be carefully taken into consideration while awarding the costs.954
Though section 35 does not impose a ceiling on costs that could be levied and gives discretion to
court in the matter, however, in awarding costs court cannot ignore any conditions or limitations in
Code of Civil Procedure, 1908 or in any rules.955

Where the plaintiff succeeds in proving his case and the defendant does not enter witness box, court
would not be justified in not awarding the costs to the plaintiff against the defendant.956

Where the appellant was not qualified to be appointed as lecturer and was not selected earlier, but
unnecessarily dragged the respondent to court. The Appellant was directed to pay costs of Rs.
5,00,000 to respondents in both appeals equally.957

Realistic costs, awarding of.—

The practice developed to award no costs or award nominal costs encourages filing of frivolous suits
and defences. Realistic costs should be awarded. High Courts should examine these aspects and
whereas necessary make requisite rules, regulations or practice directions.958

Awarding costs is a rule.—

Page 6 of 10

S. 35. Costs.

As the transaction was not commercial, trial court awarding interest at 8% p.a. justified. Courts
should award proportionate costs in view of section 35 of the Code of Civil Procedure. Awarding
costs in a civil suit is a rule and rejection of the same needs to be supported by good reasons.959

Heavy cost awarded.—

When the respondent, the rival candidate in an election petition committed serious malpractice at
the time of counting, he was directed to pay heavy costs which were quantified at Rs. 10,000.960

The petitioner was a scheduled caste candidate. He had secured a good position in merits. He was
not appointed as sub-Inspector of police for several years. He had to approach the Supreme Court.
He was awarded the costs of Rs. 5,000.961

Where the respondents before the Supreme Court were compelled to come to New Delhi again and
again, and they had to spend money on boarding and lodging, the appellants were directed to pay
Rs. 1,500 to each of the respondents by way of costs.962

In an appeal against refusal to grant affiliation to minority institution, the Government was reluctant
to perform constitutional duty. It was also disobeying orders of the Supreme Court to produce
certain documents. Heavy cost was imposed on the State Government. Normally, the Supreme Court
does not grant costs.963

Imposition of cost for misleading Court.—

The party was saddled with cash for misleading the Court by making incorrect statements and
annexing wrong document before the Court.964

Cost in perjury cases.—

The acquisition of land was challenged by the original owner and pending the proceedings he had
been stating that no construction was going on in the plot. But he actually sold out portions of the
plot and the purchaser was going on with the construction. Though technically speaking the original
owner may be right that he was not making any construction factually, it is wrong. So, he was
directed to deposit a cost of Rs. 10,000.965

Costs in case of frivolous appeals.—

Imposition of costs quantified at Rs. 10,000 was held to be justified for filing frivolous appeals
especially the tendency of PSUs.966

Costs in cases relating to corrupt election practices.—

Where an allegation of corrupt practice against a candidate contesting election and also persons
campaigning for him was not proved, the costs were allowed only to the candidate and persons who
appeared personally as witness to rebut allegation made against him.967

Costs in public interest litigation.—

Page 7 of 10

S. 35. Costs.

In a writ petition filed by a voluntary organisation as a public interest litigation which had to be
fought over a period of six years the Union of India was ordered to pay cost of Rs 50,000 as costs.968

Costs in non-payment of correct Court-fees.—

When the appellant was negligent in not paying the correct Court-fee and so the respondent was
dragged on to the Court for about ten years, while permitting the appellants to pay the deficit Court
fee for restoring the appeal, the Supreme Court ordered him to pay the respondent a sum of rupees
one thousand by way of costs.969

The above principles governing the award of costs have been applied in the appeals before Supreme
Court.970

Where the petitioner was alone and single. He fought a valiant battle against a giant enterprise. In
token of appreciation a sum of Rs. 10,000 was ordered to be paid by way of the costs.971

Where a request of appellant for extension of time to deposit deficit Court-fees was contested by
the respondent, the respondent should be made liable to pay.972

Where the appeal involved the determination of the only question as to whether the appellant was
entitled to refund of an excise duty. This duty was paid on the price of packing material used for
packing of superfine cement which according to the appellant was paid under protest. Whereas
according to the respondent, it was not paid under protest and, therefore, the claim of refund was
barred by time. It was held that the excise duty was paid under protest and question of limitation
does not arise for refund of the duty. Refund of the excise duty was refused. Hence, the
manufacturer was entitled to refund of amount with interest from the date of refusal of refund with
cost Rs. 10,000.973

In respect of a claim for encashment of leave increment arrears, special pay, etc. On account of delay
in payment for over 12 years, the Supreme Court directed the Union of India to pay a sum of Rs. two
lacs toward the interest, compensation, litigation expenses, etc. in addition to the payment of the
claim amount.974
Where an appellant had chosen to be a counsel of his own cause and not had the benefit of advice
from competent legal minds, no cost was awarded while dismissing the appeal. The conduct of the
appellant was deprecated. Non-granting of the costs was also to give an opportunity to realise his
mistake and feel contrive for his reproachable conduct.975

Costs were not allowed.—

Where the successful parties were ordered to get back to the employment, the costs were not
allowed in their favour.976

Where the controversy arose because of relevant provisions were not free from ambiguity, the
parties may be directed to bear their own costs throughout.977

Where an appeal in the Supreme Court is allowed but the appellant had not appeared before the
High Court to assist the Court. There will be no order as to costs to the appeal in Supreme Court.978

Page 8 of 10

S. 35. Costs.

No order was passed as to costs on dismissal of application in view of personal appearance of the
applicant.979

In a suit for breach of contract where the plaintiff has also committed default then the plaintiff
would not be entitled to costs of the suit.980

Subject to such conditions and limitations as may be prescribed.—“Prescribed” means by rules

The following rules contain express provisions as to costs:

(1) Order XI, rule 3—Cost of interrogatories; (2) Order XII, rule 2—Proof of documents; (3) Order XXI,
rule 72(3)—Application to set aside a sale; (4) Order XXIII, rule 1(3)—Next friends and guardians; (5)
Order XXXIV, Mortgage suits; (6) Order XXXV, rule 3—Inter-pleader suits; (7) Order XXXV, rules 10,
11 and 16—Pauper Suits.

Review.—

A Court can, when a strong case is made out, review direction as to costs.981

Revision.—

A mistake committed by a Court on the point of costs is hardly a ground for revision.982 However, a
revision will lie when a Court having no jurisdiction makes an order of amendment relating to
costs.983

Costs awarded in appeal, being with no merits.—

The appeal being devoid of merits and substance it was dismissed and costs were awarded.984

Letters Patent Appeal.—

An order as to costs is a judgment within the meaning of clause 15 of the Letters Patent.985

Appeal before Supreme Court.—

The parties were directed to bear their own costs where the claim was partly reduced.987

Although an election petition is dismissed, prevarications of the returned candidates precludes him
from getting costs.988

Page 9 of 10

S. 35. Costs.

Litigation costs from national exchequer.—

In the clarification of confused judicial situation by Court, if the parties are fair then the costs of
litigation must come out of national exchequer and not out of party’s purse.989

Filing of false affidavit should be effectively curbed with a strong hand to preserve purity of Judicial
proceedings. Hence, imposition of exemplary costs by High Court of Rs. 10,00,000 affirmed.990

934 See Amendment for Commercial Dispute of a Specified Value vide the Commercial Courts,
Commercial Division and Commercial Appellate Division of High Courts Act, 2015 (4 of 2016), Section
16 and the Schedule (w.r.e.f. 23-10-2015). 935 Sub-s. (3) reproduced below was omitted by Code of
Civil Procedure (Amendment) Act 66 of 1956 (w.e.f. 1-1-1957):

“(3) The Court may give interest on cost at any rate not exceeding six percent per annum, and such
interest shall be added to the costs and shall be recoverable as such”. 936 RG Shinde v State of
Maharashtra, AIR 1994 SC 1673 (1683) : (1993) 4 SCC 216. 937 Bijendra Nath Srivastava v Mayank
Srivastava, AIR 1994 SC 2562 (2573) : (1994) 6 SCC 117. 938 Omveer Singh v District Judge, Haridwar,
AIR 2009 Utr 55, see also Oswal Fats & Oils Ltd v Commnr, (2010) 4 SCC 728 (752). 939 Laxman
Prasad v Prodigy Electronics Ltd, AIR 2008 SC 685 : (2008) 1 SCC 618. 940 Punjab State Power
Corporation Ltd v Atma Singh Garewal, (2014)5 SCC (Civ) 762. 941 (1900) 2 Bom LR 254. 942 SA Jais
& Co v Gujarat Electricity Board, AIR 1988 SC 254 (257) : (1987) Supp SCC 617. 943 AS Iyer v V
Balasubramanyam, AIR 1980 SC 452 (470) : 1980 1 SCC 634 : 1980 Lab IC 231. 944 A Krishna Rao v
State of Orissa, AIR 1955 Ori 65. See also Pleader of Agra v High Court Judges, Allahabad, AIR 1930
PC 60. 945 Vidya Verma v Shiv Narain, AIR 1956 SC 108 : (1955) 2 SCR 983. 946 Ramon Services Pvt
Ltd v Subhash Kapoor, AIR 2001 SC 207 (216) : (2001) 1 SCC 118 : (2001) SCC (Cri) 3 : (2001) 1 KLT 34.
947 Punjab National Bank v Sri Ram Kunwar, AIR 1957 SC 276 (278) : (1957) SCR 220 : (1957) 1 LLJ
455. 948 Jugra Singh v Jaswant Singh, (1971) 1 SCJ 141 : (1970) 2 SCC 386 : (1971) 73 PLR 314. 949
Laxmibhai v Radhabhai, (1918) 42 Bom. 327. 950 Ghanshyam v Moroba, (1894) 18 Bom. 474. 951
United Bank of India v Nedarlandsche Standard Bank, AIR 1962 Cal 325. See also State of UP v Shyam
Sunder, AIR 1961 All 418. 952 S Pestonji Manjoo v Gangadhar Khemka, AIR 1969 SC 600 : (1969) 1
SCC 220 : (1969) 3 SCR 33. 953 Bishan Dayal v Bank of Upper India, (1891) 13 All 290. 954 Revajeeter
Builders & Developers v Narayanaswami & Sons, (2009) 10 SCC 84 (101); see also Vinod Seth v
Devinder Bajaj, (2010) 8 SCC 01 (23) (The provision does not impose only ceiling). 955 Sanjeev Kumar
Jain v Raghubir Saran Charitable Trust, (2012) 1 SCC (Civ) 275. 956 Union Bank of India v Monin
Enterprises, AIR 2002 Kant 270 (272). 957 Ganapath Singh Gangaram Singh Rajput v Gulbarga
University, AIR 2014 SC 77. 958 Salem Advocate Bar Assocn v UOI, AIR 2005 SC 3353 (3364). 959 MV
Prema Chandra v Sarojamma, AIR 2015 Kant 1. 960 Ambika Prasad Dubey v DM Allahabad, AIR 1991
SC 1106 (1108). 961 Ganga Singh v Commr of Police, AIR 1987 SC 699. 962 Comptroller & Auditor
General of India, Gian Prakash v KS Jagannathan, AIR 1987 SC 537 (556) : (1986) 2 SCC 679.

Page 10 of 10

S. 35. Costs.

963 Managing Board MTM v State of Bihar, AIR 1984 SC 1757 (1765) : (1984) 4 SCC 500. 964 MB
Mahadik v SK Kanitkar, AIR 2005 SC 1794 (1800, 1805). 965 State of Maharashtra v Pandurang K
Pangore, AIR 1995 SC 1202 (1204) : 1995 Supp (2) SCR 119. 966 Punjab State Power Corporation v
Atma Singh Grewal, (2014) 13 SCC 666. 967 Ramchandra G Kapse v HR Singh, AIR 1996 SC 817 (826) :
(1996) 1 SCC 206. 968 Indian Council of Enviro-Legal Action v UOI, AIR 1996 SC 1446 (1469) : (1996) 3
SCC 212. 969 Mohammed Mahibullah v Seth Chaman Lal, AIR 1993 SC 1241 (1243) : (1991) 4 SCC
529. 970 Simrathmull v Nanjalingiah, AIR 1963 SC 1183. 971 MC Mehta v UOI, AIR 1987 SC 965
(982) : (1986) 2 SCC 176. 972 Prem Narain v Vishnu Exchange Charitable Trust, AIR 1984 SC 1896 :
(1984) 4 SCC 375. 973 India Cements Ltd v Collector of Central Excise, AIR 1989 SC 1496 : (1989) 2
SCC 676. 974 SR Bhaurale v UOI, AIR 1997 SC 27 (29) : (1996) 10 SCC 172 : 1996 SCC (L&S) 1384. 975
B Varatha Rao v State of Karnataka, AIR 1987 SC 287 (294) : (1986) 4 SCC 624 : (1986) 1 ATC 763. 976
KI Shephard v UOI, AIR 1988 SC 686 (696) : (1987) 4 SCC 431. 977 Santok Chand K Jain v Bhusaval B
Municipality, AIR 1966 SC 1358 (1361). 978 S Sanyal v Gian Chand, AIR 1968 SC 438 (441) : (1968) 1
SCR 536. 979 State of Punjab v Harvinder Singh, (2008) 3 SCC 394. 980 State of AP v Singam Shetty
Yellananda, AIR 2003 AP 182 (187). 981 Mahadeo Ganesh v Secretary of State, AIR 1926 Bom 367
(DB). 982 Thirukavat Chetti Karia Goundan, AIR 1930 Mad 72. See also Catto Bai v Habizan, AIR 1951
Ajmer 98. 983 AIR 1955 Ajmer 25. 984 G Suryakumari v B Chandramouli, (2010) 2 SCC 254 (259), see
also UOI v SICOM Ltd, (2009) 2 SCC 121. 985 AIR 1919 Mad 678 (FB). See also Aspee (India)Ltd v ML
Dahanukar and Co Ltd, AIR 1954 Bom 35 (DB) : (1954) Bom 21. 986 Chatur Bhuj Pande v Collector of
Raigarh, AIR 1969 SC 255 : (1969) 1 SCR 212 : 1969 Ker LJ 212. See also AIR 1969 SC 493. Ibid. 987
Muthia Chettiar v Shanmugham, AIR 1969 SC 552 (555) : (1969) 1 SCR 444. 988 Jashbhai Patil v
Anverbeg, AIR 1969 SC 586 (590) : (1969) 2 SCR 97; see also KM Vishwanath Pillai v Sanmugham, AIR
1969 SC 493 (496) : (1969) 1 SCC 188. 989 CIT, Madras v RMC Pillai, AIR 1977 SC 489 (497) : (1977) 1
SCC 431 : (1977) 106 ITR 292 : (1977) 2 SCR 111. 990 Sciemed Overseas Inc v BOC India Ltd, AIR 2016
SC 345 : 2016 (1) SCALE 264.

End of Document

[S 35A. Compensatory costs in respect of false or vexatious claims or defences. MP Jain: The Code of
Civil Procedure including Limitation Act, 1963, 5th ed MP Jain Medha Kolhatkar

MP Jain: The Code of Civil Procedure including Limitation Act, 1963, 5th ed > MP Jain: The Code of
Civil Procedure including Limitation Act, 1963, 5th ed > The Code of Civil Procedure > PART I Suits
in General > Costs

The Code of Civil Procedure

PART I SUITS IN GENERAL

COSTS
991[S 35A. Compensatory costs in respect of false or vexatious claims or defences.

(1) If in any suit or other proceeding, 992[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 it is, as against the objector, false or vexatious to the knowledge 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, 993[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. 994(2) No Court shall make any such order for the payment of an amount
exceeding 995[three thousand rupees] or exceeding the limits of its pecuniary jurisdiction,
whichever amount is less:

Provided that where the pecuniary limits of the jurisdiction of any Court exercising the jurisdiction of
a Court of Small Causes under the Provincial Small Cause Courts Act, 1887, 996[or under a
corresponding law in force in 997(any part of India to which the said Act does not extend)], and not
being a Court constituted 998[under such Act or law], are less than two hundred and fifty rupees,
the High Court may empower such Court to award as costs under this section any amount not
exceeding two hundred and fifty rupees and not exceeding those limits by more than one hundred
rupees:

Provided further, that the High Court may limit the amount which any Court or class of Courts is
empowered to award as costs under this section.

(3) 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.

Page 2 of 5

[S 35A. Compensatory costs in respect of false or vexatious claims or defences.

(4) The amount of any compensation awarded under this section in respect of a false or vexatious
claim or defence shall be taken into account in any subsequent suit for damages or compensation in
respect of such claim or defence.]

AMENDMENT FOR COMMERCIAL DISPUTE OF A SPECIFIED VALUE

AMENDMENT OF SECTION 35A.—IN SECTION 35A OF THE CODE, SUB-SECTION (2) SHALL BE
OMITTED.

STATE AMENDMENTS

Uttar Pradesh.—The following amendments were made by Uttar Pradesh Act No 24 of 1954 S. 2 and
Schedule item 5, Entry 1 (w.e.f. 30-11-1954).

(i) In Section 35A, for the existing sub-section (1) substituted as below:

“(i) if in any suit or other proceeding, including proceedings in execution, but not being an appeal or
revision, the Court finds that the claim or defence or any part thereof is false or vexatious to the
knowledge of the party by whom it has been put forward and if such claim or defence or such part is
disallowed, abandoned or withdrawn in whole or in part, the Court may, after recording its reasons
for holding such claim or defence to be false or vexatious, make an order for the payment to the
successful party of costs by way of compensation irrespective of the decision on other issues in the
case”.

Sub-sec (1A) has been inserted by Act 57 of 1976:

“(1A). The provisions of sub-section (1) shall mutatis mutandis apply to an appeal where the
appellate Court confirms the decision of the trial Court and the trial Court has not awarded, or has
awarded insufficient, compensatory cost under that sub-section.”

COMMENT.—

Section 35 deals with the costs as discussed earlier. It provides that (1) the costs of and incident to
all suits shall be in the discretion of the Court; (2) the Court shall have power to determine by whom
or out of what property as to what extent costs are to be paid and (3) where costs are not to follow
the events, the Court shall state its reasons in writing.

Scope of the section.—

The object of section 35 in awarding costs to a litigant is to secure to him the expenses incurred by
him in the litigation999 and not to enable him to make anything in the way of gain, profit, over and
above the expenses for maintaining or defending the action, nor to give exemplary damage or smart
money, by way of penalty or punishment on the opposite party.1000

Section 35-A provides for payment of costs by way of compensation in cases of false or vexatious
claims and defences. Where costs are awarded in respect of proceedings under section 145, Code of
Criminal Procedure (wrongful attachment of property), suit based on injury of property is
maintainable.1001 Costs under this section are not intended as punishment for unsuccessful
party.1002 If

Page 3 of 5

[S 35A. Compensatory costs in respect of false or vexatious claims or defences.

claim is untenable but not false, this section does apply.1003 This section does not apply to
witnesses.1004

Section 35-A was amended by the Amending Act of 1976 to exclude its application to revision
proceedings and to enhance the maximum amount of compensation from one thousand to three
thousand.

This section is an exception to the general principle on which section 35 is based namely, that the
award of costs to a litigant is to secure to him the expenses incurred by him in the litigation, and not
to enable him to get money by way of penalty or punishment on the opposite party. In order that
this section may apply, the following conditions must exist:

(1) The claim or defence must be false or vexatious to the knowledge of the party raising it; (2) Such
claim or defence must have been disallowed or withdrawn or abandoned in whole or in part; (3) An
objection must have been taken at the earliest possible opportunity.

This section applies only to suits and proceedings and not to appeals. An order for compensatory
costs under this section is appealable under section 104.
It may be pointed out that a person against whom an order for compensatory costs has been made
under section 35-A is not exempted from any criminal liability in respect of that claim. However, the
amount of any compensatory costs awarded in respect of false or vexatious claim is to be taken into
account in any subsequent suit that may be filed for damages or compensation in respect of such
claim.

If the trial Court is satisfied that the litigation was inspired by vexatious motives and altogether
groundless, then it should take deterrent action under this provision.1005

It has been held by a Full Bench of Gujarat High Court in Anandji Haridas & Co v State of Gujarat, AIR
1977 Guj. 140 (FB) : 18 Guj LR 271 as follows: “The principle of common law in England which has
been held to be applicable even in this country in the matter of taxing party and party costs thus, is
that the costs are awarded, not as a punishment to the defeated party, nor as a bonus to the party
which receives them, but as a recompense to the successful party in order to indemnify him, though
not completely, for legal expenses to which he has been subjected in prosecuting his suit or his
defence... It is this principle which lies at the root of the order awarding proportionate costs in cases
where the plaintiff or the appellant succeeds partly in his claim.1006

Where the Principal Secretary in the Local Government Department is responsible for violation of
the statutory provisions and weakening the concept of rule of law whereby the President of a
Municipal Council is deprived of duty to assume and discharge his duties. The secretary is personally
liable to pay the costs from his own pocket.1007

Costs to be in the discretion of the Court.—

This section provides that the costs of suits and applications shall be in the discretion of the Court,
which is very wide one. Such discretion must be a judicial discretion to be exercised on legal
principles and not otherwise. Where there are no materials before the Court on which it can exercise
its discretion, it is not justified in depriving a successful party to his costs.

Page 4 of 5

[S 35A. Compensatory costs in respect of false or vexatious claims or defences.

In a case of non-payment of land acquisition compensation and utter lack of legal authority for
deprivation of respondent’s property by state authorities, the High Court in writ jurisdiction directed
to take steps to pay compensation with interest to claimant but it was liberal in not imposing any
exemplary costs. An appeal against said order was filed before the Supreme Court. Even these
Appellant State instead of accepting its mistake took an intractable attitude and persisted in
opposing just and reasonable claim of respondent. The appeal was, therefore, dismissed with
exemplary cost of Rs. 25,000.1008

Compensatory costs, provision needs revision.—

The provision relating to compensatory costs under section 35A of the Code in respect of false or
vexatious claims or defences has become virtually infructuous and ineffective on account of
inflation. This requires a realistic revision.1009

Under section 35A of the Code compensatory costs for vexatious claims and defences may not
exceed Rs. 3000. 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.1010
Imposition of additional cost.—

In a suit for declaration, defendants applied to extend time to make payment of costs of Rs. 1,50,000
to the plaintiff. It would not be in the interest of justice to dismiss the suit merely on ground that the
Advocate for the petitioners could not produce the copy of the pay order at the time of the making
of the application. However, additional cost of Rs. 25,000 was imposed on defendants to be paid to
the plaintiff.1011

Exemplary costs, not to be oppressive.—

The power to levy exemplary costs should be exercised sparingly to advance justice. It should not be
threatening and oppressive.1012

Where auction sale was found to be sham and mala fide and the case was of land grabbing, the High
Court order which set aside the sale was not interfered with and exemplary costs were levied on the
purchasers.1013

In a case, the court considered the question of compensatory costs in false claims/defences. The
court held that false claims and evasive pleas are main cause for delay in administration of justice.
The same can be avoided by ordering restitution and imposing realistic costs. Courts have to ensure
that unscrupulous litigant is not permitted to derive any benefit by abusing judicial process.1014

There is a necessity for strict enforcement of section 35(2) ceiling of compensatory cost in respect of
false or vexatious claims or defences should be at least Rs. 1,00,000. Legislature should consider
adding description of costs awardable under section 35A as “punitive costs.” There should be
periodical revision and stream lining of court fees and should have some kind of quid pro quo to cost
involved. The Supreme Court also stressed the urgency in revision of advocate’s fees provided in Sch
II High Court rules, and also suggested that amendment of rules should be made to make provision
for actual realistic costs.1015

Page 5 of 5

[S 35A. Compensatory costs in respect of false or vexatious claims or defences.

991 Section 35A inserted by Act 9 of 1922, Section 2. 992 Subs. for “not being an appeal” by Code of
Civil Procedure (Amendment) Act 66 of 1956, section 4 (w.e.f. 1-1-1957). 993 Subs. for “if the
objection has been taken at the earliest opportunity and if it is satisfied of the justice thereof” by
Code of Civil Procedure (Amendment) Act 66 of 1956, section 4 (w.e.f. 1-1-1957). 994 See
Amendment for Commercial Dispute of a Specified Value vide the Commercial Courts, Commercial
Division and Commercial Appellate Division of High Courts Act, 2015 (4 of 2016), Section 16 and the
Schedule (w.r.e.f. 23-10-2015). 995 Subs. by Code of Civil Procedure (Amendment) Act 104 of 1976,
section 14(ii) (w.e.f. 1-2-1977) for “one thousand rupees”. 996 Ins. by section 7 of Act 2 of 1951
(w.e.f. 1-4-1951). 997 Subs. for “a Part B State” by AL No. 2 of 1956. 998 Subs. for “under that Act”
by section 7 of Act 2 of 1951 (w.e.f. 1-4-1951). 999 Nand Lal Tanti v Jagdeo Singh, AIR 1962 Pat 36;
see also Marindra Chandra v Ashwini Kumar, AIR 1921 Cal 185 (DB). 1000 Firm of N Penddanna v
KVSS Sons, AIR 1954 SC 26. 1001 Bachha Pandey v Deosunder Devi, AIR 1968 Pat 248. 1002
Krishnapur Mutt v Gopalakrishnayya, AIR 1967 Mys 65. 1003 Kaza Sriramamurthy v Andhra
University, AIR 1966 AP 170. 1004 Suryanarayanamurthy v Kameshwaramma, 1960 Andh WR 307.
1005 T Arivandandam v TV Satyapal, AIR 1977 SC 2421 (2423) : (1977) 4 SCC 467. 1006 AIR 1977 Guj
140 at p 144 (FB) : 18 Guj LR 271. 1007 State of Punjab v Bhajan Singh, AIR 2001 SC 1098 (1103) :
(2001) 3 SCC 565. 1008 State of UP v Manohar, AIR 2005 SC 488. 1009 Vinod Seth v Devinder Bajaj,
(2010) 8 SCC 01 (23), see also Salem Advocate Bar Assn II v UOI, (2005) 6 SCC 344. 1010 Ashok Kumar
Mittal v Ram Kr Gupta, (2009) 2 SCC 656 (659). 1011 Vidyut Enterprises v Popatlal, 2010 (3) Mah LJ
134 (137) (DB). 1012 Satyapal Singh v UOI, AIR 2010 SC 1138 (1140), see also Sita Ram Bhandar
Society v Govt of NCT, Delhi, (2009) 10 SCC 501 (exemplary costs warrant in frivolous/vexatious
litigation to frustrate and delay legal process), Damodar S Prabhu v Syed Babalal H, AIR 2010 SC
1907. 1013 Rakesh Kumar Goel v UPSIDC Ltd, AIR 2010 SC 2451. 1014 A Shanmugam v Ariya
Kshatriay Rajakula Vamsahu Madalaya Nandhavana Paripalanai Sagam, AIR 2012 SC 2010. 1015
Sanjeev Kumar Jain v Raghubir Saran Charitable Trust, (2012) 1 SCC (Civ) 275.

End of Document

[S. 35B. Costs for causing delay. MP Jain: The Code of Civil Procedure including Limitation Act, 1963,
5th ed MP Jain Medha Kolhatkar

MP Jain: The Code of Civil Procedure including Limitation Act, 1963, 5th ed > MP Jain: The Code of
Civil Procedure including Limitation Act, 1963, 5th ed > The Code of Civil Procedure > PART I Suits
in General > Costs

The Code of Civil Procedure

PART I SUITS IN GENERAL

COSTS

1016[S. 35B. Costs for causing delay.

(1) If, on any date fixed for the hearing of a suit or for taking any step therein, a party to the suit—
(a) fails to take the step which he was required by or under this Code to take on that date, or (b)
obtains an adjournment for taking such step or for producing evidence or on any other ground,

the Court may, for reasons to be recorded, 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—

(a) the suit by the plaintiff, where the plaintiff was ordered to pay such costs; (b) the defence by the
defendant, where the defendant was ordered to pay such costs.

Explanation.—Where separate defences have been raised by the defendants or groups of

(2) The costs, 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

Page 2 of 3
[S. 35B. Costs for causing delay.

addresses of the persons by whom such costs are payable and the order so drawn up shall be
executable against such persons.] COMMENT.—

Section 35-B which was added by the Amending Act of 1976, gives to the Court discretion to impose
compensatory costs on parties who are responsible for delaying any stage of the litigation and such
costs would be irrespective of the ultimate outcome of the litigation.

When an amendment is allowed on payment of costs and the costs are accepted by a party, he
cannot afterwards raise any objection.1017

By filing a petition for eviction on the ground of reconstruction, a landlady obtained possession of
the premises but she did not do it. The Court allowed the tenant to put up the reconstruction. The
Municipality and State Government geared up to stall the reconstruction at the behest of son of
landlady, a municipal councillor. The State’s plea for impleading itself as a party to the matter was
rejected by the High Court. The abuse of process of Court was established. The rejection was proper
Government’s officials at the behest of whom appeal was filed directed to pay exemplary cost of Rs.
10,000.1018

Where the appointment of the chairman, vice-chairman and members of an Administrative Tribunal
was challenged by three police inspectors with a view to derive personal benefits and not in public
interest, with the idea just to paralyse working of the tribunal, this is a glaring case of abuse of
process of Court in the name of public interest. Each petitioner was directed to pay a sum of rupees
15000 by way of cost which may be recovered from provident fund/gratuity or any other future
monetary benefit including pension or in ordinary cause by executing the order.1019

The explanation attached to sub-section (1) of this section was added in order to avoid delay in the
disposal of suits. Accordingly, the payment of compensatory cost for causing delay has been made a
condition precedent to the further prosecution of the suit or the defence by the plaintiff or
defendant concerned.

Overruling its earlier decisions,1020 a Full Bench of Punjab and Haryana High Court has held in
Anand Prakash v Bharat Bhushan Rai, AIR 1981 P&H 269 (FB) that the provision in section 35-B is
mandatory and if a party fails to pay costs on the next date, the Court must disallow prosecution of
the suit or defence, as the case may be.

However, the provision in section 35-B is directory and not mandatory according to the Orissa High
Court as held in Kasi Biswanath v Paramananda, AIR 1982 Ori 80.

(1) Costs in Respect of certain Items: See O XX-A. (2) Payments into Courts: See O XXIV. (3) Security
for Costs: See O XXV.

To be invoked regularly to reduce delay.—

The provision under section 35-B of the Code providing for costs for causing delay is seldom invoked.
It should be regularly employed to reduce delay.1021

For non-appearance of counsel of defendant.—

Page 3 of 3
[S. 35B. Costs for causing delay.

The imposition of costs on setting aside ex parte decree is warranted in case of non-appearance of
defendant’s counsel.1022

Costs, non-payment of.—

The provision under section 35B of the Code does not contemplate or require dismissal of suit as an
automatic consequence of non-payment of costs by plaintiff.1023

Condonation of delay on Payment of costs.—

Where the appellant agreed and accepted the order by receiving the costs, it would not be open to
them to subsequently challenge the order.1024